Secoo, the Chinese luxury goods e-retailer (NASDAQ: SECO) newly
listed on NASDAQ on September 22, was glad to announce that IDG
Capital, a major shareholder of the company, remains optimistic
about the company’s future despite the recent stock price fall,
which was confirmed by Jeacy Yan, IDG Capital Partner, in an
interview.
As the first Chinese online luxury goods company to go public,
Secoo saw the closing prices drop 23.08% on the first trading day
and continue to fall for days afterwards, due to some investors’
lack of confidence in Secoo.
Having taken part in each of Secoo's A-E investment rounds,
Jeacy Yan, an IDG Capital Partner, took an interview and revealed
the logic behind their decision to continue investing in Secoo, as
well as the current state of Secoo itself.
Below is the transcript of Jeacy Yan’s conversation with a
Reporter from Sina:
About Stock Price: It Takes Time to Build Market
Confidence
Sina: How do you view the huge drop in Secoo’s stock price? What
do you think caused the drop, and how can the stock price
recover?
Yan: Technically speaking, it’s definitely because many hedge
funds bought the shares at that time, and hedge funds are
short-term. They’re not like long-term funds that will hold the
shares for a long period of time and continue to invest in the
company’s value. But the fundamental issue is this: for how long
will it take for the American market to see this as a sustainable
high-performing business and cast aside their hesitations? After
all, Secoo has just reported profits for three quarters in a
row.
With a few more profitable quarters, while maintaining a steady
increase and profit margin, and continuing an open line of
communication with investors, the company will see the stock price
gradually recover. The market just needs time to establish
confidence in the company.
Sina: When the restrictions are lifted for IDG Capital, will
they sell Secoo shares?
Yan: IDG Capital currently holds a 18.5% stake in Secoo. We
believe Secoo has continuously been undervalued because the outside
world does not understand the company. Therefore, as they remain on
the market, and maintain a high performance value, there’s no doubt
that the stock price will rise. Our short-term plan is to not sell
the shares, because really, they have just started out. Their true
potential and value cannot be reflected as of yet.
About Competition: Secoo Lacks Rivals
Sina: What is the competition like for Secoo? Who are Secoo’s
rivals?
Yan: As you can see, they have no rivals. Two years ago when
JD.com and Tmall (Alibaba) started selling luxury goods, everyone
asked me how Secoo could compete with those giants. But after 2
years, look at the result. Basically no one asks that anymore. For
instance, IDG Capital invested in Farfetch, as well as JD.com, but
the brands on Farfetch aren’t actually sold on JD.com. Their
partnership is just in terms of distribution and finance.
Of course, pressure from competitors still exists, but I just
don’t think that it’s a major factor. For example, Farfetch mainly
just revolves around selling commodities, and they haven’t started
carrying other kinds of items. Their long-term position differs
from Secoo: one is a global e-commerce platform selling high-end
luxury goods, and the other provides a wide-range service to
China’s high-end consumers. This kind of all-around service could
mean anything -- it could be merchandise, it could be consultation
services, it could be anything you can think of.
About Future Potential: Honing in on Offline
Experiences
Sina: In the future, will Secoo look towards expansion in three-
and four-tier cities? Is that plan already set in place?
Yan: Yes, they will. Secoo already has an off-line expansion
plan. Currently, Secoo has five brick-and-mortar stores. By the end
of the year they’ll open five more.
New flagship stores will become lifestyle experience centers, a
vision of the ultimate home. Inside there will be kitchens, dining
rooms, livings rooms, etc. You will be able to cook a meal inside,
and if you like any products during the experience, you can
purchase them through the APP on your mobile device and Secoo will
deliver it to your doorstep.
Sina: How will Secoo incorporate technology and data into
business?
Yan: Right now, Secoo is trying to do this in two ways: Reach
Out & Reach Offline. They’ve reached out to work strategically
with Tencent by docking to their database. This has not only
allowed them to know which groups of people look at which kinds of
bags or shoes, but in addition, it has allowed them to know what
kind of videos they watch, what kind of articles they read, and who
they follow online. This completes the entire image of the
consumer.
The other way is Reach Offline, through leveraging online data
to direct offline operation. In the Shanghai Secoo store, the
display is not set up according to the traditional logic of selling
products, but rather through the way the items are purchased
online. For example, when you buy something online, you will see a
window below that says “people who like this also like…” .
About Investing: E-Commerce Retailers Need a Unique Kind of
Competitiveness
Sina: Other than Secoo, IDG Capital has also invested in other
e-commerce retailers. What makes them worth investing in?
Yan: We think e-commerce retailers are able to persevere in the
following ways: the first is that they have control over supply
chains, so their products are unique; the second is that their site
traffic is superior and its cheap; and the third is the uniqueness
of their services. The only way to survive in this business is that
you can do what large online platforms cannot.
Original transcript on Sina:
http://tech.sina.com.cn/i/2017-10-11/doc-ifymrqmq4581553.shtml
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171012006543/en/
SECOO GroupXiaoxu XU, +8610 6588 0135xuxiaoxu@secoo.comWebsite:
www.secoo.com
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