LONDON — Baozun Inc., one of China’s biggest e-commerce service partners — more commonly known as TP, meaning Tmall Partners or Taobao Partners — which help brands execute their e-commerce strategies in the country, has agreed to acquire Full Jet, a strategic and brand-focused agency that specializes in developing go-to-market strategies for high-end and luxury brands entering China. The deal is expected to be completed on Feb. 10.
The undisclosed purchase price of Full Jet is valued at 12.5 times its 2020 earnings before interest, taxes, depreciation and amortization, consisting of a 50 percent initial cash payment and deferred payments in cash or equity over the following three years. In addition, an incentive program is granted to key members of Full Jet’s management team, subject to an earnout clause.
Vincent Qiu, chairman and chief executive officer of Baozun, said the companies share the same ambition of helping international luxury and premium brand partners enter China’s fast-growing e-commerce sector.
“We are confident that our proven track record of capabilities with deep luxury insights and solid infrastructure, combined with Full Jet’s expertise in brand and business development, will provide a compelling value proposition for international labels looking for more strategic and empowered services like us. By capitalizing on the strengths of both parties, we expect to unlock the potential for future growth of premium and luxury sectors, and we believe such initiatives will become strong growth drivers for Baozun in generating 20 billion renminbi in annual GMV [gross merchandise volume] within the next three to five years,” said Qiu.
Sandrine Zerbib, founder and managing partner of Full Jet, added that “Baozun is an ideal partner to help us realize value through scaling-up and reaching and converting new international brand clients. We share a vision with Baozun that this acquisition will bring international premium and luxury brand e-commerce to the next level.”
Founded in 2007, Baozun is a Hong Kong and Nasdaq dual listed company that has grown significantly over the years with China’s booming e-commerce industry. It is one of a dozen “six stars” service partners, rated by Tmall. It set a new record last Singles’ Day, with a total order value of 16.50 billion renminbi, or $2.55 billion, a 54.8 percent jump year-over-year, from its wide range of international clients, such as Farfetch, Nike, Gucci, Burberry, Coach, Zara, Maison Kitsune and Victoria Beckham Beauty, as well as Microsoft, Adobe, Tencent, Nintendo, Bayer and Burger King.
In the third quarter ended Sept. 30, Baozun recorded a 19.4 percent increase in GMV, reaching 10.85 billion renminbi, or $1.68 billion. Total net revenue reached 1.83 billion renminbi, or $284 million, an increase of 21.7 percent year-over-year, and operating profit increased by 50.9 percent.
Started as a consulting agency advising fashion and sports brands with regard to their China development with a focus on positioning and distribution 27 years ago, Full Jet has successfully leveraged its knowledge of China’s e-commerce market to support the likes of Adidas, Anta, Dr. Martens, Gap, Lacoste, Skechers, Toms, Under Armour, Yves Salomon, Wolford and Teva.
China has undoubtedly taken center stage in the global development of luxury e-commerce since the pandemic. According to a joint report by Bain and Tmall, the luxury goods market in mainland China will likely achieve 48 percent growth in 2020, reaching nearly 346 billion renminbi, or $52.8 billion, and China’s annual luxury online penetration increased from about 13 percent in 2019 to 23 percent in 2020, with Bain adding it expects that this reflects a permanent change in shopping behavior.
The report added that “most brands share the consensus that luxury online penetration (including omnichannel) will reach about 20 to 25 percent within three years.”
With global e-commerce players like MyTheresa and Farfech, which has formed a historic alliance with Alibaba Group and Richemont, eyeing to accelerate China business, top tier service partners like Baozun, Soplan, Hangzhou UCO Cosmetics, Keying, Xcxd, Qingmu, Shanghai Lili & Beauty Cosmetics, Buy Quickly, Hangzhou Onechance Tech and Bi Cheng are likely to benefit greatly from the boom.