Eric Shen – Chief Executive Officer Donghao Yang – Chief Financial Officer Millicent Tu – Director of Investor Relations

[Bin Vin] – JP Morgan Caroline Li – Goldman Sachs Alan Hellawell – Deutsche Bank Andy Yeung – Oppenheimer Mark Marostica – Piper Jaffray Eric Wen – China Renaissance Securities Muzhi Li – Citigroup [Joe Stell] – Macquarie C. Ming Zhao – 86Research Dick Wei – Credit Suisse

Good day, everyone, and welcome to Vipshop Holdings’ Q2 2013 Earnings Conference Call. At this point I would like to turn the call to Ms. Millicent Tu, Vipshop’s Director of Investor Relations. Please proceed.

Thank you, Operator. Hi everyone and thank you for joining Vipshop’s Q2 2013 Earnings Conference Call. Before we begin I will read the forward-looking statement: during this conference call we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations, assumptions, estimates and projections about Vipshop Holdings business and its industry. All statements other than statements of historical fact that we make during this call are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “is/are likely to,” “may,” “can,” “should,” “will,” “aim,” “potential,” or other similar expressions. These forward-looking statements are only as of the date hereof and are subject to change at any time, and we take no obligation to update these forward-looking statements. Joining us on today’s call are Eric Shen, the company’s CEO and Co-Founder, and Donghao Yang, the company’s Chief Financial Officer. At this point I would like to turn the call over to Eric Shen.

Hello everyone. Welcome to our Q2 2013 earnings conference call. We are proud to report another solid quarter with strong revenue growth and margin expansion. Total active customer count increased by almost 140% year-over-year to 3.5 million, helping to drive a 160% year-over-year increase and sales to over $351 million US. At the same time we continued to grow our profitability with GAAP net income increasing to $9 million. We believe these results attest to our growing market leadership and brand reputation as China’s leading online discount retailer for brands. We believe that this unique and clear position gives us two key benefits. First, by being focused on specializing in the underdeveloped discount retailer market in China we have built a core competence and a leadership position. Through this intense focus our capability in merchandising, logistics, brand partnership and the consumer intelligence are designed for the flash sales and online company retailing business. By leveraging these skillsets we continue to provide our 3200 brand partners with a global one-stop solution for efficient inventory and a cash flow turnaround. This is in stark contrast to many other B2C sites and marketplace operators that have recently set up their own discount retailing channels and are simply providing listing capabilities. Second, in the skilled effects inherent in our business model, our improving skills not only enables this strong sales growth but has also helped reduce our operating costs as a percentage of sales, further improving our profitability. We are now reaching levels in the ecommerce (inaudible) our scale, which now makes Vipshop the preferred go-to platform for major retailers hoping to quickly liquidate existing inventory. This in turn attracts a wider range of shoppers looking for their preferred [vendor] products, further driving our top and bottom line. This provides us increasing competence in our ability to manage this strong growth and continue to drive both top and bottom line growth. In today’s markets Vipshop has become a much bigger and stronger business we firmly believe, and our results show that we have the right model and the core competencies that are important to expanding and sustaining our business going forward. At this point, let me hand over the call to our CFO, Donghao Yang, so that he may discuss some new use and growth trends as well as this quarter’s financial achievements.

Thanks Eric, and hello everyone. As Eric discussed we are extremely pleased about our strong operational performance and our ability to manage this tremendous growth. At the same time we’re excited to discuss some new initiatives we have that are aimed at expanding our customer base and improving the user experience on our properties. To begin with, a key initiative for us in the past few quarters has been the focused growth on our mobile site. Our mobile sales have increased 67% quarter-over-quarter. This tremendous growth was fueled by two key factors. First, by nature of our flash sales model, mobile is extremely well-suited for the quick decision shopping that is inherent in flash sales offerings. Through our multiple mobile commerce offerings which now consists of three mobile applications and a mobile internet website, we provide shoppers with a convenient way to purchase their desired products on a platform anytime, anywhere, and on any device. Second, we continued to improve our user experience on our apps by improving the graphics for viewing items as well as easing the purchasing process for users once they decide they like an item. Such improvements have further helped to increase overall customer interaction and stickiness on our platform. These results demonstrate the increasing appeal for conveniently accessing Vipshop for customers looking for uniquely-priced offers on their favorites brands. In addition, we have expanded our warehouse capacity in our four leased logistic centers in Shanghai, [Zhangzhou], Beijing and Guangzhou and are on track to further increase this by approximately 300 square meters by the end of this year. This ramp up in warehousing space will allow us to better accommodate the surging demand of our customers in China’s northeast and eastern regions. Also in anticipation of the continued growth in consumer demand we’re planning to complete construction of our home warehouses in Guangzhou and [Wuwei] for a total of 300,000 square meters by the end of 2015, and expect it to cost approximately $200 million. To conclude, we aim to further expand upon the growth opportunities associated with China’s large and underdeveloped discount retail market. Building upon our increasing scale, we remain confident that our market positioning and leadership role will further strengthen Vipshop’s customer loyalty and brand partner satisfaction while fostering sustainable growth over the long term. Now, moving on to our quarterly financial highlights. Before I get started I’d like to clarify that all the financial numbers we’re presenting today are in US dollars amounts and all the percentage changes refer to year-over-year changes unless otherwise noted. Total net revenues for Q2 2013 increased by 159.7% to $351.3 million. This tremendous growth was primarily driven by a 138.7% increase in the number of total active customers to 3.5 million and a 136.3% increase in the number of total orders to 11 million. Gross margin further improved to 23.5% from 21.8% in the prior-year period, and gross profit increased by 179.6% to $82.6 million US. This improvement was driven by the increased sale of our business leading to larger discounts form our brand partners which lowered our product acquisition costs as a percentage of sales. Moreover, as we discussed earlier we continue to see improvements in operating margins as a result of improved economies of scale and increased operational leverage more specifically. Fulfillment expenses increased by 108.4% to $43.8 million for Q2 2013. As a percentage of total net revenues, fulfillment expenses decreased to 12.2% from 15.2% in the prior-year period. This cost reduction was primarily due to the successful implementation of our distributed warehouse strategy as well as our continued shift to high-quality regional and local couriers, lowering our fulfillment costs while shortening delivery time to our end customers. Marketing expenses increased by 128.9% to $15.1 million. As a percentage of total net revenues, marketing expenses decreased to 4.3% from 4.9% in the prior-year period. As you may have noticed we initiated several large advertising campaigns which helped generate a lot of buzz and attention around our April sales event. Despite the additional marketing spend on brand advertising we still remain focused on word-of-mouth referrals. Going forward we will continue to take a disciplined approach to managing our marketing expenses. Technology and content expenses increased to $8.7 million. As a percentage of total net revenues, technology and content expenses were 2.5% compared with 2.0% in the prior-year period. This is part of our continued efforts to invest in our IT system and mobile ecommerce capabilities to better support our future growth. General and administrative expenses increased by 92.9% to $10.8 million. As a percentage of total net revenues, general and administrative expenses decreased to 3.1% from 4.1% in the prior-year period. The cost reduction reflected our company’s continued cost control efforts and increased operational leverage. Driven by the growing scale of our company’s operations, improved gross margin and cost control, we realized $6.7 million in income from operations for Q2 2013. This is compared to a loss from operations of $5.4 million in the prior-year period. Operating income margin was 1.9% compared to an operating loss margin of 4.4% in the prior-year period. Non-GAAP income from operations which excludes share-based compensation expenses increased to $9.5 million compared to a non-GAAP loss from operations of $3.8 million in the prior-year period. Non-GAAP operating income margin increased to 2.7% compared to a non-GAAP operating loss margin of 2.8% in the prior-year period. Our net income for Q2 2013 was $9.0 million compared to a net loss attributable to ordinary shareholders of $5.8 million in the prior-year period. Net income margin increased to 2.6% compared with a net loss margin of 4.3% in the prior-year period. Net income per diluted ADS increased to $0.16 compared to a net loss per diluted ADS of $0.11 in the prior-year period. Non-GAAP net income increased to $11.8 million compared to a non-GAAP net loss of $4.2 million in the prior-year period. Non-GAAP net income margin increased to 3.4% compared with a non-GAAP net loss margin of 3.1% in the prior-year period. Non-GAAP net income per diluted ADS was $0.20 in Q2 2013 compared to a non-GAAP net loss per diluted ADS of $0.08 in the prior-year period. As of June 30, 2013, our company had cash and cash equivalents of $167.2 million and held to maturity securities of $217.3 million. For Q2 2013 net cash from operating activities was $11.1 million. Looking at our business outlook, for Q3 2013 we expect our total net revenues to be between $365 million and $370 million, representing a year-over-year growth rate of approximately 134% to 137%. These forecasts reflect our current and preliminary view on the markets and operational conditions which are subject to change. With that I would now like to open the call for Q&A.

Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator instructions.) Your first question comes from Alex Yao from JP Morgan. Please ask your question. [Bin Vin] – JP Morgan: Thank you for taking my question, this is [Bin Vin] calling from JP Morgan on behalf of Alex Yao. I have two questions. The first is about the competitive landscape in China’s flash sales market. Can you give us some update on this topic, and what kind of impact do you expect it will bring on Vipshop, especially some ecommerce platforms like Dangdang and 360Buy entering this market? Thanks.

[Answers in Chinese.]

So to answer your question and to summarize what Eric said just now, we are not concerned about competition. We have always had competitors in the past but now these that appeared in the past are no longer our close competitors because we have significantly widened the gap between ourselves and these guys. And our business model has grown increasingly sizable and powerful and there are a few entry barriers where we think it’s difficult for other ecommerce players to replicate in a short period of time. First, Vipshop is a dedicated special online discount retailer. We now have over 5000 employees focusing 100% on discount retailing, and what we offer to customers is the best product selection at the lowest prices available on the daily sales. And second we have the biggest merchandising team of over 300 experienced buyers who are dedicated to selecting the best products from the best brands. So over the past few years we have actually accumulated a growing number of salesmen and developed strong business intelligence data mining capabilities which are vital for merchandising. And additionally since we are dedicated and we are committed we have better knowledge and understanding of brands and their needs. So for brands as you can imagine, they demand capable and proven partners to handle their excess inventories without diluting their brand images. Because we are focused again we avoid in-season/off-season sales cannibalization which would be difficult for the other ecommerce players to overcome. And then another important thing to point out is unlike other ecommerce players whose [parallel flash] sales channel is operated by a third-party platform we, being a retailer, are able to consolidate all those and offer a one-stop solution for brands. Our integrated services as you’ll recall including merchandising, photo shooting, sales, packaging, warehousing team and shipping, customer service and so on and so forth, so in this regard we have accumulated the most in-depth knowledge and experience. And last but not least, as of now we have over 6000 brands and we have over 870 exclusive contracts.

And in addition to Eric’s comments, as a matter of fact if you look at our financials for Q2 2013, our top line grew very strong and our bottom line also improved quite significantly – both year-over-year and quarter-over-quarter. So from those financial numbers we don’t see any significant pressure from the new entrants in our industry. [Bin Vin] – JP Morgan: Okay, thank you. And I have a second question: can you share a little bit more about your logistic expansion plan over the next twelve months and what kind of impact do you expect on your margins? Thank you.

We have a strategic plan to expand our warehouse space by 300,000 square meters, company-owned warehouses, in the next three years. And that’s going to cost us about $200 million. And we’ve just signed an agreement with the local government in Wuwei to acquire a very large piece of land to build our central warehouse. If everything goes as planned the local government is going to complete all the legal and regulatory procedures on the plan in the next couple months and we can start construction by the end of this year. It’s going to take us ten, twelve months to finish the project. So this year we don’t think that there’s going to be any significant change in our CAPEX but starting from next year we’re going to spend pretty heavily on the construction of the new warehouses. And also we are in the negotiation process with the local government near Guangzhou to try to get another piece of land to build our central warehouse in southern China; and hopefully we can get that piece of land sooner rather than later. [Bin Vin] – JP Morgan: Thank you.

Thank you. Your next question comes from the line of Caroline Li from Goldman Sachs. Please ask your question. Caroline Li – Goldman Sachs: Thank you. Congratulations on a very good quarter. I have two questions: number one is regarding your advertising strategy. Could you share more color and properly help us to understand the relationship between your ad spending and what kind of function it drives in active customer growth? To that extent, if you can share some strategic plans into your advertising spending into 2014 that will be very helpful. My second question is regarding gross margin. As we see, quarter-on-quarter your gross margin has continued rising which is very encouraging. We typically would benchmark your gross margin with other listing services and ecommerce services businesses as well as offline department store concession rates. If we look at department store concession rates on average it’s between 20% to 25% so you’re actually approaching the upper side of that bend. I just want to hear your thoughts from a brand mix perspective and category perspective, how should we think about the gross margin going forward?

Alright, let me take your question and thank you very much, Caroline, for coming to our call. To your first question on advertising, our marketing expenses as a percent of total net revenue actually decreased year-over-year from 4.9% to 4.3% in Q2 this year; and actually we’re taking a very disciplined approach to managing our marketing expenses as a percent of revenue. But in the first half of this year we did launch some TV commercials but those campaigns were primarily aimed to raise awareness of Vipshop among a broader audience in the society as we become a much bigger company and leader in our industry. So going forward we expect the marketing expenses as a percent of revenue and active customer acquisition costs to not increase significantly compared to last year. And again, as I said earlier, we’re going to be very disciplined in managing our marketing expenses. And to your second question, you’re right – our gross margin of 23.5% is already a pretty high number compared to other ecommerce companies as well as other offline department stores. So we’ve told investors a number of times that our long-term sustainable goal for gross margin is about 25%. So if that is our goal you can see that there’s still some room for us to improve on our gross margin but not a lot, and at the same time we believe that we have another priority which is to consolidate this huge but very fragmented discount retail market in China – meaning we really need to be focused on driving the top line growth to gain more market share while we maintain a reasonable profitability level.

[Answers in Chinese.]

Okay, and another point to add from Eric, obviously with the success that we’ve (inaudible) in promoting the additional (inaudible) which we believe long term will benefit Vipshop’s growth in (inaudible). Caroline Li – Goldman Sachs: I have a follow-up question regarding brand building and the new customer acquisitions. In these past few quarters do you see any trend between organic traffic and paid traffic? Is there any shift say towards your organic traffic with the impact of TV commercials, etc.?

Actually we don’t see that. Again, our main purpose of launching the TV commercial campaigns is for branding the company, not necessarily for driving more traffic to the website. Caroline Li – Goldman Sachs: Okay, thanks.

Thank you very much. Your next question comes from Alan Hellawell from Deutsche Bank. Please ask your question. Alan Hellawell – Deutsche Bank: Thank you very much. I’m curious as to whether you’re seeing any shift in the mix of products ongoing, and just going forward whether you intend purposefully to change that mix; and related to that whether there are any plans to diversify the offerings into totally new product areas? Thanks.

[Answers in Chinese.]

So Alan, the product mix hasn’t changed much in the past quarter, it’s still dominated by apparel, handbags, shoes and cosmetics, so on and so forth. Going forward we will be considering expanding. Going forward we’ll continue to focus on current product categories, but having said that we’ll explore what other offerings we can add in order to better meet customers’ demands and shopping needs. For example, we can be considering maternity and baby products, (inaudible) type products which are high in shopping frequency. Alan Hellawell – Deutsche Bank: Fantastic. And just a quick follow-up: are you seeing any change in the frequency of return of visitors? And are you contemplating any new programs to improve that or to stimulate customer activity? Thank you.

[Answers in Chinese.]

So judging from the average number of orders per customer in Q2 it’s pretty much stable compared to that in Q1 this year which was around 3.1. And going forward we expect that that number will increase slightly in the second half of this year. Alan Hellawell – Deutsche Bank: Thank you very much.

Thank you. Your next question comes from Andy Yeung from Oppenheimer. Please ask your question. Andy Yeung – Oppenheimer: Hi, thank you for taking my call. My first question is actually about fulfillment costs. We’re so accustomed to seeing sequential improvement in your fulfillment costs as a percentage of revenues but I think this quarter we haven’t seen that. Does that have something to do with your warehouse expansion? How should we think about your fulfillment costs over time?

Hi Andy, thank you very much for coming. To your question of fulfillment expenses, actually our fulfillment expenses continue to improve. Efficiencies continued to improve in Q2 this year. The reason that you saw our fulfillment expenses as a percent of revenue go up slightly in Q2 was not because our efficiency went down but because our average order size for Q2 was down compared to Q1. Our average order size, average ticket size in Q1 which was winter season, very cold, was about $35; and our average order size in Q2 when it’s a lot warmer was only $32. So the average order size has come down quite significantly, so that’s why when you see the fulfillment expenses go up slightly that in fact it has come down. Andy Yeung – Oppenheimer: I see, I understand. And then the next question is about marketing spending. I’m seeing when we look at some of your competitors including yourself we have seen marketing spending going up in the ecommerce space. Can you just give us some color in terms of the competitive landscape as far as in terms of ecommerce-related advertising spending is concerned? And have you seen any price increase in advertisement pricing?

Again, if you compare year-over-year marketing expenses as a percent of revenue in Q2 this year it has actually come down to 4.3% from 4.9% a year ago. So as a long-term trend our marketing expenses have actually continued to come down in the past three to four years, and the reason again – I explained this earlier, the reason we launched some TV commercials was not because we had a tremendous pressure from competitors so that we needed those campaigns to drive traffic to the website. But instead we actually launched the marketing campaigns for primarily branding purposes, so again, to raise awareness of Vipshop in the society. So again, if you look at our financials for Q2, top line growth, gross margin, operating margin and bottom line – all of those profitability indicators have all improved. So we don’t see any pressure or significant pressure from the competitors. Andy Yeung – Oppenheimer: Great, thanks for the clarification.

Thank you. The next question comes from the line of Mark Marostica from Piper Jaffray. Please ask your question. Mark Marostica – Piper Jaffray: Yes, thank you for taking my question, I’m calling in for Gene. The first question I have is just related to the experience so far in Q3 and I was wondering if you can give us a sense of traction in the month of July around traffic, customer adds, order growth – whatever you can provide to give us some indication of trends in the business since the end of the June quarter.

Well both the June quarter and September quarter are actually low seasons for ecommerce companies as well as other traditional retailers, and our peak season will start towards the end of August through September and December. So if you ask me about the July number, what I can tell you is that the traffic in terms of daily unique visitors went up pretty significantly because we had that big promotional event on July 19th. Mark Marostica – Piper Jaffray: Okay, that’s helpful. With regards to the promotional event, can you give us your takeaways in terms of what you’ve learned from the two events you’ve done so far? Are these events that you’ll repeat in other months and if so how frequently? Any color there would be helpful.

[Answers in Chinese.]

So Mark, the recent promotions that we launched in July generated great numbers. In fact we had 1 million orders in that one single day. Going forward we haven’t decided whether, especially on our [lead] we would decide whether we would carry them out in the future and if so the timing and the frequency. Mark Marostica – Piper Jaffray: Okay, and then my last question is more of a margin question. You gave us nice color on gross margins and on fulfillment and marketing spend. If you kind of add all that together, can you help me get a sense of what’s the practical limit or perhaps a long-term target for your operating margins going forward? Thank you.

Well, we’ve actually communicated our long-term sustainable goal on operating margin to the investors. It is about 7% to 8% in the long term. Mark Marostica – Piper Jaffray: Okay, thank you.

Thank you.

Thank you. Your next question comes from Eric Wen from China Renaissance. Please ask your question. Eric Wen – China Renaissance Securities: Hi, good evening. Thanks very much for taking my questions and congratulations on the strong quarter. I have several questions. The first question is for your Q3 guidance, how much platform or marketplace revenues? I notice that you break out the platform revenues as other revenues in the current quarter. I just want to know how much of that is going to be in your guidance in Q3. And I have two follow-up questions, thanks.

Okay, well a very small number of revenue from the platform business has been included in our Q3 revenue guidance – a very small number because we can only record the commission that we charge on those marketplace types of business. That’s why it’s very small. But the [GMV] from the marketplace business is going to be pretty significant. According to the current estimate it’s going to be over $20 million for Q3. But we have not indicated that GMV from the third-party platform business in the earnings release so now I’d like to clarify on that point. The $365 million to $370 million revenue for Q3 guidance does not include the GMV from the platform business. Eric Wen – China Renaissance Securities: Yes, so Donghao, the $20 million number is actually quite significant. It’s more than 5% of your guidance next quarter. How much do you see that grow until say the end of next year? What’s the percentage of your GMV that’s going to come from marketplace?

Well we don’t provide guidance for next year, but what I can tell you is if you look at the GMV from our platform business on a quarter-over-quarter basis, you could compare Q3 with Q2 – it has grown very, very significantly. We actually only started the marketplace business back in April so it was a very small business in Q2. But in Q3 it’s going to become a lot more significant. Eric Wen – China Renaissance Securities: Okay, great. My last question is that in the active customers that you mentioned this quarter, can you tell us how many of that is new customers and what is the repeat purchase rate? Either number is fine, thanks.

[Answers in Chinese.]

So Eric, we added 1.5 million new active customers during the quarter, and the repeat purchase rate is around 75%. Eric Wen – China Renaissance Securities: Thank you.

Thank you very much. Your next question comes from Muzhi Li from Citigroup. Please ask your question. Muzhi Li – Citigroup: Hi, thanks for taking my questions. Some follow-up questions, one of them is the third-party platform. What will the company do to guarantee the customer satisfaction, because some of the deliveries in the warehouse will be handled by the merchant? So I would like to know how the company wants to retain the customer’s satisfaction. And my second follow-up question is the warehouse – would you please give me an approximate number of, by the end of 2014 and 2015, what’s the total warehouse in terms of the square meters that will become fully functioning? Thank you.

[Answers in Chinese.]

We started the third-party platform model in April this year but we have (inaudible) in executing this business strategy. So the categories where at the moment we use third-party platforms typically are [bulky] products, like furniture, like [3C] products, like beds and mattresses and so on and so forth. But our main focus is actually focusing on the B2C model. Muzhi Li – Citigroup: Thank you. And how about the warehouse question?

[Answers in Chinese.]

So we are in the process of expanding our warehouse at least… So at the end of this year it’s going to increase to approximately 400,000 square meters, and in the next two years we expect that number to reach 900,000 square meters. That’s our initial estimate. Muzhi Li – Citigroup: Thank you. My last question is I wanted to ask about how many brand partners participated in the sales event in the second half and how that compares to the previous quarter. Thank you.

[Answers in Chinese.]

So in Q2 we ran over 8000 sales events and the total brand partners was approximately 3500. Muzhi Li – Citigroup: Thank you very much, that’s very helpful.

Thank you. Your next question comes from [Joe Stell] with Macquarie. Please ask your question. [Joe Stell] – Macquarie: Thank you for taking my questions; I have two. Firstly to really just follow up on the question earlier about your platform sales, given you guys starting from a low base and expecting a very significant growth in that area, wouldn’t that sort of change your margin profile down the road for the better? Maybe clarify, you can help us to clarify – I think for the platform you recognize net revenue, i.e., commission, as a revenue which pretty much goes straight to the bottom line. That’s my first question.

Yes, you’re right, absolutely. The platform business is going to help our margin profile for the better. [Joe Stell] – Macquarie: Okay, if that’s the case do you have… I know you sort of guided your long-term gross margin. Does that change your guidance for your longer-term gross margin or operating margin?

Not yet because we have just started our platform business and it’s still too short for us to be able to predict the long-term trend. [Joe Stell] – Macquarie: Okay, that’s fair. And my second question is about your traffic. I think some of the third-party numbers and recent data apparently showed you saw a big dip in the month of June in terms of user traffic and user time. It kind of seems a bit strange given the strong growth in the space. I was wondering do you have some of your internal data you are willing to share with us to talk about what you see from inside in terms of your user traffic and the time spent, etc.? Thank you.

Okay, well the third-party traffic data may have limitations to the sampling methodology and statistical errors. And then short-term traffic data, I know you are talking about June data from [iResearch Report] but short-term traffic data may be largely skewed by promotional activities. For example, there were a lot of large ecommerce companies doing big promotional activities back in June and that’s why you saw much higher traffic data for those ecommerce companies. But Vipshop didn’t do very large promotions in that month, so that’s why maybe our number was a bit lower than the other platforms. And then June is only one month, and one month’s data does not reflect long-term trends. And if you do some calculations on the iResearch data and you compare year-over-year traffic growth among all the ecommerce companies you can see that Vipshop is among the fastest growing ecommerce websites. And you mentioned total time spent – that metric is not really valid for ecommerce companies because we are not online video companies. We don’t actually use that total time spent to track our business performance or market share, none of that. What we use is number of active customers, repeat purchase rate, number of orders – those numbers are a lot more relevant to ecommerce companies. And lastly, given our flash sales business model our customers in general have to make purchasing decisions very quickly. So market share calculations based on total time spent does not really make sense for a flash sales website like Vipshop. [Joe Stell] – Macquarie: Mm-hmm. By the way, I think you mentioned earlier, giving the promotions you did in July; and I think you also highlighted earlier that traffic growth in July has been very strong?

Yes. And we are also looking at some of the third-party traffic data reports as a reference, and we did see that you know, our July traffic data went up very significantly. [Joe Stell] – Macquarie: Okay, that’s good to hear. Thank you very much, Donghao.

Thank you.

Your next question comes from Ming Zhao with 86Research. Please ask your question. C. Ming Zhao – 86Research: Thank you. I have two questions. The first question is I was wondering if you could comment on the seasonality of the business, the quarter-over-quarter change to your top line? It does seem like your Q3 [dryness] is pointing to a lower sequential growth from Q2 to Q3, and why is that? And what about Q4 – [you’ve modestly grown] in Q4 in the last two years, so any color on that is appreciated. And the second question is on your promotional activities. We see in the industry that some other players are doing promotions in June, and you guys don’t do anything; they do it in August, November and December and you guys don’t do it there. You choose different months to do the promotions. Is that because you want to avoid the very high ad time rates and you’re not concerned about the traffic going to those guys? Thank you.

Okay, let me take the first question. There is a lot of significance in seasonality in our business. Usually Q2 and Q3 are the low seasons in the year because it’s hot summer – people only buy like t-shirts, not very expensive. So that’s why typically our Q3 and Q2 are low seasons. And if you compare Q3 versus Q2 and look at our guidance, top line Q3 only grows by about 5% quarter-over-quarter. And last year, if you compare Q3 versus Q2 the top line grew by about 15%. And the reason for that is because of the base effect. Our quarterly revenue is much, much bigger this year than that year so you can’t expect the same level of growth rate at a much higher base. And Q4 is typically the peak season in a year and it’s going to be definitely much higher in terms of top line than the previous three quarters. But I can’t tell you how big or how good Q4 is going to be for this year because we don’t provide guidance on Q4. But what I can tell you is it’s going to be the peak season in a year as always. And the second question…

[Answers in Chinese.]

So of course each business has its own unique business model and we don’t have to follow suit to join other ecommerce big promotions at the same time. What we are doing is selecting to hold promotional activities which we think is in the company’s best interests. And the other point Eric made is we do not see any major increasing media costs happening in June or July. C. Ming Zhao – 86Research: Thank you very much.

Thank you.

Thank you. Your next question comes from Dick Wei from Credit Suisse. Please ask your question. Dick Wei – Credit Suisse: Hi, thank you for taking my questions. My first question is on the third-party platform business. I just wonder what is the rationale for the third-party platform. Is that more of the different kind of categories compared to our traditional site? And if so, how much value-add will Vipshop provide and how sustainable are those categories? Thanks.

[Answers in Chinese.]

So as Eric mentioned earlier, the principal things we carry out or use in third-party platform is mainly bulky products such as (inaudible) or home goods or furniture, these kinds of products which are bulky and thus difficult to transport and at the same time take up too much space in our warehouse. And the reason that we launched this platform is based on our customers taking it. So obviously they come to shop at Vipshop; they will wish to buy all products that they desire at the same destination. Dick Wei – Credit Suisse: Maybe just a quick follow-up. If I look at the margins in that business, if I do not look at the accounting but the actual margins for that business, would that be similar to our in-house products?

Well, I think you’re talking about take rate because margin on that business is 100%, because we only book the commission that we charge. Once we book that commission as our revenue there’s no cost of goods sold, so the gross margin is almost 100%. I think you want to ask about the take rate on average. It really varies depending on the suppliers. Dick Wei – Credit Suisse: Okay. Maybe just lastly on this topic, do those tend to be more competitive products that the other partner could provide as well or is it like a value-add that Vipshop can provide in selecting and suggesting those products to end customers and good customer experience, and delivery insured?

[Answers in Chinese.]

So our main goal is still trying to differentiate our products, and what Eric mentioned and emphasized is that we still carefully scrutinize and select the products that we are selling on a third-party. Yes, that’s the main thing. Dick Wei – Credit Suisse: Then lastly I just want to check again on the mobile page view and the mobile transaction volume on the platform?

[Answers in Chinese.]

We have made essential improvements with our mobile strategy, and Eric mentioned according to the latest data sales contribution from mobile has actually increased to around 14% in Q2. And we expect a higher contribution in Q3 and Q4 this year. Dick Wei – Credit Suisse: Great, thank you very much.

Thank you very much. In the interest of time we will now hand it back to Ms. Millicent for closing remarks. Thank you.

Thank you for taking the time to join us and we look forward to speaking with you next quarter.