Good morning, ladies and gentlemen, and thank you for standing by for Bausen's Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms.
Wendy Sun, Investor Relations Director of Baozian, please proceed, Wendy.
Thank you, operator. Hello, everyone, and thank you for joining us today. Our Q2 2021 earnings release was distributed earlier today and is available on our IR website at ir. Baozhen.com as well as on Global New Price Services. We also posted a PowerPoint presentation that accompanies our comments to the same IR website.
On the call today from Baozun, we have Mr. Wen Zheng Qiu, Chairman and Chief Executive Officer Mr. Asoo Yu, Chief Financial Officer and Ms. Tracey Li, our Vice President of Strategic Business Development. Mr.
Qiu will review the business operations and company highlights, followed by Mr. Yu, who will discuss financials and guidance. We will all be available to answer your questions during the Q and A section that follows. Before we begin, I would like and the U. S.
Private Securities Litigation Reform Act of 1995. These forward statements are based upon management's current expectations and current market and operating conditions and relates to events that involve known or unknown risk Ancenotees and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward looking statements. Further information regarding these and The risks, uncertainties or factors is included in the company's filings with the U. S. SEC and the announcement on the website of Hong Kong Exchange.
The company does not undertake any obligation to update any forward looking statements, except as required under applicable law. Finally, please note that unless otherwise stated, All figures mentioned during this conference call are in RMBs. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Min Chen Qu. Min Chen, please go ahead.
Thank you, Wendy, and thank you all for joining us. We are satisfied with the progress in achieving our strategic operational goal in the Q2. Despite sitting on a high base of last year where We made significant year on innovating and executing our omni channel strategy, Further penetrating into the luxury sector, which I will further expand on the next slide. However, as we first alluded to in the first quarter results, the Better Call A initiative or BCI has negatively impacted The growth of the apparel and accessories category, especially for international sportswear brands. The impact continued into the 2nd quarter and is now both larger and longer than we initially expected.
As an indication of impact, the total outbound orders of our logistics services declined by 29% year over year For the quarter, total net revenues increased by 7%. The non GAAP net income for the quarter rose by 4% year over year, with the additional impact of our increasing investments for the future growth. Moving on to Slide number 3. During the quarter, we saw demand flourish for private domain and non traditional channels. Non Tmall channels accounted for 32% of total GMV, an increase of 7% from 25% in the same period last year.
As we execute our omni channel strategy, we are able to help our brand partners generate incremental sales and the customers from a variety of emerging channels. The luxury and the premium sector continue to be one of our key demonstrating both strong growth momentum and the high emergence profile. Following our acquisition of Fujitsu, We visited the headquarters of several European luxury and premium brands. We received very positive feedback Regarding the broad awareness of substantial affiliates in China's e commerce market, During the quarter, we onboarded 7 brand partners in luxury and the premium sector and we have laid out a very strong pipeline. We observed that the addition to Tmall stores, the brands are also planning to extract the stores across other e commerce channels.
We believe this will be a significant driver over the coming years. Now let's move to our M and A progress. Operationally, we continue to make structural improvements to our business as we make strategic investments to Deliver long term growth by providing our clients with better end to end e commerce solutions. Now please turn to Slide 4. During the quarter, on the warehouse and the logistics front, we made 2 strategic investments Baobida enriches us with integrated logistics and delivery resources We also announced our potential strategic partnership with Cainiao along with its equity investments in our logistics service Subsidiary.
Our logistics business group has long been well recognized in the industry As one of the leading providers in highly customized and premium logistics services, now with expanded capacity and more comprehensive Service capabilities, we believe our full chain solutions will continue to drive brand value and generate business leads and financial returns. During the quarter, we were particularly pleased to onboard a leading domestic footwear brand In addition, on top of the investments and partnerships made to bolster our logistics capabilities, During the quarter, we also acquired e fashion, an e commerce solution provider that is focused on bringing international fashion brands to China. This will allow us to further penetrate the branded fashion sector, expanding our leadership position. There is also profound progress in integrating our investments from previous quarters. We have started to offer our e commerce solutions to Fusun Fashion Group Brands and we will begin exploring the jump development of special Our next question comes from the line of John C.
Thompson's Q4 of 2018. With Iclick, the business development progress is well on track. We co launched a comprehensive package for our brand partners in cosmetics earlier this month, and we will also become Regarding Fujair, as I mentioned earlier, we have successfully jointly acquired new brand partners and built up business leads during the quarter. On top of luxury and the premium sector, Fujitsu is also actively penetrating participating in our business development progress in the broader apparel category. We are pleased with our substantial progress in extracting value from our various acquisitions and the strategic alliance this year.
These new partners have joined the Baozun family with a rich portfolio of brand partners on the various forms of business cooperation. As our business scope has now been very much enriched, we will no longer disclose our number of brand partners going forward. As such, Metric currently only captures brands in store operations and is no longer appropriate to evaluate our full business potential Turning to Page 6, I want to give an update on our business process reengineering. As technology empowers future success, we continued integrating technology into our operations and the service models for our brand partners. We have had some solid results from our year long trials with several proof of concepts and the prototypes In BOC, our business operating centers.
In the Q1, we applied such model broader Fashion and apparel business yielding and after comprehensive review and evaluation, we now have decided It's time to replicate such model company wide. As part of the transformation of our business, we started to build a Technology Power to the middle office, to further improve our service quality and reduce operational costs. We are integrating our technology infrastructure and management applications into our daily operations. And our ultimate goal is to make our e commerce operations more digitalized, standardized and systematic. We believe such initiatives will drive up our economies of scale in the long run.
And it promotes resource integration, Our regional service centers or RSC in Nantou and Hefei are operational. Over 20% in efficiency and accuracy improvements. We are migrating more business units and functions to Regional service centers over the next 12 months and the belief such initiative will become an effective driver for margin expansion next year. Lastly, we continue to invest in our people and organizational structure. We truly believe that people are the greatest asset of an organization and as such we have strategically grown our management team The best talents in the industry and ensure that our people grow together with the company.
The upcoming new headquarters move is on And we believe the expansion of our working environment will support our growing team, boost efficiency and Overall, the Q2 has certainly been a very busy quarter for us, but rest assured, we will continue to work quite loosely to further enhance and grow our business. While we anticipate ongoing headwinds from BCI in the second half Ever changing e commerce dynamics are presenting us with both challenges and opportunities. We are actively evaluating the Ultimately, we believe that by focusing on our core business proposition, the call over to Arthur to go over the financials. Thank you.
Okay. Thank you, Vincent. Hello, everyone. Now please turn to Page number 9. We saw healthy growth in total GMV, which increased by 23% to RMB15.7 billion.
Our distribution GMV rose by 5 percent to RMB1.1 billion and non distribution GMV increased 25 percent to RMB14.6 billion. Now bringing it down by category, We continued to see strong growth momentum in the electronics and FMCG categories, Both growing over 100% year over year. This is mainly due to our progress in omni channel strategies, especially on JD and Tencent Mini Programs. The luxury sector continues its good performance from last quarter with high double digit growth year over year. On the other hand, which is mainly due to the negative impact of the Better Phone Initiative or called BCR In the second half of this year, we are delighted to see some new business from major domestic apparel and sportswear brands, which offset the negative headwind.
Now turn to page number 10. Total net revenues increased by 7% to RMB2.3 billion. Product sales revenues increased by 5% and service revenues increased by 9%. Given that the majority of the BCI impact is happening in the sportswire category And that most of these brands normally work with us on the full end to end consignment model. Was 16.2%, largely flat compared with a year ago, but improved from 15.4% last quarter.
Our overall gross margin was 64.6%, up 60 bps from 64% a year ago. Our take rate for the non distribution model was 9.1%, down from 10.4% a year ago. This reduction in take rate was expected as we made progress in our omnichannel strategy. In addition, as BCI reduced the revenue contribution of the consignment model, Therefore, the change in revenue mix led to a lower take rate for non distribution model as a whole. If we look at take rates of the transaction model itself, it actually shows an improvement year over year to 12.7%.
Now let's turn to operating expenses on Page number 11. Fulfillment expenses decreased to RMB560 1,000,000 as outbound orders were lower in quarter due to the impact of BCI. As a percentage of GMV, the fulfillment ratio improved to 3.6% from 4.5% a year ago, driven by efficiency improvements. Our sales and marketing Expenses were RMB648 1,000,000 and as a percentage of GMV, kept relatively stable at 4 and efficiency gains, offset by the investments in talent to build our stronger digital marketing capabilities. Our technology and content expenses were CNY115 1,000,000 and as a percentage of GMV improved to 0.7% from 0.8% last year, mainly due to the rise in staff costs for incremental IT investments, offset by efficiency improvements.
Our G and A expenses increased to RMB98 1,000,000. This increase was in line with our expectations, predominantly reflects the majority of investments we have made this year Firstly, we recruited new talents, especially for our expanding omni channel services and retain the best talent in the industry. And secondly, we also incurred additional expenses related to our new headquarters. And thirdly, professional fees increased year over year due to our increased M and As a result of the above, G and A expenses as a percentage of GMV increased slightly to 0.6% from 0.4%. Now please turn to page number 12.
Reflecting our additional investment and the impact from BCI, non GAAP income from operations was RMB162 1,000,000, down by 14% year over year and non GAAP operating margins was year over year. The basic and diluted non GAAP EPS was RMB2.04 and RMB2.01, collectively for the quarter. Now turning to page number 14. We generated a positive operating cash flow of RMB499 1,000,000 and used RMB230 1,000,000 for our M and A activities during this quarter. As of June 30, 2021, we had a RMB4.5 billion in cash, cash equivalents and short term investments, which is a very healthy level based on our normal operational activities.
And lastly, on 18 May 2021, our Board of Directors authorized a share repurchase program, allowing us to repurchase up to US125 $1,000,000 worth of our shares. As of June 30, 2021, we had repurchased a total of RMB12.5 million of our ATM. I would expect the short term impact from BCR. We have made good progress during quarter 2 to execute on our strategy to deliver sustainable and profitable growth. In the second half of this year, We remain confident in our business model and we believe Baozun will deliver unique value proposition to our customer in the long term, this concludes our prepared remarks.
Thank you, everyone. Operator, we are now
Your first question comes from the line of Alicia Yap of Citigroup. Please ask your question.
Hi, good evening management. Thanks for taking my questions. I have a question related to these top sportswear brands that you mentioned. Just wondering, has the consumer sentiment Cover from this BCI issue, because it seems like the alternative channels Like top sports and all that are actually seeing some solid recovery of the demand from these global sports brands. So I'm not sure, are we Seeing similar trend.
And as related to these, just wondering also overall Consumer consumption sentiment on apparels and also the discretionary accessories, have we seen any Slowdowns of these purchasing revenues on these apparel and these accessory categories? And do you anticipate some of these if the consumptions are slowing down, do you anticipate weakness to continue into the 4Q promotional period. And also curious to hear if there's any early Preparation work by brands for this year to prepare for their single stage. So any Feedback colors on that will be great. Thank you.
Okay. Thank you, Alicia. Actually, it's a quite large question. So first, I want to echo to the specific question like the B side impact and Especially for the sports category. So for the B side, I think the influence continue to negatively impact our immersive fashion in the sports category, and it has lasted longer than we expect, but with improving trends, we do see foresee is going to improve maybe in the Coronavirus will continue to cause the disruption to many apparel brand supply chain in the second half of the year.
So we do foresee there is a potential we see preparing for the Double 11 stock. So that's why from the For the tactics part, Baozun's team and we work with the client to accelerate our own And also to release the stock pressure caused by the BCI and also to conduct the projects in the private traffic domain areas, Focusing on the CRM experience. And also if we back to the Tianhejiang existing environment, I want to say In the next half year, the traffic gap between brands will become larger. We believe the brands which we are serving right now still have the competitive Merchandising strategy and also we are supported by the sustainable marketing spending. So this, we think, combined in the double eleven part.
And also one thing I want to highlight is on the winter analytics, what we heard In February next year, so we anticipate maybe there's a boost of the winter closing and also short Health related category and also currently we are already discussing the resource allocation with Tianbao starting from This month actually. And for the second part, to discuss about the overall consumption and also the consumer, Their attitude towards the overconsumption, one thing I want to highlight is if you see the overall data, the first half of the year, But after 6.18, we expect a 2 month downtime due to a clock rate shopping behavior, highly driven by the low price during the 6.18. So From the July data, you can see the total online transition is assembled at is still grow, but with a single digital growth. And the But luxury and the healthy related and the community life has increased, substantially. So from our point of view, I think we think the market has shown some the trends on the downtime part, but we still I have the confidence and see the opportunity in the following areas.
Firstly, the potential in the new channel developments with increased traffic flow derived from the major market And this is driven by the change of the user headings and the busy time durations here. So that's why Baozun has also firmly And the second is the rising categories like luxury, healthy, outdoor and also the community Life, which will trigger to slide for the greater performance in the next half of the year. And the third is, We think the 12 and the high quality brands will gain more advantage on the traditional platform. That's why we will further differentiate our
Your next question comes from the line of Pammat Song of Jefferies. Please ask your question. Thanks
Can management share some update about the potential synergy with Hi, Niel. And also how should we think about our M and A strategy going forward? And are we going to see more investment or cooperation? Thank you.
Hello, this is Arthur here. So I think we recently So there are 2 main factors we take into account when we have this partnership. One is we will be able to enjoy a better economic scale if we get Into China's national network, both to reduce the cost and also to reach out to more potential customers. And secondly, there is a very good synergy between what China has stood at and what Baojun has stood at. The service in the logistics for luxury, for the sportswear and China is more focused on the standard goods.
So therefore, we think the combination of 2 will help us to win more market share. So that's on the Chinao part. In overall, when we look at our M and A strategy for the second half of this year, We actually focus on 4 key areas to create value. The first one, we're looking at building Acquiring additional capability to help Quadrant to deliver more value to the customer. So we are CRM, we are looking at the live streaming and also the data services.
So these are the capabilities we are looking And secondly, as we all know, The TP and also the JD partner, we are still in a very diversified marketplace. So what we are looking for is to do the consolidation. So our recent deal with Yifan has proved really successful in terms of expanding our market share in the apparel category. So we will continue to look for opportunity for further consolidation. And thirdly, we were looking to use more the M and A opportunity Our connection with the brand, so our recent deal with the Fuxin Fashion Group has created a good example where our And finally, we are looking at some opportunities for the overseas expansion.
We are thinking of replicating Baozun's capability to the overseas market I'm mainly focused on the Southeast Asia, where there has a great similarity between the Chinese market and the Southeast Asia market. So that's about our iMandelay strategy going forward.
Got it. Thank you.
Thank you.
Your next question comes from the line of Tian Hou of T. H. Capital. Please ask your question.
Yes. Good evening, management. I have a couple of questions. The first one is regarding the GMV compensation. So I wonder what's the different category what's the contribution from different category such as like Aparo's, Consumer Electronics, FMCG, what's your contribution right now for the GMV?
That's number 1. Number 2, as we acquire more brands domestically, internationally, So I wonder what's the GMV contribution from different brand partners? And The third one is regarding the omni channel. So we saw TikTok or Baidan has an e commerce promotion just last couple of days. I wonder if you guys participated and what's the result of that
Okay. I will take the first two questions and then we can take the last one. Yes. In terms of the GMV, if you turn to the slide number 5, on the right hand side, you can see Our electronics now count for 25% of the GMV, which is growing at about 100% over 100% year over year. And if you look at the of the iMCP, it actually comes for 20%.
The apparel and accessories totally account for 35%. But as I mentioned earlier, it's actually declining 23% year Due to the BCI impact mainly on the sports and the mainland winning closing. But within this overall category, luxury is actually performing better, grow at a high double digit from a year on year perspective. And finally, the appliance is complete for about 10% of our overall GMV. So that's the composition of our GMV.
In terms of the brand partners, As we may know, Baozun is we have been working mainly with the global top brands And the majority of our revenue contribution from the large global brands so far, Having said that, in this quarter, we have made some good progress. We have win several new contracts from Major domestic sports wire company in China and also some major electronics Kind of the brands in China. So we are making really good progress in the major domestic brands in China. I mean, the key is to create value. So, if a customer wants to grow their business, then we are looking for Baozun to help them to deliver this value, which is we see more business from the domestic Major partners at this moment in time.
So that's my question for the top 2.
Sure, Xiaobin. And specifically to the Douyin situation, Actually, in the past August 2018 motion, I actually I think, first of all, the record So you have indeed diverted user sign from e commerce to their channel. So the traditional e commerce platform is facing change, That is all true. But in this part, I want to divide into 2 angles. First of all, I think in the past few months, Even in the August 2018, majority of the GMV is still driven by the KOL live So from this point of view, you can see actually brands used to select QoS from JML like in ZYGATIA, WEYA.
But now And more and more celebrities and KOL are also open account in the way, accommodation is stronger. I think for brands, it's bringing more choice and also I think it will release to a financial benefit for them too. For the other angle, I want to emphasize is on the self owned live streaming. We also I think Zaojun's team also We successfully launched more than 10 self broadcasting projects in the past few months. We're helping To verify the incremental value of emerging channels in the past few months, some good news is Roughly, there is a lower overlapping reach for e commerce consumer between the yin and also the traditional channel.
Across Different category, I think, is less than 20%. It's relatively 10% to 20%, right? And also it also proves the Value will say they can have differentiated different product strategy, which means the top selling products on KMO It's only slightly overlapped with the top selling products of Douyin, so which is very, I mean, helpful for brands if they want to Differentiate the 2 channels. And also we're also seeing some good signs on the consumer ongoing and also A little younger, like 3 or 5 years younger than their KMO client base. But on The other side, I think the stable monthly sales and also the traffic cost and the sustainable The outcome is need to verify in the longer term.
And from Baozun's point of view, we will continue to invest In our operation and also our capability in this area and the sense for the attention for this.
From the line of Charlie Chen of China Renaissance. Please ask your question.
Good evening, management. Thanks for taking my question. Actually, I have only one question related to regulatory issues. As we know that Chinese government has conducted a series of Regulatory activities to basically regulate the Internet industry, and which includes Prevention of personal data abuse, etcetera. So how does this regulator, specifically for personal data abuse, how Would this action impact your business in terms of your relationship with brand partners?
Will they increase or decrease And will they change the ways that they do marketing activities online? So have you done anything to
Okay. Thank you for the question. Yes. As you mentioned, recently there's a lot of different regulations ongoing From different aspects, let's talk about the consumer information protection thing And the data security, yes, I think we have already received the acknowledgment from Tmall already about the reactions we need to take together with Tmall to It's newly in place in a regulation for consumer Data protection. Yes, basically, I think from the system point of view, We are almost ready to connect to the Tmall in a new way, keep That's from the sensitivity of our consumer data.
So in general, the business process will be smooth, no matter what kind of new programs added into this process. So From the consumer experience, nothing changed. All of this process will be normal And in good shape, so that is number 1. Number 2, for your question about The brand perception for this and their actions, I think for right now it's not very clear because the new system is not So after that, we know that how we are going to do the digital marketing In a different way, but right now, I think the brands are quite ready for this change. And I don't think there will be a big change for Their digital marketing expense on Tmall platform and Baozun are ready to help them do things in a smarter way, Consumed digital marketing investment.
So that is basically, I think there is not a big influence For the general business process, yes, but we would take this very seriously. Thank you.
And just one more point to add Vincent. So given that we have been continuously making the investments into the technology,
Yes. Thank you.
Your next Question comes from the line of Joy Hsu from Bank of America. Please ask your question.
Good evening, Lin, Sam, Arthur and Wendy. Thanks for I have two questions. The first one is related to the category growth. Because we recall in this quarter, we have seen Like FMCG and actually grow very strong and like you mentioned luxury also grows nice and while Foursquare and Electronics seems Just want to get more colors or update in terms of the Q3 and Q4 spend, especially with our You know, outlook for a category growth perspective. And the second question is, we have seen this Quarter, the gap between the January growth and revenue growth seems like pretty wide.
Just want to get more details or color in terms how we should actually understand this and what's the trend going forward? Thanks a lot.
I think the second question is not very clear, but can you repeat?
Sure. I think the GMV growth and the revenue growth this quarter seems there is a pretty wide gap. Just want to understand how this actually what's the reason behind? And going forward, how should we expect that gap to narrow or
Okay, George. This is Arthur here. I think as I mentioned in the prepared remarks, the increase in the GMV mainly contributed Our omni channel strategy and mainly from the JD channel and also the mini program channel. Hello. Can you hear me, guys?
Yes. Yes. Thanks,
Yes, I will continue. So in the second half of the year, we will see continued growth In the electronic and in the FMCG category, which is mainly driven by our omni channel strategy from JD and from the Mini Program. Regarding to the second question, I think You mentioned the take rate is actually dropping. So this is anticipated. As we I'm now deploying more resource into the omni channel.
The new channel, as I tried to explain So over a longer period of time, so after we have built a significant Size of the business, our investments will have a greater return and we will see the margin improve in the medium and longer term. And we see no reason why the new channel cannot be as profit It's the traditional channel. So this is what we are looking for. Okay. Okay, guys.
Yes, thanks.
Your next question comes from the line of Ashley Hsu
There are 2 from me. First is, I want to check how many brands have already tested on the new Douyin platform or have launched official stores. And from our communication with the international brands, what do you think are holding some of them back? Even my impression is that most of the international brands have been more cautious in testing this new channel. And my second question is about the apparel growth.
If we exclude the names that have been impacted by the BCI issue, What would be the growth for the rest of our brand portfolio? Thank you.
Regarding the pipeline on the Douyin part, actually, I think I agree with you. It's because right now, the current Players is majority driven by the local brands and most of them actually is complying is actually implement our Clean Rigs Operation strategy is not a very traditional, I mean, I would say it's a formal channel developed strategy on Douyin. But regarding the our overseas brands right now, I think right now, the first, the wave of the category is still on the apparel and the sports category and followed by some of the consumer And also cosmetic part, but I want to emphasize on even the brands they opened their flagship cell K now, the business is On the delays not very mature right now, it's still driven by the supply chain and also by the KL itself. But On the other hand, we also see there's I mean, the channel value part is how to say It's where we expect from the brand itself. That's why they opened their flagship store and they want
Hi, Ashley. It's Arthur here. On your second question, can you repeat your question once again, because I wasn't sure I'm 100% clear about your question?
Yes, because we already disclosed that the apparel category is declining 23% year over year. Just want to get an idea about the brand portfolio that are not impacted by this BCI issue. Like if we separate the brand into 2 groups, how much is the impacting names growing?
Yes. I think if you look at our overall portfolio, so we have a wide range of different portfolio. So even though Within this category, the luxury is actually a spotlight where we have growth in a high double digit year over year. So that's one of the categories. Even that we've seen the wider category of apparel is actually Outside of the apparel, if you look at the SMICG and you look at the eXtronics, even our omni channel strategy will actually grow So some of the categories even grow In high double digits or even over 100% year over year.
So this is a proof of the Baozun Business model where we have a wide range of different categories in Belgium and helping us to get through the difficult time like the BCI period.
Your next question comes from the line of Andre Cheng of JPMorgan. Please ask your question.
Thank you, Vincent, Arthur and Wendy. My question is regarding the investment in the current There are a lot of changes in the regulatory front and the overall consumption front. So I wonder what's your Claim about how to use the cash in the second half of this year and next year, how should we think of No, the investment and also the impact on the non operating front, say, if any like one off Items we should pay attention to into second half this year and the next year. Thanks.
Okay. Thank you for the question. I think, first of all, I would like to restate that both of these Overall, our operating cash flow is positive, which means we are able to create the blast for ourselves, Which is a very important factor if you take into account in the current situation where getting more funding is more and more difficult. So with that, we currently have RMB4.5 billion in cash reserve, which we can either use it to secure So as I mentioned in the question earlier, we have 4 different areas for the future investment. So overall, we will use KAI more cautiously during this period because in this period, KAI is the team.
So we will put small emphasis on the liquidity of the whole company. And when we select
Your next question comes from the line of Robin Leung of Zaiwa. Please ask your question.
Hi, management. Thanks for taking my question. This is Robin asking on behalf of John Choi. I have a follow-up question on the take rate trend. This quarter, the decline, I think management mentioned that it's because of the BCI and also new channel contribution.
But this quarter, the Non Tmall mix is actually lower than 1Q, but the year on year decline is even more so. How should we think about the trend in the second half? Which factor between the BCI and also new channels is impacting the take rate more? And should we expect the take rate to decline By over one percentage point every quarter. And also my second question is on the revenue I will look in the second half, if we look at the 2 years CAGR, this quarter is growing at mid teens.
Management did And you mentioned the domestic sportswear brand will help to offset, but I think usually it takes a few quarters to pick up. So should we expect 3Q and 4Q will also grow at mid teens? Should we expect a meaningful rebound in
Okay. So on the first question on K3, I think there are two factors impacting the K3. Number 1 and the largest impact is the omni channel strategy. As I mentioned earlier, we are in an investment stage. So that will dilute our take rate.
But also the second factor is the BCI. As we know, the BCI impacted category is traditionally all in high take rate category. So if you take the BCI impact out of this, if you look at our non BCI duration model as a whole, where we have a consignment model excluding the BCI impacted. It actually shows an improvement to 12.7% year over year. So basically, it's actually if we take out the BCI and we take out the omnichannel strategy, then it's actually an improvement year over year.
And as I mentioned earlier, over a period of time, when we have the economy of scale for those new channels, There is no reason why we cannot get back to the normal take rate as we are currently enjoying in the Tmall channel. So that's on the take rate. On the second question in terms of the growth of the GMV, I think we are confident that even with the BCI Impact for the 3rd and 4th quarter, we still have a high confidence in our omni channel strategy And the DCI impact probably will likely to be there in Q3 and Q4. Given the strong In our omni channel customer, we are confident we will maintain a very good Growth rate in terms of the GMV.
Got it. Thank you.
Thank you. Seeing no more questions in the queue, let me turn the call back to Ms. Wendy Sun for the closing remarks.
Thank you, operator. In closing, on behalf of the Baozun management team, we would like to thank you for your participation in today's call. If you require any further information, please feel free to reach out to us. Thank you for joining us today. This concludes the call.
Thank you all again. This concludes the call. You may now disconnect.
Thank you. Bye bye.