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Live streaming drives growth for Chinese online fashion retailer Mogu

Chinese online fashion and lifestyle retailer Mogu says its live-streaming broadcast formats doubled in the last quarter, driving a 7.8 per cent rise in group GMV last year to US$2.6 billion. 

The number of hours of live streaming rose from 3400 hours per day in September last year to 3800 in December. It now contributes 53 per cent of the group’s total GMV.

“[Last] quarter, we made significant progress in cultivating and empowering our KOLs and LVB hosts, a key component of the engaging and comprehensive fashion and lifestyle destination we are building for our users,” said Qi Chen, chairman and CEO of Mogu.

“First, we expanded our LVB host talent pool by recruiting nearly 5000 new hosts during the quarter to increase the diversity of fashion and lifestyle-related content and amplify engagement with a wider demographic. Second, we are seeing the performance and growth of our new and mid-tier LVB hosts improve rapidly on our platform driven by the effective systematic execution of the new-KOL incubation and empowering ‘Duo Hundred’ and ‘Migrating Bird’ plans we rolled out in July. 

“Third, we strengthened the infrastructure we have built to empower KOLs by adding 2000 new supply chain vendors that cater to several product categories and are strategically located across different parts of China,” he said. 

“We believe that combination of strategically expanding and supporting our LVB host talent pool and the increase in our supply chain capacity will create enormous synergies that deepen our competitive advantage and generate sustainable growth going forward.”

Qi Chen said further progress this year will not be without challenges.

“The outbreak of the Covid-19 has threatened the health of many people across the globe and disrupted a wide variety of consumer-related industries in China. As a company that serves a majority female-oriented consumer base with a deep-rooted supply chain spread across China, we have not been immune to the impact from the Covid-19 outbreak. We expect that our near-term performance will be impacted by the outbreak and subsequent temporary suspension of operations by factories, large wholesale markets, and express delivery services.”

Responding to these challenges, Mogu has collaborated with its KOLs and business partners to mitigate the impact of the epidemic as well as seize the opportunities created by it, he said. 

“We capitalised on the growing realisation of the importance that online operations play in today’s economy and expanded the pool of brand partners we work with by adding over 500 new ones to our supply chain. We made a strategic decision to prioritise cooperation with brand partners whose sales were most impacted by the outbreak by demonstrating the unique value proposition and differentiated solutions our platform can offer through LVB discount sales. 

“We are also taking advantage of the opportunity to further optimise the systems and processes we use to empower KOLs and suppliers and are benefiting from enhanced streamlining of our cost structure,” he concluded.

“We believe the outbreak will gradually be contained and business will resume quickly. The word crisis, or weiji in Chinese, contains the characters for both “danger” and “opportunity”. Trials and tribulations create opportunities and we firmly believe that the outbreak will create an opportunity for us to strengthen the impact our KOL-centered LVB business has on the growth of the e-commerce sector as we focus on creating long-term and sustainable growth for our shareholders.”

Meanwhile, the number of active buyers in the 12-months to December 31 reached 26.6 million, a decrease of 22.9 per cent year on year. 

Mogu recorded an operating loss of $229.1 million for the year, largely due to a goodwill impairment incurred which was associated with weaker-than-expected synergies created by the acquisition of Meiliworks (meilishuo.com) in February 2016. The company said the shortfall in the realised synergies was in part due to the company’s shift of focus towards building a KOL-driven interactive e-commerce model, as well as an increasingly competitive market environment and the impact from the outbreak of the coronavirus.

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