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Baozun Inc. (NASDAQ:BZUN)
Q4 2018 Earnings Conference Call
March 6, 2019, 7:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, ladies and gentlemen, and thank you for standing by for Baozun's Fourth Quarter and Full Year 2018 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 would now like to turn the meeting over to your host for today's call, Ms. Wendy Sun, Investor Relations Director. Please proceed, Wendy.

Wendy Sun -- Director, Investor Relations

Thank you, operator. Hello, everyone, and thank you for joining us today. Baozun's earnings release was distributed earlier today and is available on our IR website at ir.baozun.com, as well as on global wire services. On the call today from Baozun are Mr. Vincent Qiu, Chairman and Chief Executive Officer, Mr. Junhua Wu, Chief Growth Officer, and Mr. Robin Lu, Chief Financial Officer. Mr. Qiu will review business operations and company highlights, followed by Mr. Liu, who will discuss financial and guidance. They will be available to answer your questions during the Q&A section that follows.

Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934 as a mandate and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "build," "expect," "anticipate," "future," "intent," "plan," "believe," "estimate," "target," "going forward," "outlook," and similar statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, 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, performance, or achievements to differ materially from those in the forward-looking statements.

Further information regarding these and other risks, uncertainties, or factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned in this conference call are in renminbi. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Mr. Qiu, please go ahead.

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Thank you, Wendy, and thanks, everyone, for joining our earnings call today. We closed out the year with a strong quarter, where GMV increased 43% year over year. While China's broader economy is slowing, growth in the e-commerce sector remains strong as the emerging base of increasingly affluent middle-class Chinese continues to drive consumption growth. We strongly believe that the e-commerce industry and the digitization of retail industry will continue to grow at a faster pace than the overall economy, which we are ideally positioned to benefit from.

We continue to expand the number of brand partners we work with, which grew rapidly for 185 as of the end of fourth quarter, an increase from 152 during the same period last year. The newly added brands are primarily in apparel, cosmetics, and FMCG categories, and they include an American lifestyle brand, a global jewelry brand, and a global casual clothing and accessory retailer.

The rapid acceleration of new brand partners added during the quarter demonstrates the growing strength and the reliability the brand and services now have in the market. As our reputation strengthens, so too are the number of global leading brands we are in touch with at the moment. We are seeing an increasing number of high-end brands approaching us to help them execute their e-commerce strategies in China. We eagerly look forward to working with these brands to expand their presence in China's e-commerce market, where we expect to see their contribution to GMV steadily increase over the next two to three years.

I'm very excited to say that our pipeline for the year has never been stronger. The growing array of exclusive end-to-end solutions we have on offer and our omnichannel capabilities were again critical this year in driving growth during the fourth quarter. Total net revenues were RMB2.2 billion during the quarter, an increase of 41% year over year, which is the highest growth rate we've experienced over the past three years.

We continue to strengthen our omnichannel matrix of solutions with the addition of new and innovative proprietary tools and digital marketing services during the quarter. We successfully launched and expanded several new WeChat mini programs for a number of leading global brands. In addition, we received the New Retail Outstanding Service Award at the 2018 Golden Wheat Awards in recognition of our growing omnichannel matrix of solutions, which demonstrates how these solutions are gaining wider market recognition and helping to increase brand value of our services. We are actively developing new toolkits and products for emerging e-commerce, social media, and short video channels, which we believe will create new opportunities for growth.

Technology remains a key strategic focus of ours as we increasingly devote more resources toward expanding our technological infrastructure and hiring the industry's best technical talent for our innovation center in order to drive future growth. Demand for our proprietary cloud-based platform in particular is growing, with more and more premium brands leveraging this sophisticated platform to rapidly establish their online presence, creating new ways for us to increase brand value and help brand partners to improve efficiency and reduce costs.

These same technologies also help us to greatly improve our operating efficiency and strengthen our position within the industry. We reorganized the structure of our business during the quarter to provide us with added focus on e-commerce, supplies and logistics, and technological innovation. Within e-commerce in particular, we are devoting our attention specifically to the fashion apparel, cosmetics, FMCG, sportswear, and the maternity and child care categories, which we believe have strong growth potential going forward.

Despite the uncertainty created by the broader economic environment, we were still able to generate solid GMV and revenue growth. I'm confident in our ability to continue driving growth by investing in technology and expanding our addressable market in order to create long-term value for our shareholders. With that, I will turn the call over to Robin to go over the financials. Thank you.

Robin Bin Lu -- Chief Financial Officer

Thank you, Vincent. Let's now go over the fourth-quarter financial results. We delivered another solid quarter, with GMV increasing by 43% year over year. Non-distribution GMV in particular increased by 45% year over year. We believe year-over-year comparison is the best way to review our performance. Our percentage change I'm going to give will be on that basis. Once again, please note all figures mentioned in the financial review section are in RMB.

Firstly, total GMV during the quarter increased by 43% to RMB12 billion. Our focus remains on growing our non-distribution business, which saw GMV increase by 45% this quarter. Total net revenues increased by 41% to RMB2.2 billion. Product sales revenue increased by 25% to RMB975 million. The increase was primarily attributable to the increase in product sales revenue resulting from the increased popularity of brand partners' products and Baozun's increasing effective marketing and promotional campaigns.

Services revenue increased by 57% to RMB1.2 billion during the quarter. The increase was primarily attributable to the rapid growth in sales from existing brand partners and the addition of new brand partners under the company's consignment model and service fee model. Total operating expenses were RMB2 billion, compared to RMB1.4 billion in the same quarter last year.

In particular, cost of products was increased to RMB790 million from RMB630 million, primarily due to the higher costs associated with the increase in product sales revenue. Fulfillment expenses increased to RMB512 million from RMB340 million, mainly due to an increase in GMV from the company's distribution and consignment model business and increased warehouse rental expenses.

Sales and marketing expenses increased to RMB544 million from RMB343 million, primarily due to the addition of online store operational staff and increase in promotional and marketing expenses, including digital marketing expenses. Technology and content expenses increased to RMB84 million from RMB45 million. The increase was primarily due to the increased investments in innovation and productization and the recruitment of additional technology-focused staff.

G&A expenses increased to RMB43 million from RMB33 million, primarily due to an increase in administrative corporate strategy and business planning staff. Income from operations increased to RMB230 million with an operating margin of 10.4% compared with RMB176 million with operating margin of 11.2%. Non-GAAP income from operations was RMB247 million, an increase from RMB190 million with a non-GAAP operating margin of 11.2% compared with 12.1% in the same quarter of last year.

Investments in technological innovation and productization were RMB21 million, which we believe will enable us to expand our addressable market and strengthen our long-term competitiveness. In Q4, net income attributable to ordinary shareholders of Baozun increased by 28% to RMB188 million. Basic and diluted net income attributable to ordinary shareholders of Baozun per ADS was RMB3.29 and RMB3.17 respectively, compared to RMB2.67 and RMB2.48 in the same quarter of last year respectively.

Non-GAAP net income attributable to ordinary shareholders for Baozun increased by 28% to RMB205 million. Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun per ADS were RMB3.59 and RMB3.46 respectively, compared to RMB2.93 and RMB2.72 in the same quarter of last year respectively. That completes the profit and loss statement for the quarter. As of December 31st, 2018, the company had RMB514 million in cash and cash equivalents and short-term investments compared with RMB557 million as of December 31st, 2017.

Turning to guidance, based on current macroeconomic and operating conditions, for the first quarter of 2019, we expect total net revenues to be between RMB1.25-1.3 billion, with services revenue to increase by over 45% on a year-over-year basis. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A section. Thanks.

Questions and Answers:

Operator

Thanks, sir. Ladies and gentlemen, if you wish to queue for a question, please press 01 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press 02. Again, that's 01 on your telephone keypad now. We will pause for a moment to build up the queue. Your first question comes from Nicky from China Renaissance. Your line is now open. Please go ahead.

Nicky Ge -- China Renaissance -- Analyst

Good evening Vincent, Robin, Wendy. Thanks for taking the questions. I have two questions here. My first question is about our guidance. Our first-quarter guidance seems very strong, but our full-year guidance has a wide range, and it looks conservative. Just wondering whether management could provide more color for guidance assumptions, especially on the macro and the cellphone category. And, my second question is about margin. In the fourth quarter, we've seen that marketing costs increased a lot. Is there a particular reason for the increase, and how should we think about margin trends for 2019? Thank you.

Robin Bin Lu -- Chief Financial Officer

Okay. Hi, Nicky. It's Robin. I will take your questions. The first one about the guidance -- we provide both Q1 outlook and the whole-year outlook for year 2019. For the whole year, we take some uncertainties of the macroeconomic situation into consideration when we do the whole-year forecast. In Q1, we have better visibility for Q1, and we do think there is strong growth for our GMV and net revenue as well. I think there are two reasons. The first one -- you know we had above 33 brands coming in last year, most of the brands coming from Q2 through Q4, which started to make a greater contribution to our GMV and net revenues. And meanwhile, we think we have a very strong pipeline or accelerated pipeline to acquire more brands. The second one -- we provided more services to our existing brands, and also, we see strong growth in our same-store sales growth in Q1 as well. So, these are two reasons we gave you the outlook about 55-60% growth rate in Q1.

And, about your second question, you talked about marketing. I think that's a mix of factors for the marketing spend. The first one -- we did call -- from the middle of 2017, we started the digital marketing service, which almost tripled revenue, but it's still in the ramp-up stage. It's in the lower margin, which has some impact on our total marketing expenses. But, we think that the strategic initiatives -- first off, part of our new brands we acquired, we just started with the marketing service, and then we acquired them as our GMV brand. The second one -- with the ramp-up of the digital marketing services, we think we have great opportunity to improve the margin of the service.

And also, for the recent brands, with more service, we will have better take rate, so it's a strategic initiative we do. And of course, another reason is in Q4, we do see some uncertainty in macroeconomics, and in marketing expenses, we do see some of the brands spend more on marketing, which has some impact with our marketing. We should see a one-off staff in the marketing expenses.

Nicky Ge -- China Renaissance -- Analyst

Got it. Thank you, Robin.

Robin Bin Lu -- Chief Financial Officer

Thank you.

Operator

Thank you, Nicky. Your next question is from Billy from Haitong. Your line is now open. Please go ahead.

Billy Leung -- Haitong International Securities-Director

Hi, management. Thanks for taking my question. I just wanted to ask about our new client sign-up during Q4. In terms of absolute number, we signed the most clients this quarter in our listing history. I was just wondering why there was a sudden jump in the increasing number of clients. Was it structural or some company-specific reason? And also, could you give us a breakdown of the nature of the new clients signed on during Q4? Thank you.

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Thanks for the question. From the year of 2017, we started to build and enhance lots of different capabilities, including marketing, logistics, and technology. So, after these two years of efforts, right now, our capacity to serve the new clients is getting much better than before, so we'll have more new clients to onboard. So, that is what happened in the past several months. So, right now, we can see the pipeline is strong, and we can serve more and more brands in a more quality manner. We have much more confidence in serving a bigger size of clients. So, that is the key reason, I think.

Robin Bin Lu -- Chief Financial Officer

Additionally, as I mentioned, we have the acceleration of the new brands. For example, we have technology investment and we have expanded digital marketing services. Those initiatives -- we really benefit from those initiatives because initially, some brands came to us for the technology connection and have come to us for the digital marketing service in the very beginning, and then become our full-service clients. So, we think the growth model has been proved by us since the second half of last year, and we are very confident that we can acquire more brands in 2019 and contribute more to the GMV.

Billy Leung -- Haitong International Securities-Director

Great, thanks. Just as a quick follow-up, if I may, should we expect the same pace of additional brand partners each quarter going forward from now?

Robin Bin Lu -- Chief Financial Officer

We cannot specify for each quarter, but for the whole year, I would say we will have much larger numbers than 2018.

Billy Leung -- Haitong International Securities-Director

Thank you. I'll get back into queue.

Robin Bin Lu -- Chief Financial Officer

Thank you.

Operator

Thank you, Billy. Your next question is from Alicia from Citigroup. Your line is now open. Please go ahead.

Alicia Yap -- Citigroup -- Managing Director

Hi. Good evening, management. Thanks for taking my questions. I have one question. Could management elaborate a bit more on the growth target for the company? What could Baozun do more to help service the brand better that currently, you have not already done, so that you target and trend to achieve? And then, if Baozun were to also plan to penetrate more into the domestic brands, will eventually the margin profile for these domestic brands be higher or lower than the global brands? Thank you.

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Thank you, Alicia, for the question. Vincent here. Yes, you're right. With the investment in technology, logistics, and digital marketing, now we have multiple entry points to target the different clients, including the domestic brands, and also, not only is it an entry point, but also, we can deliver related services to these kinds of brands to serve them better in different angles.

So, that gives us a better position. Besides, we can deliver a one-stop solution the first time, but we can also do it one by one. A client can come just for logistics services, and then we offer technology service to them, and similarly to others. So, for us, right now, for example, we can target a lot of domestic brands, which we didn't do a lot in the past, with technology, because technology is the best part for solutions for them, and logistics, maybe, for the other group of potential clients. So, this kind of strategy is very successful and gives us a lot of flexibility and possibility in targeting new clients.

Robin Bin Lu -- Chief Financial Officer

About the margin, I think it's hard to say domestic margin and global brands margin. It really depends on the category and the product mix. Additionally, at this moment, when we talk about the service with the local brands, most likely, we would utilize our technology and give more integrated service or comprehensive service to the local brands, which will naturally increase the margin.

Alicia Yap -- Citigroup -- Managing Director

Thank you.

Operator

Thank you, Alicia. Your next question is from Eileen from Deutsche Bank. Your line is now open. Please go ahead.

Eileen Deng -- Deutsche Bank -- Vice President

Thank you, management, for taking my questions. Congratulations on the strong GMV guidance. I have a question regarding our investment in R&D technology in the long term. We've talked many times on this strategy around SaaS, cloud, and the overall warehousing technology. I'm wondering how management views such investments in the long term to support our brand partners and our growth financial-wise and also operation-wise. Thank you. And, a follow-up on the fourth-quarter same-brand growth rate -- if management can give that percentage, that'd be great. Thank you.

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Okay. I will say something about the operations side first. For example, let me just talk about the technology side R&D. We believe that in the modern e-commerce online retail, technology plays a very crucial part to make business successful. So, we have to, and we are doing so in investing heavily in technology. That is the truth. And, this kind of investment can return in two different directions. One way is that technology investment -- by doing the investment, we can have a bunch of proprietary efficiency automation tools to help ourselves in delivering much higher efficiency than before, so that can also help us to have better profitability.

The other way to do that is -- I just mentioned that by utilizing new technologies, tools, products, cloud-based solutions, new retail initiatives, we can serve a lot more new clients, which we couldn't in the past -- for example, a lot of domestic brands. So, for the operations side, we invest in technology and logistics and supply chain to serve a broader base of potential clients, so that is about the operational and strategic thinking. For the financial impact...

Robin Bin Lu -- Chief Financial Officer

I will take the financial impact. I should say with the relatively higher growth in the technology investment in 2018, we don't expect we have significant growth in 2019. It will be relatively flat for the technology investment. So, about your second question, are you asking about same-store growth? It's not clear for me.

Eileen Deng -- Deutsche Bank -- Vice President

Yes. This is just a housekeeping question on the fourth-quarter GMV growth. What is the same-brand growth rate? Thank you.

Robin Bin Lu -- Chief Financial Officer

Okay. For the same-store sales growth, overall, we have 39%. If we exclude the three same brands which have been negatively impacted in No. 11 and the first quarter, our growth would be 48%.

Eileen Deng -- Deutsche Bank -- Vice President

Thank you very much. That will be very helpful.

Robin Bin Lu -- Chief Financial Officer

Thank you.

Operator

Thank you. Your next question is from Joyce from Bank of America Merrill Lynch. Your line is now open. Please go ahead.

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Thanks, Robin, Vincent, and Wendy. Congrats on closing the year on solid results. I have two questions. My first question is regarding the brand take rate because we know -- Robin mentioned we are actually adding more and more fashion, cosmetics, and FMCG brands. Should we expect branded take rate to improve year over year for '19 given they are perceived as more profitable categories? And, my second question is regarding the VAT. Based on the GMV, distribution GMV, and distribution revenue the company provided, the VAT rate seems like it declined over the past couple quarters. Also, we know recently, there is new policies like a decline in VAT rate. So, what is the impact on our future financial results? Thanks.

Robin Bin Lu -- Chief Financial Officer

Thank you. I think that's a question for me. About the take rate, I think there are multiple factors that affect it. When you see the numbers -- when you calculate the numbers in our income statement, the major factor is category mix. You're right -- when we acquire more clients from higher-take-rate categories, in average, we would have a higher take rate. But, it's hard to say quarter by quarter. In the whole year, maybe that's a trend, but in the quarter, because of the seasonality in the products we provide, each quarter is not very comparable, so yes, in the whole year, we are confident, and we have an opportunity to improve our take rate.

About the tax rate, there are some impacts on our bottom line because there are some tax incentives and a tax cut from the government. We also noticed for the VAT tax, most of the VAT tax reduction passed through to the consumers, which encourages consumers to shop, which increases the overall business conditions, but not in the bottom line.

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Got it. A quick follow-up -- may we get a sense of the percentage of our sales and marketing expense is actually related to our digital marketing investments?

Robin Bin Lu -- Chief Financial Officer

From the revenue side, because we booked both revenue and marketing expense, you can do the small calculation -- we are really in the middle range, single digits of revenue coming from digital marketing. It's a lower margin, and you can do a calculation for the marketing expense by yourself.

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks a lot.

Operator

Thank you, Joyce. Our next question is from Monica from Credit Suisse. Your line is now open. Please go ahead.

Monica Chen -- Credit Suisse -- Analyst

Hi, good evening, management -- Vincent, Junhua, Robin, and Wendy. Thank you for taking my questions. I have two questions here. Regarding our guidance for the first quarter, the revenue guidance is 36-41% growth, whereas the GMV growth is 55-60%. How can we think about the gap between the different growth rates, and what does the implied take rate mean? My second question is about -- we see there are higher fulfillment costs in this quarter, so I want to understand -- do we have plans to further increase our CapEx for this year and open more warehouses as we are adding more and more brand partners? Thank you.

Robin Bin Lu -- Chief Financial Officer

I think that's my question. The first one -- we provided guidance for both GMV and revenue. Just as I mentioned, there are some seasonality issues in each quarter and some -- for example, for a certain brand, maybe the products sell pretty good in a certain quarter, so it cannot be representative of the take rate ups and downs. Secondly, from the GMV, you know we can see that in the distribution and non-distribution GMV, the take rate cannot be simply calculated by the overall net revenue divided by the GMV. So, it's complex. What's your second question? Can you remind me, please?

Monica Chen -- Credit Suisse -- Analyst

Oh, yeah. Second question is regarding our CapEx plan, and maybe more warehouse to add for this year.

Robin Bin Lu -- Chief Financial Officer

We don't have CapEx plan for adding warehouse this year.

Monica Chen -- Credit Suisse -- Analyst

Okay. So, do we have any plans to open more warehouses?

Robin Bin Lu -- Chief Financial Officer

No. We gradually increased our square feet in the warehouse in 2018. In our plan, I think that warehouse is enough for us to use.

Monica Chen -- Credit Suisse -- Analyst

Okay, I understand. Thank you.

Operator

Thank you, Monica. Your next question is from Chen Bi from CICC. Your line is now open. Please go ahead.

Chen Bi -- CICC -- Analyst

Hi, good evening, Vincent, Robin, and Wendy. Thank you very much for taking my question. Actually, I have a follow-up question regarding the 2019 full-year GMV guidance. We gave a quite strong 2019 GMV guidance, but with a relatively wide range of 40-50%. So, could management share some logic or your assumptions behind this guidance, like what are the SSG behind all the macro conditions we see, behind the upper and lower end of this GMV guidance, and what we see from those new brand contributions we expect in the bull or the bear case, and for the other side, for the bull case of this guidance, do we include the contribution from the leading sportswear brand that we mentioned before? Thank you very much.

Robin Bin Lu -- Chief Financial Officer

When we make the estimate, we do take the uncertainties of macroeconomics into consideration, especially in the lower end. And, we don't include the sportswear brand in our current forecast.

Chen Bi -- CICC -- Analyst

Okay, thank you.

Robin Bin Lu -- Chief Financial Officer

Does that answer your question?

Chen Bi -- CICC -- Analyst

Yes. Actually, Robin, could you share with us the SSG assumption behind the upper side and the lower side of the guidance, if I may ask?

Robin Bin Lu -- Chief Financial Officer

As I said, we have a couple of factors to affect our forecast. The first was we have a very strong pipeline in brand position, which means we will have a bigger percentage of the new brand contribution in our GMV in the foreseeable future. And then, we will take into consideration about macroeconomic issues, which we are not experts on, but we do put the factor into the estimate in the overall brands.

Chen Bi -- CICC -- Analyst

Okay, thank you, Robin.

Operator

Thank you. There are currently no more questions in queue. As a reminder, if you wish to ask a question, please press 01 on your telephone keypad and wait for your name to be announced. Again, that's 01 on your telephone keypad now. We have a follow-up question from Joyce from Bank of America Merrill Lynch. Your line is now open. Please go ahead. Joyce, your line is now open if you'd like to ask a question.

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Thanks, management. Sorry. I just wanted to have a follow-up on our technology investment because we recently saw a PR article from another cloud service provider talking about their SaaS service jointly provided with Baozun. Could you just give us more color in terms of what kind of technology service we want to expand, and in the near term or the mid term, if we have any revenue guidance or any cost guidance in terms of this technology initiative? Also, I just want to double-check -- Robin, you mentioned a flat technology cost. That means a percentage of GMV or absolute numbers? Thank you.

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Thanks for the question, first. Let me talk about the technology and investment directions a bit, and then maybe Robin can give some more support on the financial side. Baozun's technology offering is very comprehensive. One direction is to serve ourselves to get better operational efficiency. So, in the past, a lot of jobs have been done by many workers, but right now, a bigger and bigger part has been done by automated tools and technology. So, for example, the daily operation of the store will include a lot of tech processing, image processing, upload, and other processing, customer service, a lot of different functions. Right now, each of the building blocks I just mentioned rely more and more on computer-based software -- SaaS-based socialized different software to support the operation. So, this gives us very good support to deliver better efficiency.

Secondly, these kinds of tools can also serve non-Baozun clients -- I mean, non-existing clients. They can serve to a broader base of clients. We are delivering these kind of services to clients by cloud-based, SaaS-based software platform. So, that is about the efficiency part. The other part is the enabling part, including the website system, including the new retail system. This kind of system is enabling our clients to set up their online stores and also connect offline on the channel connectivity. So, we have already upgraded almost all our software offerings to a more modernized software structure, including cloud-based, including SaaS technologies. So, this gives us a much better manageability and transparency to us, and also to our clients, so that is the technology part.

Robin Bin Lu -- Chief Financial Officer

Percentage-wise, about the investment in technology over GMV, you'll recall in 2018, the major driver in the growth of technology investment is the technology-focused personnel we hired, and up until Q4, we think the size is not for us to grow our technology tools to guarantee our growth, so we don't have a plan to have an aggressive talent acquisition in 2019. In this world, for the numbers -- Q4 numbers are a benchmark for the whole 2019 year, and percentage-wise, with the growth of GMV, I think the percentage will be lower than the growth of GMV, at least.

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Many thanks.

Operator

Thank you, Joyce. We also have another follow-up question from Alicia from Citigroup. Your line is now open. Please go ahead.

Alicia Yap -- Citigroup -- Managing Director

Hi. Thanks for taking my follow-up. I actually have a follow-up question on the margin trend -- the direction for the full year. So, any additional investment that we need to be aware of, such as the area in the digital marketing spend, that could affect margin trends? Any color on the direction in terms of the first-half versus the second-half trend would be helpful. Thank you.

Robin Bin Lu -- Chief Financial Officer

We grew our digital marketing from the middle of 2017, and we think that will not add more burden in our marketing percentage, but digital marketing itself is a profitable business with a lower margin for this certain stage. So, when you look at the margin in 2019, I think in the first half of the year, we may -- for the net margin, we make it flat to the same period a year ago, but we do have a great opportunity to improve our margins in the second half of the year because with more new brands coming in and with more services we'll provide to the existing brands, we will have a better margin.

Alicia Yap -- Citigroup -- Managing Director

Okay, great. Thank you.

Operator

Thank you. There are currently no more questions in queue. I would now like to hand the conference back to your speakers today for their closing remarks.

Wendy Sun -- Director, Investor Relations

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 or have any interest in visiting us in China, please let us know. Thank you for joining us today. This concludes the call.

Operator

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for your participation. You may all now disconnect.

Duration: 48 minutes

Call participants:

Wendy Sun -- Director, Investor Relations

Vincent Wenbin Qiu -- Chairman and Chief Financial Officer

Robin Bin Lu -- Chief Financial Officer

Junhua Wu -- Director and Chief Operating Officer

Nicky Ge -- China Renaissance -- Analyst

Billy Leung -- Haitong International Securities-Director

Alicia Yap -- Citigroup -- Managing Director

Eileen Deng -- Deutsche Bank -- Vice President

Joyce Ju -- Bank of America Merrill Lynch -- Analyst

Monica Chen -- Credit Suisse -- Analyst

Chen Bi -- CICC -- Analyst

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