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Vipshop Holdings Limited (NYSE:VIPS)
Q3 2019 Earnings Call
Nov 13, 2019, 7:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen. Good day everyone and welcome to the Q3 2019 Vipshop Holdings Limited Earnings Conference Call. [Operator Instructions]

At this point, I would like to turn the call over to Ms. Jessie Fan, Vipshop's Director of Investor Relations. Please proceed.

Jessie Fan -- Director, Head of Investor Relations

Thank you, operator. Hello, everyone, and thank you for joining Vipshop's third quarter 2019 earnings conference call.

Before we begin, I will read the Safe Harbor 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 Limited and its industry. All statements other than statements of historical fact we may 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 or are likely to, may, plan, should, will, aim, potential, or other similar expressions. These forward-looking statements speak only as of the date hereof and are subject to change at any time, and we have no obligation to update these forward-looking statements.

Joining us on today's call are Eric Shen, our Co-Founder, Chairman and CEO; and Donghao Yang, our CFO.

At this time, I would like to turn the call over to Mr. Eric Shen.

Eric Ya Shen -- Chairman and Chief Executive Officer

Good morning and good evening everyone. Welcome and thank you for joining our third quarter 2019 Earnings Conference Call. During the quarter, we delivered a strong operational and financial results, which was made possible by our team's solid execution over the merchandising strategy,

Our total active customers increased by 21% year-over-year, which further improved from the 11% year-over-year growth we delivered in the second quarter of this year.

The healthy growth momentum of both our repeat and new customers is driving our top line growth represented by 10% year-over-year increase in the third quarter of 2019 despite weak seasonality by shifting back to the discount apparel business where our core capability lies we are seeing better user metrics across the border. As we continue to improve our product offering to meet more customer needs. The positive word of mouth feedback we receive will enable us to penetrate into new customer segments and attract more new customers over time.

This is a very important as customer growth is the inking that will drive our top-line growth and the profitability improvements in the future. Looking ahead, we will continue to focus on improving our product procurement and driving more value to our customers as we dominated here in China's discount retail segment. We are well positioned to further expand our market share and generate sustainable value for our stake holders.

At this point, let me hand over the call to our CFO Donghao Yang, so that he may discuss our strategy in more detail and go over our operational and financial results.

Donghao Yang -- Chief Financial Officer

Thanks Eric, and hello everyone. We finished the third quarter of 2019 with solid top-line growth and sustainable year-over-year improvement in our profitability. During the quarter, our non-GAAP net income attributable to Vipshop shareholders increased by 140% year-over-year to RM B 1.2 billion from RMB 501 million in the prior year period. Our non-GAAP net margin attributable to Vipshop shareholders reached 6.1% which is a new historically high level. These successes were the result of our focus on highly profitable apparel related categories. GMV for apparel related categories including GMV from the newly acquired Shan Shan Outlets increased by 29% year-over-year in the third quarter of 2019.

Our two deep discount channels [Indecipherable] continued to drive our GMV growth during the quarter, specifically GMV contribution from these two channels reached 42% of our online GMV in the third quarter of 2019, which further increased from 29% in the previous quarter. These results further demonstrate there are customers are looking for value and when we offer desirable products at a deep discounts to them they shop with us more. We are keenly focused on the training of our merchandisers as they continue to improve their procurement and negotiation capabilities, we believe we will see further improvement in our key operating metrics and financial results, allowing us to reinvest into unlocking the long-term potential of our company.

Furthermore, we will continue to balance our top-line growth with sustainable profitability improvement aiming to deliver enhanced shareholder return over time.

Now moving on to our quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented today are Renminbi amounts and all the percentage changes refer to year-over-year changes unless otherwise noted.

Total net revenue for the third quarter of 2019 increased by 10% to RMB 19.6 billion from RMB 17.8 billion in the prior-year period, primarily driven by the growth in number of total active customers. Gross profit for the third quarter of 2019 increased by 16.6% to RMB 4.2 billion from RMB 3.6 billion in the prior year period.

Gross margin increased to 21.6% from 20.4% in the prior year period. Fulfillment expenses for the third quarter of 2019 decreased to RMB 1.6 billion from RMB 1.8 billion in the prior year period. As a percentage of total net revenue fulfillment expenses decreased to 8.1% from 9.9% in the prior year period. Marketing expenses for the third quarter of 2019 was RMB 721 million as compared with RMB 578 million in the prior year period.

As a percentage of total net revenue marketing expenses were 3.7% as compared with 3.2% in the prior year period. Technology and content expenses for the third quarter of 2019 decreased to RMB 401 million from RMB 491 million in the prior year period. As a percentage of total net revenue, technology and content expenses decreased to 2% from 2.8% in the prior year period.

General and administrative expenses for the third quarter of 2019 were RMB 682 million as compared with RMB 625 million in the prior year period. As a percentage of total net revenue, general and administrative expenses remained stable at 3.5% year-over-year. Our income from operations for the third quarter of 2019 increased by 229.7% to RMB 1.2 billion from RMB 355 million in the prior year period. Operating margin increased to 6% from 2% in the prior year period.

Non-GAAP income from operations, which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions increased by 151.5% to RMB 1.4 billion from $547 million in the prior year period. Non-GAAP operating income margin increased to 7% from 3.1% in the prior year period. Our net income attributable to Vipshop shareholders for the third quarter of 2019 increased by 282.7% to RMB 875 million from RMB 229 million in the prior year period. Net margin attributable to Vipshop shareholders increased to 4.5% from 1.3% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 1.3 from RMB 0.34 in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders, which excludes share-based compensation expenses, impairment loss of investments, amortization of intangible assets resulting from business acquisitions, tax effect of amortization of intangible assets resulting from business acquisitions, investment gain and revaluation of investments excluding dividends, tax effect of investment gain and revaluation of investments excluding dividends, and share of gain or loss in investment of limited partnership that is accounted for as an equity method investee, increased by 140.2% to RMB 1.2 billion from RMB 501 million in the prior year period.

Non-GAAP net margin attributable to Vipshop shareholders increased to 6.1% from 2.8% in the prior year period. Non-GAAP Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 1.78 from RMB 0.75 in the prior year period. As of September 30, 2019, our company had cash and cash equivalents and restricted cash of RMB 6.6 billion and short-term investments of RMB 58 million for the third quarter of 2019. Net cash from operating activities was RMB 2.1 billion. Looking at our business outlook for the fourth quarter of 2019, we expect our total net revenue to be between RMB 26.1 billion and RMB 27.4 billion representing a year-over-year growth rate of approximately 0% to 5%. These forecasts reflect our current and preliminary view on the market and operational conditions which are subject to change.

With that I would now like to open the call for Q&A

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session [Operator Instruction] . Your first question comes from the line of Ronald Keung from Goldman Sachs. Please go ahead.

Ronald Keung -- Goldman Sachs -- Analyst

Hi, thank you Shen, Donghao Yang and Jessie and congratulations on the very strong third quarter result. My question would be on your fourth quarter revenue guidance. I just want to hear how you're seeing the Singles' Day and how the first month and half of the fourth quarter have tracked and partly because last year fourth quarter revenue kind of slow. So it's a pretty low base quarter of last year as we shifted the non-apparel 1P business to 3P. So with this relatively low base and based on how we have done in Single's Day I just want to hear how are we looking into the growth in the fourth quarter and should we expect a similar growth pattern of the second and third quarter that you constantly have done even ahead of what you were targeting as you guided, but I just want to hear how you've wrapped into the 0% to 5%. Obviously your revenue guidance for the fourth quarter. Thank you.

Unidentified Speaker

[Technical Issues] [Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech]. So, Ronald, fourth quarter is a big quarter for us. So, the GMV and the revenue contribution for the full year in 4Q is quite big from our perspective. We just finished our Singles' Day promotional event. However, the December 8th Anniversary Sale is quite big for us and it's actually the biggest promotional event for us in the fourth quarter. We are preparing for that right now. Therefore, we are being modest with the guidance.

Operator

Thank you. Your next question comes from the line of Joyce Ju from Bank of America. Your line is now open.

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

Good evening, Shen, Donghao Yang and Jessie. Congrats on a solid quarter. I actually have a question regarding the consolidation of the offline outlet business, we have seen -- Yang have mentioned, we have seen a very strong growth in terms of GMV, the apparel growth is 29% year-over-year. I wonder like how much of that growth actually contributed by the offline outlet, and also how this -- how do we actually book the revenue for this business, is it like calculated in the, as a wrap [Phonetic]. And also want to ask for our active customer growth and also the order growth. Are these offline orders being also counted in? Yeah.

Donghao Yang -- Chief Financial Officer

Okay. Let me take the first half of the question you've asked, how we consolidate the numbers from Shan Shan Outlets malls. We booked Shan Shan revenue on net basis, meaning we only book the commission at Shan Shan Outlets made on the sales, so it's on net basis. And in Q3, the net revenue contribution from Shan Shan Outlets was around RMB70 million, it's not a big number. And on the top line, the profit, net profit that we booked consolidated from Shan Shan Outlets was around RMB8 million. So, the total contributions from Shan Shan in terms of net revenue and bottom line are not very significant.

Jessie Fan -- Director, Head of Investor Relations

And the second question from Joyce. [Foreign Speech]

Donghao Yang -- Chief Financial Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

So, Joyce, excluding Shan Shan Outlets, apparel growth in the third quarter of 2019 was around 20% year-over-year. And from our disclosed numbers in terms of active customers and total orders we don't include any offline business from that.

Operator

Your next question comes from the line of Thomas Chong from Jefferies. Your line is now open.

Thomas Chong -- Jefferies -- Analyst

Hi, management. I would like to ask more about the margin. This quarter, the margin has been better than expected. I will ask, how should we think about the next quarter's margin and also around the -- more across 2020 how we will do marginally? And then also on the fulfillment expense as a percentage of revenue, how should we see that trend? Thank you.

Donghao Yang -- Chief Financial Officer

Thank you very much for your question. So, in terms of margin, we are confident that the current margin level will be sustainable in the foreseeable future. I don't get the reasons behind the margin improvement. We refocus our effort on high gross margin apparel-related categories. And then, we have taken great efforts to cut down costs in our operations. So, if you look at those things that drive the improvement in our margin, you can see the where the confidence has come from, why we believe that the margin -- gross margin should be sustainable in the foreseeable future.

And in terms of the fulfillment costs, we're still trying to further drive down the fulfillment costs. And so far we've outsourced about 30% to 40% of our delivery operations to third-party couriers. And going forward, we will continue to take make efforts to further cut down costs.

Operator

Thank you. Your next question comes from the line of Tian Hou from T.H. Capital. Your line is now open.

Tian Hou -- T.H. Capital -- Analyst

Yeah. Good evening management. Congratulations on the good 3Q results. The questions related to the active users. Active user grow almost 21%. That's actually pretty significant. So, I wonder how many from our Vipshop organically, how many from -- come from WeChat or JD? And going forward, how does management envision [Phonetic] user growth will be. That is the first question.

[Foreign Speech] So the questions is, this year we have already renewed our focus on our core business and it's very effective. So, going forward, what's the new strategy, what's the new growth driver? That's the two questions. Thank you so much.

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Donghao Yang -- Chief Financial Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

Around 24% of our quarterly new customers come from Tencent and JD. However, we do want to note that new customers and total active customers are different metrics.

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] So, Tian, on your second question, on the growth driver going forward, since we've shifted back to the core business and focus on apparel we're seeing quite positive results. So, we do believe that as long as we continue to deepen our expertise in this field and continuing to execute on the merchandising strategy, there is still a lot of potential.So, our core business and our merchandising capability will continue to drive our long-term growth.

[Foreign Speech]

And more specifically, we're focused on good products. So, we're focused on good merchandising and good product offerings. And having good products we will continue to drive new customers come to our platform. And also at the same time, our existing customers will be buying more. Once new customers come to our platform, as long as we continue to offer good merchandising and good products and deep discounts, they will become high quality existing customers over time. So, we do believe that everything is in the core of merchandising.

Operator

Thank you. Your next question comes from the line of Andre Chang from JP Morgan. Your line is now open.

Andre Chang -- JP Morgan -- Analyst

[Foreign Speech]

Let me translate my question, I noticed that the -- in the fulfillment expense, the shipping and handling expenses improvement has been pretty consistent. But the other part has been pretty volatile. In third quarter, the other part of your fulfillment expenses has improved quite meaningfully. I want to understand the underlying reason behind it. Thank you.

Donghao Yang -- Chief Financial Officer

Well, thank you very much for your question. I think, the biggest contributor to the savings in our fulfillment costs the GATX [Phonetic] model. We are now shipping the products under the GATX [Phonetic] model directly from our suppliers' warehouse to our customers' addresses. So -- but in the past, everything has had to go through our own warehouses. So, by shipping directly from the suppliers to customers, we could save warehousing costs and also shipping costs. And also in this past quarter, we cut also on our headcount in our fulfillment operations with another contributor to our cost savings.

Operator

Your next question comes from the line of Tina Long from Credit Suisse. Your line is now open.

Tina long -- Credit Suisse -- Analyst

Hi, management. Congratulations on the very strong results. I have -- my question actually lies on [Phonetic] because I -- we actually noted since fourth quarter last year most of our revenue growth actually has been driven by the number of active customers instead of the revenue per customer. In fact, the revenue per customer actually has been entering into negative territory since fourth quarter last year. So, we want to know, going forward, should we expect the ARPU to be stabilized or continue to enter -- I mean, continue today in the negative year-on-year territory, and the growth were mainly driven by the customer number growth or we should see a stabilization in ARPU, and in the meantime, we will have a more solid or healthy the customer number growth. Thank you.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] So, Tina, our ARPU this quarter was down year-over-year due to a few factors. The first is new customer contribution went up and new customers always buy less than our existing customers, and therefore, there was an ARPU dilution as a result of that. And the second factor is the contribution from our marketplace went up and ticket size on marketplace is much lower, also dragging down and impacting ARPU a little bit. And lastly, since we've refocused on to the core deep discounted products, the ticket sizes are naturally lower, are also contributing to part of the ARPU decline.

However, we do think that these issues should have stabilized going forward. And we will -- as new customers to shop with us more and more, we're confident that we can turn them into high quality existing customers who will be spending more with us and the ARPU trend should been more healthy going forward.

Operator

Your next question comes from the line of Hans Chung from KeyBanc Capital Markets. Your line is now open.

Eric Jung -- Macquarie -- Analyst

Good evening. Thank you for taking my question. So, Shen, Donghao Yang, and Jessie [Foreign Speech]. So, I have a couple of quick questions. So, first, if we look at the gross margin third quarter is seems like is actually down sequentially, but historically we have seen sequential quarter for third quarter in terms of gross margin. And so, maybe, just any color regarding the trend and then -- and how should we think about the fourth quarter and beyond?

And then, second one is, I noticed that our inventory, the dollar and also the days of inventory both spiked a little bit in third quarter. And then, so wonder what's the dynamic here and is that because we started to increase more and more the opportunity to purchase from here, so any color will be helpful. Thank you.

Donghao Yang -- Chief Financial Officer

Okay. Well, thank you very much for the question. Let me take your questions. Now, the first, gross margin in Q3, it's -- Q3 is usually our soft season in the year, because it's hot some time and we less apparel in Q3 than other quarters, for example, Q4 and Q1. So, gross margin sequentially is usually lower because of the product mix, but year-over-year gross margin improvement in Q3 in this past Q3 was quite strong.

And inventory, the increase in our inventory and the inventory turnover days is mainly because we've purchased some products for our offline stores. So far, we've got about 300 offline stores, but those offline stores are so in this experimental stage, but we pass on inventory to support the growth of those and operations if those offline stores

Operator

Your next question comes from the line of Alicia Yap from Citi. Your line is now open.

Vicky Wei -- Citi -- Analyst

This is Vicky Wei on behalf of Alicia Yap. Good evening management. Thanks for taking my question. I have a follow-up questions on Shan Shan Outlets, would management please share the synergy you see with Shan Shan. And what should -- and also in terms of apparel, what should we expect our apparel GMV growth into next year? And any color on motives [Indecipherable] you could share with us on the Singles' Day promotion, especially on the apparel sales growth rate during Singles' Day space. Thank you.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech]

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] So, for Shan Shan, because we are a discount retailer essentially in online outlet, Shan Shan is an offline outlet chain. We do see a lot of opportunities to leverage our mutual expertise and integrate our resources online and offline. As for apparel growth next year we are keenly focused on the growth in the apparel category and we believe the consumption needs for such a core category would continue next year. So, we're quite confident with apparel growth for 2020. And lastly, regarding Singles' Day apparel sales, we saw a quite solid growth apparel category at around 20% year-over-year for our Singles' Day promotional event.

Operator

Your next question comes from the line of Natalie Wu from CICC. Your line is now open.

Unidentified Participant

Hi, management. It's [Indecipherable] on behalf of Natalie. Thanks for taking the question. Would you please share the breakdowns elements in other revenues, what is the percentage of commission and how should we expect the growth in other revenues, and as percentage of total revenue, especially after the consolidation of Shan Shan. Thanks.

Jessie Fan -- Director, Head of Investor Relations

So, OK, I'll just read over the other revenue breakdown. In the third quarter 2019 in other revenues, contribution from third-party marketplace commission is around 23%, from advertising around 22%, from third-party logistics at co-location totaled 5%, Internet finance interest around 7%, third-party delivery income around 35%, Super VIP Membership fee at around 5%, and Shan Shan Outlets at around 1% and the rest is what we call, others.

Operator

Your next question comes from the line of Lisa Zhou from 86Research. Your line is now open.

Lisa Zhou -- 86Research -- Analyst

Hi, management. Congratulations on strong results. So, my question is on fulfillment, especially on the GATX [Phonetic] model, could management share how much of your orders is currently using the GATX [Phonetic] model now, and what's your future target? Thank you.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] So, Lisa, currently about 30% of our orders are shipped to the GATX model. However, we do have a lot of orders that need to be combined in warehouses. And therefore, of course, we will continue to expand the coverage of GATX and the contribution should continue to increase slightly, but it wouldn't be much more significant increase from where we stand right now.

Operator

Thank you. Your next question comes from the line of Jamie Shen from Bank of China. You may now ask the question.

Jamie Shen -- Bank of China -- Analyst

Hi, management, I have a very quick follow-up on the customer growth. I think you named better merchandising strategy as the key driver behind the customer growth in your prepared remarks. Just wondering if you could elaborate more on how you manage to improve targeting efficiency for new customers effectively during the past quarter. In addition, as we are halfway through the fourth quarter, do you expect the robust customer growth trend to continue? Thank you.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] We drive -- we drove our new customer an existing customer growth due to our merchandising strategy, so as we bring better and better product offerings to our platform, both new customers and existing customers want to visit us and shop from more. So, we do believe that our products are bringing these customers to us. So, we are deepening our expertise and continuing to find better and more valuable products for our customers. In the fourth quarter, it's the same strategy for customer acquisitions. We continue to focus on merchandising and we are seeing pretty good trends currently.

Operator

Your next question comes from the line of Sally Chan from CLSA [Phonetic]. Your line is now open.

Sally Chan -- CLSA -- Analyst

Yes, hi. Hello. Thank you, management for taking my question. I just have a follow-up question on offline strategy, understood that we opened around 300 VIP offline stores in the past one year, actually a lot of these stores are pretty new. So, just wondering, say, for older stores, are there any metrics that we can share in terms of the sales or the margin side, and for example, for these older stores, how long do we think it could take for them to breakeven. And looking in next year, what's our expansion plan like for offline stores, how much upfront investment do we need for each store and should we expect any drag to margins for next year or even this year? Thank you.

Jessie Fan -- Director, Head of Investor Relations

Thank you. Sally. [Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] Sally, we're actively exploring the offline opportunity in two different models Vipshop and VIP/MAX [Phonetic] with different positioning, are currently listing a very good customer feedback. The business is slightly loss-making on the fixed basis. Currently, we're still in quite early stage exploring how to optimize the per store efficiency and also to improve the customer experience. So, we will continue to looking to the offline opportunities. It's very likely that we will continue to invest into this segment. We will also look for the efficiency so that it can be breaking even or make profit as quickly as we can.

Donghao Yang -- Chief Financial Officer

And on top of that the GMV growth, GMV contribution from the offline stores is not very significant as a now.

Operator

Your next question comes from the line of Eric Jung [Phonetic] from Macquarie. Your line is now open.

Eric Jung -- Macquarie -- Analyst

Thank you, Shen, Yango [Phonetic] and Jessie congratulations on the strong quarter. I just have a quick question on the average order ticket size. So, what I did was I divided GMV by the total orders and I realize from the past two quarters since our average order ticket size has fallen a bit below to our RMB288 free shipping threshold. I just want to see if management could give us any color on the reason of the lower order ticket size. Thank you.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] So, Eric [Phonetic], the ticket size decline is due to a few factors. The first one is marketplace contribution increased from 5% in third quarter of 2018 to 9% this quarter, and because third-party marketplace orders are shipped from different suppliers and ticket size is lower, it just drag down currently the ticket size.

The second factor is our no bundling policy that we rolled out in the fourth quarter of last year. Customers don't have to buy more than one item to get the highest level of discount. So, after we rolled out the no bundling policy, we are seeing it having some customer buying less item, which affect ticket size, but it's much better for the customer experience.

And lastly, our Super VIP has free shipping and free return, which also impacts ticket size, actually you don't have to buy over [Indecipherable] to get free shipping. Overall, we're not too concerned about the decline in ticket size, we are more focused on driving the ARPU for different cohorts. So, as long as they are buying from us, more from us on an annualized basis, that's a very positive sign. We want them to visit more frequently and as frequently as they can, as much as we can balance the fulfillment costs associated with the shipping of these orders, we still thinking it's very good for the customer experience and it's positive trend.

Operator

Your next question comes from the line of Jerry Liu [Phonetic] from UBS. Your line is now open.

Jerry Liu -- UBS -- Analyst

Shen, Yang and Jessie [Phonetic], thanks for taking my question. My question is that other than fulfillment expenses where else can we see leverage in operating expenses. And how do we see our marketing expenses trend for next quarter and next year, given our revenue guidance for the next quarter is only 0% to 5%. Third question, could we have somewhat of an update on the Super VIP users this year [Phonetic]?

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] The Jerry, our G&A technology trend should continue to go down with more and more leverage as we expand our scale. In fact, our customer acquisition costs on the marketing side has declined year-over-year in the third quarter of 2019, and we will continue to execute similarly to the fourth quarter.

[Foreign Speech]

Regarding the Super VIP Program in the third quarter of 2019 we have around 2.5 million paid members. They are very loyal customers to Vipshop. In the future, we plan to increase our investment into the Super VIP Program further increasing our customers making into the platform.

Operator

Your next question comes from the line of Joyce Ju from Bank of America. Your line is now open.

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

[Foreign Speech] I have a follow-up question regarding the overall trend what you've seen in the general, in the e-commerce space because we have seen the latest [Indecipherable] data showing a slowing down time in the third quarter, while for the company it's showing a relatively resilient demand over the Singles' Day. Have you ever seen a -- actually a recovering trend for the e-commerce business and like in the fourth quarter versus third quarter or like you're actually seeing a more stablized retail growth.

Jessie Fan -- Director, Head of Investor Relations

[Foreign Speech]

Eric Ya Shen -- Chairman and Chief Executive Officer

[Foreign Speech] We are seeing quite strong growth momentum and growth potential in the e-commerce industry. During the fourth quarter, we also saw quite good growth in Singles' Day in the industry. So, we have a lot of confidence in the continued growth of this industry going forward.

Operator

There are no further questions at this time, I would now like to hand the conference over back to you, management.

Donghao Yang -- Chief Financial Officer

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

Eric Ya Shen -- Chairman and Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks].

Duration: 53 minutes

Call participants:

Jessie Fan -- Director, Head of Investor Relations

Eric Ya Shen -- Chairman and Chief Executive Officer

Donghao Yang -- Chief Financial Officer

Unidentified Speaker

Ronald Keung -- Goldman Sachs -- Analyst

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

Thomas Chong -- Jefferies -- Analyst

Tian Hou -- T.H. Capital -- Analyst

Andre Chang -- JP Morgan -- Analyst

Tina long -- Credit Suisse -- Analyst

Eric Jung -- Macquarie -- Analyst

Vicky Wei -- Citi -- Analyst

Unidentified Participant

Lisa Zhou -- 86Research -- Analyst

Jamie Shen -- Bank of China -- Analyst

Sally Chan -- CLSA -- Analyst

Jerry Liu -- UBS -- Analyst

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