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January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
The Disruptor:
Tubatu— An O2O Disruptor
in the Home Décor Market
KeyHighlights
1) TubatuisaB2Ce-commerceplatformwhichaimstoprovideinteriordesignandhomedécorservicesbylinkingcustomerstolocalprofessionals.ThecompanyisestimatedtobeworthUS$2billion.
2) GMVoftheO2OhomedécormarketinChinawas¥151billionin2015,up40%yearoveryear,andcomprises10%ofthetotalhomedécormarket,accordingtoChinaConstructionDecorationAssociation.
3) Tubatuactsasadisruptorinthehomedécormarket,asitincreasesthetransparencyoftheconstructionprocessandbringstogetherover950,000interiordesignersand70,000décorcompaniesinanintegratedplatformfromwhichconsumerscanchoosefrom.
Deborah Weinswig
Managing Director,
Fung Global Retail & Technology
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
2
January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
MarketTrendTheinteriordesignandhomedécormarketinChinawasworth¥3.4trillionin2015,up8%overthepreviousyear.Themarketisgraduallyexpandingalongwiththeincreaseinhousingdemandandincomegrowth.
Beforethehomedécorserviceslistedonline,itwasnoteasyforhomeownerstofindthebestsolutiontosuittheirneeds,withthousandsofcompaniestochoosefrom,nottomentionopaquepricingandinsufficientcreditinformation.Atthesametime,homedécorcompaniesfounditdifficulttopindownactualcustomers,asmosthomeownerswerelookingforafreesampledesignsotheycouldcomparecompaniesandtheirofferings.
Figure1.SizeoftheInteriorDesignandHomeDécorMarketinChina(¥trillion)
Source:ChinaBuildingDecorationAssociation
Figure2.YoYGrowthRateoftheInteriorDesignandHomeDécorMarketinChina
Source:ChinaBuildingDecorationAssociation
0.70.9 1.0
1.21.5
1.71.9
2.12.4
2.62.9
3.23.4
0%
5%
10%
15%
20%
25%
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2003200420052006200720082009201020112012201320142015
IndustrySize(trillionYuan) yoy(RHS)
0%
20%
40%
60%
80%
100%
120%
2010 2011 2012 2013 2014 2015
Homedecorabon
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January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure3.O2OPenetration(¥billion)
Source:ChinaBuildingDecorationAssociation
CompanyBackgroundTherearemorethan100,000companiestryingtocapitalizeonthisgrowingmarket.Yet,thefeedbackfortheoverallindustryisnegative,duetoalackoftransparency,informationasymmetryandlackofprotectionforconsumers.Againstthisbackdrop,RobinWangGuoBinsawthisasanopportunitytosetupanonlineplatformtoconnectconsumersandcompanies.
WangGuoBinisthefounderandCEOofTubatuwhowasselectedasoneofChina’stendécormarketleadersin2015andratedasoneofthetop35youngentrepreneursunder35byiheima.comin2016.
Figure4.HistoryofTubatu
Source:Company
2010:launchedO2Opalform,biddingfor
decorservices
2011:MatrixPartners
joinedseriesAfundinground
2012:Launcheddecoraboninsurance
2014:Sequoia
capitaljoinedseriesBfunding
2015:58.com,Sequoia
capitalandMarbxPartners
joinedseriesCfunding,valuabontoppedUS$200million
1,359,90%
151,10%
TrandibonalhomedecorabonO2Ohomedecorabon
WangGuoBin
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January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Itiscalled“Tubatu,”whichisametaphorinChinesetomeananagileteamthatworkstogethertoovercomechallenges,launchedasanO2Oplatformforinteriordesignandhomedécorin2008.
Thewebsiteservesasanagentofferingavarietyofhomefurnishingsolutions:homedécorcompaniesareencouragedtotaketheinitiativetoprovidefreeservicessuchasdesigndraftingandpricingsoconsumerscaneasilygatheralltheinformationtheyneedtochoosethesolutionthatbestsuitstheirneeds.Homedécorcompaniesuploadtheirfinisheddesigns,renovationcostestimatesandotherservicesonTubatu,andthenhomeownerscanbrowseandselecttheirfavoritesfromamongthem.
Forcustomersthatdonothavethetimetosearch,theycanchoosetouploadtheirowndecorationexpectationsanddesignideasandletthebestbidderwinthecontract.Tubatuwillalsoanalyzethedatafrombothsidesandsuggestthemostsuitablesolutionthatmatcheswiththehomeowner’sdemands.
Alldetailsaboutpricing,designandconstructiontimearetransparenttothecustomer.Byachievinginformationsymmetrybetweenbuyersandserviceproviders,Tubatufoundthekeytotransformingthetraditionalhomedécormarket.
Figure5.TubatuKeyStatistics
Source:Company
AnUnconventionalSupervisorAsthevolumeofclientsgrew,theinconsistentqualityoffinishedprojectspostedapotentialdownsiderisktoTubatu’sreputation.Tocombatthis,thecompanylaunchedthe“decorationinsurance”servicein2012.
Uponsigningthe“decorationinsurance”,Tubatuactsasatrustandshoulders100%oftheconstructionfeeandprovidesafeeschedulethatregulatestherelationshipbetweenthehomeownerandthehomedécorserviceprovider.Thefirst5%isusedtopayformaterialcosts.Afterthat,theconstructioncostisbrokendownintothreemainparts:thewatersystem,wall&plasteringandpainting.Thehomeownerpaysaltogether75%oftheconstructionfeeseparatelyuponeachstageofcompletion.Theremaining20%ispaidaftertheprojectisfinished.Duringeachstageofcompletion,thehomeownerhastherighttoaskforaprogresscheckandcanwithholdpaymentuntilthehomeownerissatisfiedwiththeproject.
Ifthehomeownerdoesnotwanttogetinvolvedinmonitoringtheproject,Tubatuhasasupervisionteamthatcanoverseeeverystepoftheconstructionprocess.
250cibes
70,000decoraboncompanies
900,000interiordesigers
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January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
Figure6.Tubatu‘sdecorationinsurance
Area Tubatu'sdecorationinsurance Traditionalinstallment
Beforetheprojectstarts -
Tubatuactsasatrustandshoulders100%oftheconstructionfee
40%todécorcompany
Afteracceptancecheckof…
Materials 5%todécorcompany -
Watersystems 30%todécorcompany 40%todécorcompany
Wall&Plastering 25%todécorcompany 15%todécorcompany
Painting 20%todécorcompany -
Wholeproejct 20%todécorcompany 5%todécorcompanySource:Company
PenetratingintoE-commerceLeveragingitsgrowingreputationamongconsumers,Tubatuaimstodevelopaverticallyintegratedbusinessmodel.In2015,thecompanyreachedouttoupstreamsuppliersofconstructionmaterials,furnitureandhouseholditems.Aftersixmonthsofpreparation,Tubatuaddedanewfeaturetoitswebsite–B2Ce-commerceforhomedécor.Bysettingupanintermediatetransitionwarehouse,Tubatucanstreamlinethefactory-to-customerlogisticsprocess.
Tubatugathersalltherequiredmaterialsandproductsfromdifferentsuppliersandstoresthematitstransitionwarehouse,thenarrangestodelivertheitemsaltogethertothecustomer.
Tubatuhaswarehousesinoversevencities,includingBeijing,ShanghaiandShenzhen.Tofurtherleverageitssupply-chainnetwork,Tubaturequiresallconstructionprojectstousesuppliersthatitisalreadypartneredwithonitse-commerceplatform.
Figure7.Tubatu‘se-commercewebsite
Source:Company
6
January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
OurThoughtsWethinkTubatucanbeadisruptiveforcetothetraditionalinteriordesignandhomedécormarketduetothreefactors:
• Transparentindustryinformationsharing:Formostcompanies,keepingcertaininformation,suchasthequalityofthematerialsandconstructiontechniquesused,hiddenfromcustomersisapracticalwaytomakeadecentprofit.Yet,thisinformationimbalancemaynotholdforlong,giventhevolumeofinformationthatiswidelyavailableontheinternet.Facilitatinginformationsharing,Tubatuimmediatelygeneratestrustamongitstargetaudience.
• Factory-to-consumer:ThankstoTubatu’se-commerceplatform,consumersareabletoplacecustomizableordersdirectlytothefactoryandsavecoststheywouldincuriftheywentthroughanintermediary.Cuttingoutintermediariescaneffectivelylowerthecostoffurnishings,whichgivesTubatuanedgeovertraditionalhomedécorcompanies.
• Turnkeysolutions:Fromthecustomer’sperspective,Tubatuhassimplifiedtheentirehomedecorationprocesstoonlythreesteps:choosethebestoption,checkthefinishedprojectandpayfortheservice.Mostconsumerslackknowledgeofconstructionandinteriordesign,e.g.,thequalityandcostofthematerialsused,soTubatu’ssolutionhelpseliminatethispain.
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January24,2017
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comSimicChanSeniorResearchAssociate
HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com
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