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Pomelo Fashion presents at 2014 Citibank ASEAN stars of the next decade! Includes, e-commerce growth trends in south east asia and sectors most likely to benefit from emerging mobile and social media trends.
Citation preview
www.pomelofashion.com
Market perspective on E-commerce Trends in South East Asia
Citibank Research Conference
South East Asia (‘SEA’) is a large unified market with increasingly growing spending power
Though the 3rd largest population center in the world, minimal focus on technology sector until now has created a unique greenfield opportunity
China India South East Asia
EU US0
200400600800
1000120014001600
13471210
617504
314
Population by Region (M)
Sing
apor
e
Malay
sia
Thailand
China
Indo
nesia
Philli
pine
s
Vietn
am0
10
20
30
40
50
60
7060.8
179.6 9.1
4.8 4.3 3.7
GDP per Capita PPP basis (K of USD)
Population(M): 5 29 67 247 97 89
• SEA has 2x the population of the US• SEA is evolving into one addressable
market with ASEAN free trade zone in 2015
• Singapore, Malaysia, and Thailand have higher GDP per capita than China
• Indonesia, Philippines, and Vietnam are catching up quickly
Sources: World Bank
Rapidly accelerating internet and smart phone penetration driving this trend
A step-change increase in internet access is expected over the next 5 years
2010 2020E0
50
100
150
200
250
300
350
400
166
360
SEA Internet Users (M)
2008 2009 2010 2011 2012 2013E2014E2015E2016E0
10
20
30
40
50
60
70
3.4 611
20
28
3643
51
59
SEA smartphone sales (M Units)
Penetration: 25% 62%
• Approx. 200M additional internet users gaining access this decade
Sources: “We are social”, Accenture; Euromonitor 2013
Additionally, SEA is the social media capital of the world
• Bangkok and Jakarta are #1 and #2 for Facebook users in the world
Sources(1) Social Bakers; Instagram
Social networks are powerful and expansive, core to the internet adoption revolution
# City Country Facebook Users
Users/Population
1 Bangkok Thailand 8,682,940
104%
2 Jakarta Indonesia
7,434,580
34%
3 Istanbul Turkey 7,066,700 63%
4 London UK 6,139,180 74%
5 Bogota Colombia 6,112,120 82%
6 Sao Paulo Brazil 5,718,220 30%
7 Mexico City Mexico 4,294,820 23%
8 Santiago Chile 4,129,700 73%
9 Mumbai India 3,700,460 19%
10 Buenos Aires Argentina 3,533,840 29%
Top Facebook Cities in 2013
• Bangkok has 2 of the most Instagram’ed locations in the world
# Location City
1 Siam Paragon Bangkok
2 Times Square New York
3 Disney Land California
4 Bellagio Fountains Las Vegas
5 Disney World Florida
6 Staples Center Los Angeles
7 Central Park New York
8 Dodger Stadium Los Angeles
9 Bangkok International Airport
Bangkok
10 The High Line New York
Most Instagram’ed Locations in 2013
“Social networking is what Southeast Asian consumers everywhere do during their online leisure time” – Accenture, Surfing Southeast Asia’s Powerful Digital Wave
E-commerce penetration is relatively low but ramping up quickly
Internet access, smart phone availability, hyper connectivity through social media driving rapid rise in E-commerce
2005
2006
2007
2008
2009
2010
2011
2012
2013
E
2014
E
2015
E0
5
10
15
20
25
1 1.8 2.2 2.5 2.8 3.5
7.19.2
13.5
18.7
23.5
TH, PH, & ID - Online Retail Sales Forecast (B USD)
Korea USA Japan Australia Global China SEA0
2
4
6
8
10
12
14
16
18 16.3
11.710.4
8.2 7.9 7.2
1-2%
E-commerce as % of Total Retail Sales (2014)
• SEA’s total e-commerce market size is expected to reach $24B USD by 2015 • If E-commerce represents 7% of retail sales, the market size in TH, PH, and ID alone
would be $50-100B USD
Sources: ICD Research; JP Morgan E-commerce Report
46% CAGR
China an example of the speed at which E-commerce penetrates a market
2008 2009 2010 2011 2012 2013 2014E2015E0
50
100
150
200
250
300
350
400
450
500
-0.5%
0.5%
1.5%
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
9.5%
1839
70
127
199
283
369
461
1.1%
2.0%
2.9%
4.3%
6.0%
7.4%
8.5%
9.3%
On
lin
e S
ho
pp
ing
tra
nsa
ctio
n V
alu
e
(US
$b
n)
As
% o
f C
hin
a’s
reta
il s
ale
s
1. Surging domestic consumption
2. Low availability of products outside major city centers
3. Rapid increase in internet penetration
4. Rapid development of delivery and logistics infrastructure
5. Major capital investment in E-commerce sites
Sources: Morgan Stanley
The same drivers that drove 10x growth in China’s E-commerce market over last 5 years to drive 5x E-commerce growth in SEA
Key Drivers of Chinese E-commerce
SEA?
Current SEA E-commerce penetration
rate
Started in Q1 2012
Regional adaptation of Amazon.com
Price driven discount retailer of all vertical categories
Over $400M USD of raised capital
Rocket Internet was 1st mover helping drive initial wave of e-commerce adoption
Started in Q4 2011
Regional adaptation of Zappos.com; viewed as price-driven discounter due to aggressive growth targets
Shoes and apparel retailer
Over $200M USD of raised capital
Rocket Internet has 2 major e-commerce plays in the region with backing from major European and American investors
Investment Details Investors
Sources: Ardent Capital
Investors now funding more targeted vertical plays as reach of E-commerce expands
Company Focus Most Recent Round Investors
Reebonz Regional luxury flash sale site
$40M (2014)
Luxola Regional online beauty site
$10M (2014)
Redmart Singapore online grocery site
$23M (2014) Eduardo Saverin, Garena, Softbank Ventures
A-commerce Regional E-commerce logistics & support service provider
$3.1M (2013)
POMELO Regional online fast fashion
UNDISCLOSED
Investors seizing opportunity to scale up cheaply and be #1 in a specific vertical, as E-commerce seen as certainty in SEA
Sources: TechinAsia, Techcrunch, E27.com
Fashion is the single largest retail category in SEA and has the highest average retail GM
Fashion and Beauty account for 50% of non-consumable retail sales
12%0.115347334410
33911%
0.109208400646204
3010%13.44%
10.33%
7.42%
17757%
SEA Retail Sales 2013 (In B USD)
Fashion Home & LivingElectronicsBeauty & Pers. CareHome AppliancesConsumer HealthKids & ToysOther (Food, Travel, etc)
0
25
50
75
5349 49
4034
3128 28 27
24 24
US Gross Margins by Retail Category 2010 (%)
Fashion typically has highest retail gross margins
Sources: Euromonitor; Annual Retail Trade Survey 2010
Fashion has leading share of online spending in the US and China
In more developed markets Fashion and Beauty consistently rank as top E-commerce categories
Fash
ion
and
Shoe
s
Med
ia
Cosm
etics
Elec
tron
ics
Home
Decor
ations
Cell Ph
ones
and
Acc
esso
ries
Toys
Com
pute
rs
Home
Appl
ianc
es
Food
s0
10
20
30
40
50
60 57
4641
3529 27 25 23 22 20
Best sold items in China over Internet (% of shoppers)
Compu
ters
Fash
ion
& A
cces
sorie
s
Med
ia
Auto
& P
arts
Furn
iture
& H
ome
Furn
...
Health
& B
eaut
y
Offi
ce
Toys
& H
obby
0
10
20
30
40
50
60 56
49
2420 19
129 8
US Ecommerce Sales by Category – 2013 (B USD)
Sources: I Research; eMarketer
SEA fashion E-commerce to reach 6 to 14B USD by 2018
Fashion E-commerce market size in SEA can be calculated by taking a top down approach to the forecast
• Assumes 10% CAGR from 2013-2018
Sources: “We are social”, Accenture; Euromonitor 2013
2018 Fashion and
Beauty Retail Sales:
$70-80B USD
x
2018 Fashion and Beauty E-commerce
sales:
$6-9B USD
Expected E-commerce share of
retail sales:
7-10%
=
• Assumes E-commerce penetration in line with China in 2013
• 10% market share implies $600-900M USD revenue
• 1% market share implies $60-90M USD revenue
Global fashion E-commerce valuations higher for own-brand due to product differentiation and higher margins
Merchandizing
Company
Focus Revenue @
Investment
EV EV / Revenue
Comment
Own-brand + curated 3rd party
Asos Fast Fashion with own-brand#1 online fashion site in UK
1,240 6,800
5.5x
4-6x valuation at
scale
Own-brand VANCL Own-brand Fast Fashion#1 online fashion site in China
800 3,000
4.0x
Own-brand + curated 3rd party
Zulily Mom Fashion & Babies Flash Sales
500 2,600
5.2x
Own-brand Bonobos Men’s own-brand fashion#1 online men’s fashion site in US
80 800 10x
8-10x valuation
during growth phase
Own-brand + curated 3rd party
Nastygal Women’s LA Street Fashion 100 800 8.0x
Own-brand Warby Parker
Own-brand Eyewear#1 online eyewear site in US
50 500 10.0x
Resell 3rd-party brands
Zalando Broadline shoes & apparel 1,800 3,900
2.2x 1-2x valuation regardless of size due to threat of competition and lack of differentiation
Resell 3rd-party brands
Zappos Broadline shoes & apparel 1,000 (‘09)
1,000
(‘09)
1.0x
Resell 3rd-party brands
Myntra Broadline shoes & apparel 150 300 1.7x
Sources: Techcrunch, Google Finance, FT.com, Dailypando, Bloomberg
(In M USD)
Thank you!
For more information please contact: David Jou at [email protected]