e-commerce opportunities in southeast asia by ardent capital ceo, dr. adrian vanzyl (june 2015)
TRANSCRIPT
Ardent CapitalThe Leading Operator Venture Capital Firm in S.E. Asia
FOUNDED IN
2012Investments in 7
countries
TH, ID, PH, HK, MY, SG, and Sri Lanka
Team SEA Exits over
$110MPORTFOLIO
16Investments to date (3 core commerce group
and 13 venture investments)$6B+
Team Global Exits
CASH ON CASH
5.4xFor investors to date
Our Investors
Ardent itself has investment from Sinar Mas, Recruit, GMO and Siemer and has co-invested with these companies
JAPAN
USA
INDONESIA
MALAYSIA
AUSTRALIA
THAILAND
SG
HK
About Me
• Dr Adrian Vanzyl
• Based in Bangkok, previously in San Francisco & Australia
• Ardent Capital, Bangkok - CEO and Co-Founder
• Blumberg Capital, San Francisco - multiple roles over 12 years (CTO & CEO of two portfolio companies, LP, Advisor)• Current fund $150M. Investments include Hootsuite, DoubleVerify,
Nutanix
• SLI-Systems, San Francisco - Co-Founder, Board Member• NZX listed. Leading search solution for global eCommerce companies
• LinkExchange, San Francisco - VP Business Development• Sold to Microsoft for $260M. Then Group Manager in Small Biz portal, launched in 22 markets.
• LookSmart, San Francisco – CTO• IPO NASDAQ. Peak market cap of US$3B
• Sausage Software, Melbourne AU - CTO and Board Member• First internet IPO in AU. Peak market cap AU$1.7B
• MD degree (MB BS Hons I), Monash University, Australia.
Agenda
Three main parts1. Data and macro trends – high level2. Recent movements in the market – what are corporates
and investors doing?3. Growth and opportunities
SEA Population is Massive
SEA is bigger (2x) than the US and bigger than the EU
Source: World Population Review (2014)
China; 1392
India; 1262
EU; 741
US; 319
SEA; 627
Population (in Millions)
Cambodia
Indonesia
Laos
Malaysia
Myanmar
Philippines
Singapore
Thailand
Vietnam
15
254
7
30
54
101
5
68
93
Population (in Millions)
Young: More Than 67% Are Under 35 Yrs…
Source: UBS report “ASEAN E-commerce” at 13 June 2014 / Global Demographics
Vietnam
Thailand
Singapore
Philippines
Malaysia
Indonesia
42%
45%
24%
40%
37%
43%
32%
29%
27%
31%
26%
27%
14%
14%
25%
16%
22%
19%
8%
7%
17%
9%
10%
8%
5%
4%
8%
5%
6%
4%
Age profile of ASEAN netizens
15-24 25-34 35-44 45-55 55+
…And Becoming Richer!
Source: UBS report “ASEAN E-commerce” at 13 June 2014 / Global Demographics / Macquarie Research 2014
Income per capita is growing fast enough to drive rising affluence, much faster than global average
Global Avg Indonesia Thailand Philippines Malaysia Singapore
2.0%
4.1%4.6%
4.1%
5.7%6.3%
1.5%
2.7%2.1%
1.4%
3.2%2.9%
1.2%
2.3%
1.3%0.8%
2.0%1.5%
2009-14 2014-19 2019-24
Structural Shift of Internet Usage in Asia
• Internet usage epicenter outside the US• US and Europe is no longer the epicenter of internet usage
Source: Internet World Stats
1996 2015
66%
10%
34%
90%
Outside US
US
SEA is Taking Up Fast
14M
31M
18M
4M
55M
34M
194MNew internet
users
360MInternet users
2010 2020
62% Est. internet penetration
25% 2010 internet penetration
2014
33% 2014 internet penetration
20M
41M
20M
4M
71M
44M
156M
204M
Comparing SEA Online Landscape
199 millionActive Social
Network Users SEA
ONLINESNAPSHOT
208 million Internet
Users
630 millionTotal Population
119%Mobile
Penetration
32% Social Network
Penetration
33% Internet
Penetration
45:55 Urban: Rural
98%Mobile
subscriptionsPenetration
29% Social Network
Penetration
42% Internet
Penetration
53:47 Urban: Rural
GLOBALONLINE
SNAPSHOT
Source: Global Digital Statistics Jan 2015
Effective reach to upcountry population
Relatively low internet
penetration but going up fast
Crazy about social media
Everyone has at least 1 cell
phone
IMPLICATION FOR SEA
Internet Has Surpassed TV in Most SEA
Source: Nielsen; eMarketer 2014
SEA Has Highest Mobile Penetration Rate
Source: Global web index, March 2014 from Ystats
Higher Mobile
Penetration
Singapore 152%Thailand 150%Vietnam 141%Malaysia 137%Indonesia 121%
SEA Avg 119%
Philippines 114%
Global Avg 98%
China 95%
Country | Penetration
All major SEA countries are now all above the global average in mobile penetration
Still Room for Smartphone Growth in SEA
Source: Nielsen 2014 Asian Mobile consumer report, http://www.chandlernguyen.com/blog/2014/04/12/is-mobile-first-the-right-strategy-for-apac/
More Affordable Smartphones for Everyone
Source: http://techtrader.co.za/pavblog/blog&id=18, http://www.nextbuying.com/mobile-smart-phone-under-150/?mode=grid
Then Now>$500 >$200$100-$200
2013 2014 2015E
1.0
1.31.5
+12%
+26%
Number of smartphones shipped worldwide (Bn)
Xiaomi Doogee Elephone Doogee
LeagooDoogeeDoogeeDoogee
Samsung iPhoneSamsungiPhone
Other brands: Oppo, OnePlus, Qmobile, Coolpad, Karbonn, Smartfren, Xolo, i-Mobile, Micromax, Himax, Mito, MyPhone, CherryMobile
Comparative Study: Thailand vs China
Thailand requires 1.5 vs 3 years to reach the same online penetration level as China’s post 3G
Source: CNNIC, UBS estimates
00.10.20.30.40.50.6
2003 2005 2007 2009 2011 2013 2015 2017
Internet Penetration
Internet penetration in China
Internet penetration in Thailand
0.0%10.0%20.0%30.0%40.0%50.0%60.0%
2008 2009 2010 2011 2012 2013 2014
Smartphone penetration
Smartphone penetration in China
Smartphone penetration in Thailand
LINE Stats – Case Study
Within 3 years… 600M+ users and counting Global Stats• Latest total active users at 205mm, up from
170mm in October last year
• LINE Game – Disney Tsum Tsum gained 40M downloads in Feb alone. LINE Bubble record 1.4M pre-registrants
• LINE Creator Market (Sticker) - launched Feb last year. Now reach 100k sticker sets with concentration in Thailand and Taiwan
With 205M+ active users
Impact the Way People Transact in SEA
3 of top 10 countries for LINE users are in SEA Key LINE Stats from Thailand• 29M+ users in Thailand alone• Came out of no where in June 2011,
now rivalling FB• Largest direct to consumer channel in
the country, largest active reach• AIS• 200k+ registrations on AIS account
within 24 hours• 60M+ uses of AIS stickers in one day
• BigC• 500k LINE friends • 350% increased in web traffic• 2,000% increased in call center traffic • All this within 3 months after launched
(July 2014)
SEA Has Very Low eCommerce Penetration
E-commerce shopping makes up just 1-2% of total retail sales in SEA. This compares with 16% in Korea, 12% in the U.S. and 8% global average
Source: Euromonitor, BofA Merrill Lynch’s eCommerce Report as of May 2015 and SingPost Report as of Jan 2015
US: 8.4% Korea: 16.3%
Japan: 10.4%
Australia: 8.2%
Global: 7.9%
China: 8.5%
SEA: 1-2%
E-Commerce as % of Total Retail Sales (2014)
ASEAN’s Market Potential is Massive
Theoretical Potential
$67 – 89bn
ASEAN is at Inflection Point for E-Commerce
Source: A.T. Kearney Analysis
Bottleneck converting offline to online• Internet penetration• Basic regulations• Warehouse readiness• Last mile delivery• Payment• Talents• Tax and customs• Online security Where we are
Digital Development in Global Perspective
Source: Digital Evolution Index, The Fletcher School at Tufts University, https://hbr.org/2015/02/where-the-digital-economy-is-moving-the-fastest
Potential to develop strong digital economies though overall score still
lowLow score currently and facing significant challenges to grow
High level of digital development and continue upward
Achieved high level but losing momentum
12
3
4
Big Players Are Moving into eCommerce
• 2012 and before
• had
• had
• hosted
• Feb 2013: hosted
• May 2013: launched
• May 2013: hosted
• Jan 2014: launched in ASEAN
• Mar 2015: launched
Recent Moves of Listed Players in SEA
• Sep 2013: launched SEA site, in SG
• Aug 2014: invest S$312M to purchase 10% equity in to secure eCommerce logistics network in SEA
• Oct 2014: announced the S$182M construction of eCommerce Logistics Hub in Sinagpore. Expected to completed by Jan 2016
• Feb 2015: invested $500 to launch
SEA Tech Funding Has Reached Inflection Point
Investment by countryU
S$ M
2010 2011 2012 2013 20140
40
80
120
924
5470
133
Malaysia Thailand Philippines Indonesia Singapore Vietnam
Num
ber o
f dea
ls
2010 2011 2012 2013 20140
100
200
300
400
500
446 49 72
446
219% (2010-2014 CAGR)
+522
% Yo
Y
Closer Look into the Unicorns
Source: CB Insights
• Out of current 110 unicorns 26 are from Asia, of which 12 are in eCommerce
• SE Asia is also following this trend, with 6 of the 10 biggest funding rounds in 2014-2015 in eCommerce• Mataharimall ($500M)• Lazada ($249M)• Tokopedia ($100M)• Redmart ($23M)• aCommerce ($11M)• Luxola ($10M)• aCommerce (US$10.7M)
• Luxola (US$10M)
Company Valuation Country Sector
Xiaomi 46.0 China HardwareFlipkart 15.0 India eCommerce/MarketplaceDJI Innovations 10.0 China HardwareLufax 10.0 China FintechKuaidi Dache* 8.8 China On-DemandMeituan 7.0 China eCommerce/MarketplaceDianping 4.1 China eCommerce/MarketplaceVANCL 3.0 China eCommerce/MarketplaceSnapdeal 2.5 India eCommerce/MarketplaceOlacabs 2.4 India TransportationTrendy Group International 2.0 China Clothing & AccessoriesCoupang 2.0 South Korea eCommerce/MarketplaceOne97 Communications 2.0 India FintechMu Sigma 1.5 India Big DataKoudai Gouwu 1.4 China eCommerce/MarketplaceLazada 1.3 Singapore eCommerce/MarketplaceQuikr 1.0 India eCommerce/MarketplaceZomato Media 1.0 India SocialInMobi 1.0 Singapore AdtechMogujie 1.0 China SocialFanli 1.0 China eCommerce/Marketplaceiwjw.com 1.0 China eCommerce/MarketplacePanshi 1.0 China AdtechBeiBei 1.0 China eCommerce/MarketplaceGrabTaxi 1.0 Singapore TransportationYello Mobile 1.0 South Korea Mobile Software & Services
Most Funds Flow in SEA to eCommerce and Mktplace
Source: Techlist
Our View: The Next Big Online Businesses
eCommerce: B2C, C2C marketplace and B2B
Transports and logistics
Online/Mobile payment
Fin Tech
SEA Has Seen Several Notable Exits
Company When? Exit Values
Sep 2013 $200M
Mar 2012 $321M
Acquired by
Acquired by
Aug 2007 $373M (Market Cap as of Jun ‘15)
IPO at
Feb 2014
Acquired by$524M
Dec 2014 IPO at $365M(Market Cap as of Jun ‘15)
SEA’s Recent Sizeable eCommerce Deals
Company When? Deal
April 2014 USD18.5mm
July 2014 USD23mm
Acquired by
Raised Series B led by existing investors
Garena and Eduardo Saverin
June 2014
May 2015
USD10.7mm
USD5.0mm
Raised Series A
Rights Issue
March 2014 USD 10mmRaised Series B led by Japan’s Transcosmos
(SEA business)
Round Size
SEA Companies Recently Raised Over $100M
Company When? Deal Round Size
October 2014
USD100 mmRaised from Softbank and Sequoia Capital
December 2014 USD250 mm
Raised Series D from Soft Bank
December 2014 USD249 mm
Led by Temasek Holdings
Leading eCommerce Players in SEA
B2C Marketplaces
B2C Multi-brand
Retailers
B2C Private Sales &
Daily deals
C2C Marketplaces & Classifieds
Singapore
Thailand
Indonesia
Philippines
2015 Largest Deal Goes into Mobile Commerce
• Coupang founded in 2010
• Become Korea’s largest online retailer
• Mobile commerce accounts for 75 percent of revenues
• Focuses on speed of delivery using a combination of logistics technology it has built coupled with an army of so-called “Coupang Men” who both deliver goods and act as customer service reps
Source: http://venturebeat.com/2015/06/03/koreas-coupang-raises-1b-from-softbank-for-5b-valuation/
Trends Happening in the US
Big social players starting to monetize through commerce - impulsive buying buttons
Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
Trends Happening in the US
Sharing economy: marketplace + on-demand fulfilment for everything?
Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
Trends Happening in the US
Asian messaging leaders may move into becoming Central Communication Hub with commerce, transportation, payment services
While Facebook messenger and Whatsapp do not
Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
Trends Happening in the US
Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
Summary
• BIG: bigger than US (2x), bigger than EU• Young and rich: much younger population than US and EU and
becoming richer• Internet focused: more time spent on the internet than other media• Mobile: well over 100% penetration in most markets• Social: everyone is on social media (Facebook, LINE)• Growing fast: eCommerce CAGR 2011-2014 is 25.1%• Inflection point: both eCommerce and funding in the region is
growing ever faster than before• Less competition: not (yet) dominated by global players• Capital available: funding available from seed to growth
What Next?
Our view: themes shaping SEA eCommerce in the next 5 years
1. M&A consolidations in B2C
2. Digital agencies will adapt or go extinct
3. The marketplace space will get overcrowded
4. Cross-border eCommerce will accelerate with AEC
5. Demographic evolution: foreign entrepreneurs will flood the market
6. The Uber-ization of logistics and everything else
7. Mobile commerce still crippled by poor UX
8. B2B eCommerce will be the new black
9. COD will remain necessary to win SEA
https://www.techinasia.com/10-trends-shape-southeast-asian-ecommerce-2015/
