E-Commerce Opportunities in Southeast Asia by Ardent Capital CEO, Dr. Adrian Vanzyl (June 2015)

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Dr. Adrian Vanzyl, CEO of one Southeast Asia's top VC firms, Ardent Capital, explains why Southeast Asia is the hottest market in the world for ecommerce. Complete with statistics and key insights, this presentation is the most recent (June 2015) analysis of the Southeast Asian market and was pitched to leading financial executives at the UBS LVMC Conference in Thailand on June 5, 2015.

Topics:

- Data and Macro Trends
- Recent Movements in the Markets
- Growth and Opportunities

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  • More updated data and forecast at http://dazeinfo.com/2014/12/18/worldwide-smartphone-users-2014-2018-forecast-india-china-usa-report/
    However, that based on survey of People who hold smartphone / Population
  • CPN - http://talk.mthai.com/topic/421011
    Shopat7 - http://www.cpall.co.th/News-Center/corporate-news/%E0%B8%82%E0%B9%88%E0%B8%B2%E0%B8%A7%E0%B8%9A%E0%B8%A3%E0%B8%B4%E0%B8%A9%E0%B8%B1%E0%B8%97/1/%E0%B8%8B%E0%B8%B5%E0%B8%9E%E0%B8%B5-%E0%B8%AD%E0%B8%AD%E0%B8%A5%E0%B8%A5%E0%B9%8C-%E0%B9%80%E0%B8%9B%E0%B8%B4%E0%B8%94%E0%B8%98%E0%B8%B8%E0%B8%A3%E0%B8%81%E0%B8%B4%E0%B8%88%E0%B9%83%E0%B8%AB%E0%B8%A1%E0%B9%88-%E0%B8%A3%E0%B8%B8%E0%B8%81%E0%B8%95%E0%B8%A5%E0%B8%B2%E0%B8%94%E0%B8%8A%E0%B9%89%E0%B8%AD%E0%B8%9B%E0%B8%9B%E0%B8%B4%E0%B9%89%E0%B8%87%E0%B8%AD%E0%B8%B5%E0%B8%84%E0%B8%AD%E0%B8%A1%E0%B9%80%E0%B8%A1%E0%B8%B4%E0%B8%A3%E0%B9%8C%E0%B8%8B-%E0%B8%AD%E0%B8%AD%E0%B8%99%E0%B9%84%E0%B8%A5%E0%B8%99%E0%B9%8C-%E0%B9%80%E0%B8%9B%E0%B8%B4%E0%B8%94%E0%B8%95%E0%B8%B1%E0%B8%A7%E0%B8%9A%E0%B8%A3%E0%B8%B4%E0%B8%A9%E0%B8%B1%E0%B8%97-%E0%B8%97%E0%B9%80%E0%B8%A7%E0%B8%99%E0%B8%95%E0%B8%B5%E0%B9%89%E0%B9%82%E0%B8%9F%E0%B8%A3%E0%B9%8C-%E0%B8%8A%E0%B9%89%E0%B8%AD%E0%B8%9B%E0%B8%9B%E0%B8%B4%E0%B9%89%E0%B8%87-%E0%B8%A3%E0%B8%B1%E0%B8%9A%E0%B8%9B%E0%B8%B5%E0%B8%A1%E0%B9%89%E0%B8%B2%E0%B8%97%E0%B8%AD%E0%B8%87-2557
  • https://www.google.co.th/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=alibaba+enter+South+east+asia
  • $10M, ASX
  • $10M, ASX
  • E-Commerce Opportunities in Southeast Asia by Ardent Capital CEO, Dr. Adrian Vanzyl (June 2015)

    1. 1. Ardent Capital eCommerce in Southeast Asia Adrian Vanzyl | 5 June 2015 Adrian@ardentcapital.com
    2. 2. Ardent Capital The Leading Operator Venture Capital Firm in S.E. Asia FOUNDED IN 2012 Investments in 7 countries TH, ID, PH, HK, MY, SG, and Sri Lanka Team SEA Exits over $110M PORTFOLIO 16 Investments to date (3 core commerce group and 13 venture investments)$6B+ Team Global Exits CASH ON CASH 5.4x For investors to date
    3. 3. Our Investors Ardent itself has investment from Sinar Mas, Recruit, GMO and Siemer and has co-invested with these companies
    4. 4. 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.
    5. 5. Agenda Three main parts 1. Data and macro trends – high level 2. Recent movements in the market – what are corporates and investors doing? 3. Growth and opportunities
    6. 6. 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) 15 254 7 30 54 101 5 68 93 Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Vietnam Population (in Millions)
    7. 7. Young: More Than 67% Are Under 35 Yrs… Source: UBS report “ASEAN E-commerce” at 13 June 2014 / Global Demographics 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% Vietnam Thailand Singapore Philippines Malaysia Indonesia Age profile of ASEAN netizens 15-24 25-34 35-44 45-55 55+
    8. 8. …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 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% 1.30% 0.8% 2.0% 1.5% Global Avg Indonesia Thailand Philippines Malaysia Singapore 2009-14 2014-19 2019-24
    9. 9. 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 66% 10% 34% 90% 1996 2015 Outside US US
    10. 10. SEA is Taking Up Fast 14M 31M 18M 4M 55M 34M 194M New internet users 360M Internet users 2010 2020 62% Est. internet penetration 25% 2010 internet penetration 2014 33% 2014 internet penetration 20M 41M 20M 4M 71M 44M 156M 204M
    11. 11. Comparing SEA Online Landscape 199 million Active Social Network Users SEA ONLINE SNAPSHOT 208 million Internet Users 630 million Total Population 119% Mobile Penetration 32% Social Network Penetration 33% Internet Penetration 45:55 Urban: Rural 98% Mobile subscriptions Penetration 29% Social Network Penetration 42% Internet Penetration 53:47 Urban: Rural GLOBAL ONLINE 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
    12. 12. Internet Has Surpassed TV in Most SEA Source: Nielsen; eMarketer 2014
    13. 13. 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
    14. 14. 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/
    15. 15. 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 1.0 1.3 1.5 2013 2014 2015E 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
    16. 16. 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 0 0.1 0.2 0.3 0.4 0.5 0.6 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
    17. 17. 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
    18. 18. 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)
    19. 19. 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)
    20. 20. ASEAN’s Market Potential is Massive Theoretical Potential $67 – 89bn
    21. 21. 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
    22. 22. 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 low Low score currently and facing significant challenges to grow High level of digital development and continue upward Achieved high level but losing momentum 1 2 3 4
    23. 23. 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
    24. 24. 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 $500 to launch
    25. 25. SEA Tech Funding Has Reached Inflection Point Investment by country US$M 9 24 54 70 133 0 40 80 120 2010 2011 2012 2013 2014 Malaysia Thailand Philippines Indonesia Singapore Vietnam Numberofdeals 4 46 49 72 446 0 100 200 300 400 500 2010 2011 2012 2013 2014
    26. 26. 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 Hardware Flipkart 15.0 India eCommerce/Marketplace DJI Innovations 10.0 China Hardware Lufax 10.0 China Fintech Kuaidi Dache* 8.8 China On-Demand Meituan 7.0 China eCommerce/Marketplace Dianping 4.1 China eCommerce/Marketplace VANCL 3.0 China eCommerce/Marketplace Snapdeal 2.5 India eCommerce/Marketplace Olacabs 2.4 India Transportation Trendy Group International 2.0 China Clothing & Accessories Coupang 2.0 South Korea eCommerce/Marketplace One97 Communications 2.0 India Fintech Mu Sigma 1.5 India Big Data Koudai Gouwu 1.4 China eCommerce/Marketplace Lazada 1.3 Singapore eCommerce/Marketplace Quikr 1.0 India eCommerce/Marketplace Zomato Media 1.0 India Social InMobi 1.0 Singapore Adtech Mogujie 1.0 China Social Fanli 1.0 China eCommerce/Marketplace iwjw.com 1.0 China eCommerce/Marketplace Panshi 1.0 China Adtech BeiBei 1.0 China eCommerce/Marketplace GrabTaxi 1.0 Singapore Transportation Yello Mobile 1.0 South Korea Mobile Software & Services
    27. 27. Most Funds Flow in SEA to eCommerce and Mktplace Source: Techlist
    28. 28. Our View: The Next Big Online Businesses eCommerce: B2C, C2C marketplace and B2B Transports and logistics Online/Mobile payment Fin Tech
    29. 29. 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)
    30. 30. 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 10mm Raised Series B led by Japan’s Transcosmos (SEA business) Round Size
    31. 31. 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
    32. 32. Leading eCommerce Players in SEA B2C Marketplaces B2C Multi-brand Retailers B2C Private Sales & Daily deals C2C Marketplaces & Classifieds Singapore Thailand Indonesia Philippines
    33. 33. 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/
    34. 34. 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
    35. 35. Trends Happening in the US Sharing economy: marketplace + on-demand fulfilment for everything? Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
    36. 36. 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
    37. 37. Trends Happening in the US Source: KPCB’s Mary Meeker’s 20th Annual Internet Trend Report
    38. 38. 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
    39. 39. 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/
    40. 40. Thank You Twitter: @ardentcapital Visit us at www.ardentcapital.com Adrian Vanzyl Adrian@ardentcapital.com

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