Smart Phone Market Review Unbranded

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Explore global online markets for the presence of potential illicit seller activities across 5 popular smart phone brands. Measure the size and distribution of the problem across brands and regions. Identify areas at significant risk of counterfeiting and/or diversion.

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Smart Phone Market Review Unbranded

  1. 1. Smart Phone Market Review Prepared by: NewMomentum, Inc. Q4/2011page| 1 Confidential
  2. 2. Contents Objectives of Market Review Methodology Key Findings General Market Summary Suspect Market Summary Conclusionspage| 2 Confidential
  3. 3. Objectives of Market Review Explore global online markets for the presence of potential illicit seller activities across 5 popular smart phone brands. Measure the size and distribution of the problem across brands and regions. Identify areas at significant risk of counterfeiting and/or diversion.page| 3 Confidential
  4. 4. Methodology Select Process Measure Monitor Data Results Products 5 brands 17 online Filter, label, and Overall market 23 products marketplaces classify collected summary Standalone phones; 1 month of data Suspect market not phone and plan monitoring Apply risk indices summary bundles offered based on business Breakdown by through legitimate rules to identify manufacturer, carriers Alibaba eBay Potential region, suspect Taobao suspect sellers classification 人何任 Potential Amazon 處無 suspect listings mercadolibrepage| 4 Confidential
  5. 5. Key Findings • Internet monitoring revealed over 25K listings of the subject products offered for sale by over 11K sellers • Total available sales volume reported was over $33 billion (calculated as quantity offered for sale X price in the listing) • Potential sales volume was over $8 billion even after adjusting for “outliers” by capping maximum quantity per listing at 100K units • Significant discounts were offered by the 11K sellers • 23% of the sellers offered products at a 31% to 45% discount • 22% of the sellers offered products at a 46% to 60% discount • Discounts varied largely by region • APAC showed the highest level of discounting with 64% of the sellers offering products at >30% discount • EMEA showed the lowest level of discounting with only 24% of the sellers offering products at >30% discount and 23% actually selling above list price • APAC represented over 50% of the listings found • Taobao was by far the biggest source of listings with more than 12K of the 25K product offerings • Over 8K sellers (76%) have significant risk indicatorspage| 5 Confidential
  6. 6. General Market Summarypage| 6 Confidential
  7. 7. General Market Summary Number of Sellers 757 Brand A 1,050 Brand B 5,101 Brand C Total Unique* Sellers: 11,016 2,199 Brand D * Sellers can represent multiple brands Brand E 4,657 Number of Listings 1,034 Brand A 1,835 12,706 Brand B 3,328 Brand C Brand D Brand E Total Number of Listings: 25,759 6,856page| 7 Confidential
  8. 8. General Market Summary Reported Available Sales Volume $28,284,830 $248,571,516 Brand A Brand B $926,953,165 Brand C Total Reported Available $3,601,750,173 Brand D Sales Volume: $33.8 billion Brand E $29,005,406,014 Adjusted* Available Sales Volume Brand A $248,571,516 $28,284,830 Brand B $759,751,075 Brand C Brand D Brand E $3,912,433,001 $3,301,114,161 Total Adjusted Available Sales Volume: $8.3 billion * maximum quantity per listing capped at 100K unitspage| 8 Confidential
  9. 9. Top Ten Products Brand B Product 1 $2,474,519,953 Brand A Product 1 $1,313,228,391 Brand A Product 2 $875,741,300 Brand B Product 2 $826,594,208 Brand A Product 3 $766,218,837 Brand A Product 4 $551,784,024 Brand C Product 1 $448,453,683 Brand A Product 5 $245,277,898 Brand A Product 6 $160,182,552 Brand C Product 2 $131,747,130 $- $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000page| 9 Confidential
  10. 10. Region Breakdown 56% # of Sellers by Region 60% 50% Americas 3,379 APAC 6,143 40% 31% EMEA 1,494 30% Total 11,016 20% 14% 10% 0% Americas APAC EMEA 70% 62% # of Listings by Region 60% Americas 4,537 50% APAC 16,012 EMEA 5,210 40% Total 25,759 30% 20% 18% 20% 10% 0% Americas APAC EMEApage| 10 Confidential
  11. 11. Top Ten Marketplaces Based on # of Listings TAOBAO 12,720 FUDZILLA 4,009 AMAZON 1,663 PAIPAI 1,407 MERCADOLIBREBR 1,319 MERCADOLIBREMX 1,288 ALIEXPRESS 1,039 MERCADOLIBREAR 982 HC360 432 ALIBABA 432 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Number of Listingspage| 11 Confidential
  12. 12. Discount Levels 25% 23% 22% 20% 17% 15% 11% 10% 9% 10% 7% 5% 0% Selling above Discount < 15% Discount 15% - Discount 31% - Discount 46% Discount > 60% No price list 30% 45% to 60% available 1,013 1,152 1,908 2,519 2,441 1,251 732 sellers sellers sellers sellers sellers sellers sellers Discounts offered by the 11,016 monitored sellerspage| 12 Confidential
  13. 13. Suspect Market Summarypage| 13 Confidential
  14. 14. Suspect Indicators Suspect Listings: Listings Risk Index (LRI) • Points awarded to each listing for potentially negative indicators • Higher score equals higher probability of illicit listing Indicator Points Awarded Quantity Available = 1,000 to 10,000 units 5 Quantity Available >= 10,000 units 8 Product Offered at Discount > 40% 10 Listing on Known High Risk Marketplace 8 Listing Indicates Phone is “Unlocked” 5 Seller Claims to Be a Manufacturer 5 High Risk Selling Location or Port 5 Listing Indicates Product Copy or Replica 9 Suspect Sellers: Seller Risk Index (SRI) • The sum of the LRI scores for all listings for a specific seller • Higher score equals higher probability of suspect sellerpage| 14 Confidential
  15. 15. Suspect Listings Summary Indicator Points Awarded # of Listings # of Sellers Quantity Available = 1,000 to 10,000 units 5 2,627 1,248 Quantity Available >= 10,000 units 8 410 221 Product Offered at Discount > 40% 10 4,318 2,885 Listing on Known High Risk Marketplace 8 12,720 5,085 Listing Indicates Phone is “Unlocked” 5 2,039 1,088 Seller Claims to Be a Manufacturer 5 297 85 High Risk Selling Location or Port 5 507 187 Listing Indicates Product Copy or Replica 9 65 29 # of Listings 12,000 10,705 10,081 10,000 Distribution of 25,759 Number of Listings 8,000 collected listings by listing score 6,000 4,000 2,738 1,699 2,000 536 Higher ranked listings are - more likely illicit 0-5 6 - 10 11-15 16-20 Over 20 Listing Score Rangepage| 15 Confidential
  16. 16. Suspect Sellers Summary Suspect Sellers: Seller Risk Index (SRI) • The sum of the LRI scores for all listings for a specific seller • Higher score equals higher probability of suspect seller # of Sellers 5,000 4,741 4,500 4,000 Distribution of 11,016 Number of Sellers 3,500 3,000 2,591 unique sellers by SRI 2,455 2,500 score 2,000 1,500 886 1,000 Higher ranked sellers pose 500 167 176 - greater potential risk 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 SRI Score Rangepage| 16 Confidential
  17. 17. Suspects by Product 700 800 600 700 500 600 400 500 400 300 300 200 200 100 100 0 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 Brand B Product 1 / Sales Volume Rank #1 Brand A Product 1 / Sales Volume Rank #2 500 1600 450 1400 400 1200 350 300 1000 250 800 200 600 150 400 100 200 50 0 0 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 0 - 10 11 - 25 26 - 50 51 - 75 76 - 100 Over 100 100 Brand A Product 2 / Sales Volume Rank #3 Brand B Product 2 / Sales Volume Rank #4 These Brand A products carry the greatest risk for illicit salespage| 17 Confidential
  18. 18. Top 10 Suspects for Brand A Confidential
  19. 19. Highest-Ranked Seller Info Seller Detail Top 10 Listingspage| 19 Confidential
  20. 20. Listing Detail Confidential
  21. 21. Conclusions • Illicit activity in the smartphone arena is very high • Crosses regions, marketplaces, and brands • Recommend each brand enacts a proactive program to protect their IP • Online monitoring to provide a view into counterfeit, gray market and reseller infraction activity • Authentication tools to verify whether the products listed for sale are yours • Track and trace tools to know where your product exited authorized channels • Continued monitoring to measure the impact of authentication solutions and identify enforcement needs • Recommend each brand enacts a program of ongoing investigation and enforcement actions • Test buys, seller company profiling, raids • Cease and desist letters and DMCA letters to unauthorized sellers or others infringing on your brand • Auction site de-listings, ISP take down notices, ad de-listings • Engagement of IP counsel for criminal and civil litigationpage| 21 Confidential
  22. 22. Contact Information Pam Passaretti CEO (415) 710-4466 ppassaretti@newmo.com Holger Hoppe CTO (707) 349-5515 hhoppe@newmo.compage| 22 Confidential

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