The document discusses the potential for group buying and social commerce models like Kolektiva to increase online shopping adoption in Serbia by addressing pain points for both businesses and customers. It analyzes barriers to online shopping and payments in Serbia such as an underdeveloped banking sector, lack of competition and integrated payment solutions, and low consumer trust. The pitch argues that Kolektiva is poised to tip Serbia's e-commerce market by leveraging social networks and delivering a superior customer experience over other online retailers.

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The Moment of Truth
October 27, 2010

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An interesting thing happened last week…
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An observation is made …
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WHAT?!!!
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Can we buy, can we buy?
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And then in Serbia …
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But Croatians are least likely to buy ANYTHING online!
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*Source: Nielson, Global Trends in Online Shopping, June 2010

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Exactly …
WTF ?!
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Deal is SIMPLE: 1 city, 1 huge deal, 1 day
We offer 50-90% off fun things to do If enough people buy in, the deal is on!
Time limit =viral, word-of-mouth effect If deal works, buyers receive e-coupon
• Buyer simply prints and redeems any time

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Intriguing, Indeed

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Intriguing, Indeed

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S&P 500 Index
Bad Day!!!

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Let’s travel back in time …
• The economy was tanking … With no end in sight

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What are pain points in Croatia & Serbia?
• Small business problems
- Fewer customers due to
recession
- No idea how to start with
marketing
- Agencies are expensive
- No guaranteed results
• Problems for customers
- Tightened budgets due to
recession
- Either laid off, or working 1.5+
jobs
- HIGHER taxes

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How can they be solved?
1) Create/Advertise deal 2) Gather customers 3) Deliver customers 4) Guarantee a result

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Collective buying model could work …
• Small business problems
- Fewer customers due to
recession
- No idea how to start with
marketing
- Agencies are expensive
- No guaranteed results
• Problems for customers
- Tightened budgets due to
recession
- Either laid off, or working 1.5+
jobs
- HIGHER taxes
• Small business solutions
- Deliver 1000’s of new customers
- Kolektiva creates ads
- Zero upfront costs
- We guarantee results
• Solutions for customers
- 50%+ off on great things to do
- No hassles, redeem anytime
- Pay LESS PDV

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…
Except almost NO ONE in ex-YU
buys online!!!

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Why not?!
• Identify pain points
• Competitive advantage can be created through superior customer
insight and understanding
• Companies that create products/services that meet customer needs
will win if they can relentlessly execute against superior insights

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Croatian online shopping experience
• Small market issues
-Largest sites still don’t have scale for great discounts
-Niche sites are almost invisible
• Few incentives to buy online
-Online is often a MORE expensive channel
-Distribution of physical goods is problematic
-Limited online payment mechanisms
• Consumer issues
-Mentality of wanting to touch & feel merchandise
-Security, fraud concerns

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Kolektiva delivers a SUPERIOR experience
Avg Cro/Serb e-commerce site
• No incentives to buy
• Poor customer service
• Lack of transparency
• Cost/hassle of shipping
• Cost of returns
• Items not in stock

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Kolektiva delivers a SUPERIOR experience
Avg Cro/Serb e-commerce site
• No incentives to buy
• Poor customer service
• Lack of transparency
• Cost/hassle of shipping
• Cost of returns
• Items not in stock
KOLEKTIVA
• Exclusive, attractive deals
• Customer loyalty team
• Fully transparent
• Immediate delivery @ no cost
• No cost to return
• Consumers trust auction model

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Deal # 1 - June 15, 2010
• 36 coupons sold
• Kolektiva in 5 cities, 2 countries
• 8.500+ TOTAL coupons sold
Deal #1 - Jan. 22, 2010
• 42 coupons sold
• Kolektiva present in 1 city
Kolektiva’s evolution

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• Award for most innovative contribution to e-commerce in 2010
Kolektiva as an innovator

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Michael Brehm
CEO & Founder
Previous Executive Director of Germany's biggest Social
Network (VZnet Netzwerke)
Michael Brehm
CEO & Founder
Previous Executive Director of Germany's biggest Social
Network (VZnet Netzwerke)
Stefan Glänzer
Chair & Co-Founder
Founder of Whitebearyard.com and Executive Director at
mendeley
Ex- CEO of Ricardo & last.fm
Stefan Glänzer
Chair & Co-Founder
Founder of Whitebearyard.com and Executive Director at
mendeley
Ex- CEO of Ricardo & last.fm
Our partners

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So where are we now?
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Most
Deals
Sold:
8.592
Most
Deals
Sold:
269
Most
Deals
Sold:
1.376
Most
Deals
Sold:
5.725
Most
Deals
Sold:
11.708

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So what’s going on in Serbia?
• Online payment is a HUGE pain point
-Only 7,6% of sites claim to offer
“online” payments/uplatnica)1
• No startup culture?
• No credit/debit cards?
• Paying online isn’t safe?
- Online fraud big in Serbia?
- No trust in banks?
• Banks open for business?
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• Uplatnica have a major breakage
rate. It comes down to the moment
of truth!
• We’re all here aren’t we?!
• 914.402 individuals w/ 1.169.528
CREDIT CARDS in Feb. 20092
- 0,5% fraud claim rate in Serbia3
,
1.13% in USA!!!4
- 48% trust banks, but ONLY 26%
trust gov’t!!!!5
• Impossible to hook up to payment
gateways, no competition, no PR, no
discussion on safety!

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So what’s really going on in Serbia?
• Critical mass is formed
• Tipping point for e-commerce
adoption still elusive
• Serbian checkout is complicated,
time consuming
- Register as user on Kolektiva
 1 click FB connect
- Intent to purchase
 Fill out info
 Accept terms/submit
- Register as user on EMS
 4 step process
- Accept terms
- Register on EMS
- Choose card
- Enter card info/pay
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*Source: Clifton, Advanced Web Metrics with Google Analytics, 2008

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The Moment of Truth?
• Group buying and social commerce have the potential to “tip” e-
commerce adoption
• Tens of thousands “friends” in social networks are interested buyers
• If Croatians are willing to buy in Serbia, why aren’t Serbs?
- Requires more proactive focus, funding, development, attention and PR
from banking sector
- Requires competition
- Requires easier, more integrated payment solutions
 APIs
 1 click process
- Requires lawsuits and swift decisions against cheaters and illegal webshops
- Requires bloggers in this room to discuss the issue, take a stand!
• We’re on the cusp of making it happen. It’s the moment of truth …

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External Sources
1. Republički Zavod za Statistiku Srbije (RZSS), Upotreba
Informaciono-komunikacionih tehnologiji u Republici Srbiji, 2010.
2. http://www.bifonline.rs/vesti/article.php?storyid=294
3. RZSS
4. https://www.paypalobjects.com/html/mit-1201.html
5. Goran Tintor, GFK Belgrade Custom Research Director
http://www.gfk.rs/public_relations/press/articles/005902/index.en.html