1. The battle of the channels
– an outsider’s view –
Daniel Ropers – Managing Director – bol.com

2. Agenda
12.05 – 12.15 De ambitie van bol.com
12.15 – 12.35 Is ‘the battle of the channels’ al verloren?
12:35 – 12:40 Optioneel: digitale boeken, een paar inzichten

6. bol.com: Famous in NL (& increasingly BE)
Largest online shopping site:
>150M visits/year
From Books to Baby:
>5.5 Mio products offered
>3.5 Mio active customers
Consumer Sales
bol.com in M Euro
400
2006-2011:
350
Revenues x4
300
250
200
150
100
50
0
2009
2003
2004
2005
2006
2007
2008
2010
2011

7. bol.com: uitgegroeid tot een
verzameling van speciaalzaken
Digitaal
aangeboden
2e hands en
via derden
Nieuw
Boeken Entertainment Klein SCE Groot SCE Speelgoed KHH GHH Baby Koken En nog meer
Nederlands CD Digitale cam. TV Trampoline Koffieapp. Wasmachine Autostoeltje & Tafelen
UK/US DVD Mobiele Computer Puzzels Fohn Vaatwassers Buggy
Internation Software telefoons DVD speler Schaatsen Electrische Stofzuiger Luiers
aal Navigatie tandenbor-
stel

8. A quarter of the Dutch population is a
regular customer at bol.com

9. De beste winkel...

10. Onze definitie van de beste winkel
Helpt je te kiezen
Is overal toegankelijk
door optimaal aan
en aanwezig, waar
Klant staat te sluiten bij
vraag ontstaat
centraal persoonlijke
behoefte
Biedt maximale keuze in
product, prijs, vorm, en
beschikbaarheid

11. Typical online market share distribution
100+ niche players
“Also-ran’s” Market seems
to yield natural
monopolies
Market leader

12. In the online world, the best get big
and the biggest get bigger: fat cats win

13. The bol.com business model
Awareness,
Revenue
preference,
growth A machine
satisfaction
that is capable
Scale / Knowledge / Brand of delivering
even more
Lower prices
service quality
Improved Economies
service of scale at lower costs
New services
More
marketing

14. So what?

15. The real impact of online…
Transparency!
1 – Customers know
what’s available and are able
to choose what’s best for them
2 – Opportunities arise in the
‘long tail’ of consumer demand
3 – Revenues and profits in
traditional models under pressure
4 – Scale based economies and
network effects drive ‘Winner
takes all’ principle
15

16. Business opportunities in the ‘long tail’
# of customers Market distribution in an intransparent market:
Majority of value and demand (>80%) in small
portion of the (theoretical) supply
MARKET
LOST
Distribution of demand in a transparent market:
50% of value and demand the ‘long tail’ of niche
proposition
# products,
sorted by popularity
MARKET
OPPORTUNITY

17. The ‘long tail’ of information
and entertainment
# of interested Mass media.
consumers Definition: formats targeted at broad
audiences, based on ‘one size fits all’-average of
reader (and advertiser!) interests)
Larger, online interest segments
Definition: specialized but large enough segments to
PRESSURE
merit regular attention from large groups of readers
UNDER
Special interest segments / niches
Definition: specialized segments that draw attention less
frequently and/or from smaller groups of readers
Interest segments,
sorted by popularity
ALREADY ONLINE
THRIVING ONLINE OPPORTUNITIES

18. Voorbeelden van online ‘category killers’

19. Integrated (online) vertical is better
for consumers AND advertisers
Consumer network effect Advertiser network effect
They offer
all the They have
... that’s the best
information
relevant for qualified
I need ...
me to get reach...
inspired...
... allow me
to present
adequately
... make the
what I have
right
to offer...
choice, ...
Double network
effect
... allow for
an easy ... convert
transaction directly into
... and share ... transactions
my at low cost ...
... And to get
experience
instant feedback
with others
on the added value
of my offers

20. … and that attraction is reflected
by the advertising rates
Advertising cost / consumer
Degree to which the
customer is likely to transact

21. Are we doomed?
No, not if we:
• Face the facts and understand the
economic & demand dynamics
• Redefine the definition of market
and competition
• Increase scale, save cost, and
monetize assets in traditional media
• Increasing the granularity of our
view. That will yield plenty of online
opportunity in the niches!
• Learn new tricks to grab them!

22. 22

23. dropers@bol.com
@DanielRopers

24. Some thoughts on digital books
-Market is developing very fast
-Major hurdles for even faster growth:
- Supply of titles
- Ease of use (DRM)
- High prices (VAT!)
- One-dimensional commercial model
-Major threat:
- Illegal distribution – can be countered if we act now!
- Closed systems – lock in of customers in this early stage is bad for everybody
- Super-aggressive market development by 1 or 2 parties can create monopoly
-Major opportunity:
- Small language area allows for pace setting in developing the market
- So far, closed systems not very successful – open system opportunities?
- Market is infant, potential is huge!