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The Accel 5 “Mantras” of Ecommerce
in Turkey
Philippe Botteri


Webrazzi Summit
October 4th 2012, Istanbul
Disclaimer


     This document has been prepared by Accel Partners Management LLP (hereinafter Accel). Accel
     is a limited liability partnership incorporated in England and Wales with registered number
     OC303424, having its registered office at 16 St James’s Street, London, SW1A 1ER. Accel is
     authorised and regulated by the Financial Services Authority (the "FSA") and is entered on the
     FSA register with registration number 222503.

     This document is provided for information purposes only and does not constitute an offer or a
     recommendation to purchase or sell any security or service. It is not intended for distribution,
     publication, or use in any jurisdiction where such distribution, publication, or use would be
     unlawful.

     This document forms part of a presentation to persons who have been invited to attend such
     presentation and must be read and considered in the context of that presentation only.
     This document does not contain personalized recommendations or advice and is not intended to
     substitute any professional advice on investment in financial products. Before entering into any
     transaction, an investor should consider carefully the suitability of a transaction to his/her
     particular circumstances and, where necessary, obtain independent professional advice in respect
     of risks, as well as any legal, regulatory, credit, tax, and accounting consequences.
     This document is the property of Accel and is addressed to its recipient exclusively for their
     personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any
     other purpose without the prior written permission of Accel.


Accel Partners Confidential                                                                                 2
We mean “Global”
    Track record of 225+ exits




•     Founded in 1983               •   Over 500 companies
                                        - 100+ public offerings
•     $9 billion in capital under
                                        - 125+ mergers or sales
      management

•     Stage agnostic                •   Added-value partner

    Accel Confidential                                            3
Key trends we are betting on

Big Data
& Cloud Computing


Gaming




Mobile




Social



Next Generation
ecommerce &
marketplaces


Emerging Markets
(Turkey is next!)


   Accel Confidential          4
Turkey is next


 Strong Macro                 • 2011 GDP growth 8.1%
 Trends                       • GDP per capita grew from $6k in 2001 to
                                $14k in 2011



                              •   5th European country by internet users (38m)
 Good
 Infrastructure               •   Mobile penetration rate of 90%+                  Large and fast
                              •   Strong logistics and payments infrastructure    growing Internet
                                                                                    market, but
                              •   Very high credit card penetration (45M+)
                                                                                  underpenetrated


                              • 3rd most engaged online audience in Europe
 Attractive                       (hours spent)
 Demographics
                              • Extremely social demographics
                                  (no. 5 country on Facebook, no. 8 on Twitter)
                              • Young population
                                  (half of the population below 30)


Accel Partners Confidential                                                                     5
The Accel Five Mantras of
                      eCommerce in Turkey




Accel Confidential                               6
1         “Me too” is not enough


 Stay Away from the “Clone War”
 Number of clones created in Turley


                                           •   To be successful, you
                       150                     need to be clearly
                                               differentiated:
                                                 − Product
                                                 − Segment
                                                 − User acquisition
                                      70             channels

                                           •   Competition drives
                                               margin down: Gross
                                               Margin in Turkey usually
                                               ½ of what we see in
                                               EU/US for comparable
                            1         2        businesses


Source: Forbes

       Accel Confidential                                              7
2 eCommerce is not a cheap
     journey: be prepared!

 Successful ecommerce companies have
 raised $45m+
 Institutional capital raised to date, USD


          174
                                                              Key drivers of cash
                                                              consumption:

                            104                               •   Working Capital:
                                                                  building inventory is
                                         79
                                                    65            costly
                                                         45
                                                              •   Marketing costs: second
                                                                  or third baskets are
                                                                  usually NOT FREE




Source: Accel Analysis, Ventur Source, TechCrunch

       Accel Confidential                                                                   8
3 Run your business with numbers


        eCommerce is all about numbers and doing a 100 small things right


      Customer              • CAC (Customer Acquisition Cost): by channel, for 1st basket, 2nd
      metrics                 basket…
                            • CLTV (Customer Lifetime Value): revenue - all direct costs – CAC 1st
                              basket – CAC 2nd basket…

     Website                •   CPC by channel
     metrics                •   Google Quality score
                            •   Conversion rate: ratio visitors/ buyers
                            •   Traffic sources: evolution of traffic by channel, paid vs. non paid…


      Financial             • Gross Margin/ Contribution margin
      metrics               • EBITDA
                            • Working Capital and Inventory: % of inventory write-off, days payables,
                              % of sales through inventory/consignment, cost of storage by SKU…
Source: Accel Analysis
                            • Cash flow
       Accel Confidential                                                                              9
4 Build your brand by focusing on
    user experience

 The strength of your brand will
 define your profitability
                                                  Build your brand by
                                                  providing an outstanding
                                                  user experience:
                  More
                                   Stronger
                 Volume
                                    Brand         •   Product: choice,
                                                      easiness to use, social
                                                      features…(measured by
                                                      conversion)

                                                  •   Service: Fast delivery &
  Higher                                 Free         responsive customer
Profitability                           Traffic       service

                                                  •   Payment: Variety of
                           Lower                      payments and financing
                            CAC                       options

Source: Forbes

      Accel Confidential                                                         10
5 Mobile will be bigger than you
     think

 Mobile already a significant share of                      … and mobile penetration is quite
 traffic & transactions in EU/US…                           high and growing fast
 Accel Portfolio Examples                                   % of population


   •     Blablacar:                                                              Mobile phone
           • 15% of transactions booked via                            ~92%      penetration expected
              mobile app                                                         to be >100% by 2014
           • 20%+ of trips posted via mobile
              app

   •     US ecommerce: 40%+ of Holiday season
         traffic coming from tablets

   •     EU ecommerce: 20%+ of sales coming
                                                                                        ~25%
         from mobile app

   …and this is just the beginning as
   smartphone and tablet sales are still
   soaring!                                                             1
                                                                  Mobile phone            2
                                                                                      Smartphone
Source: ComScore, IPSOS, Google, Informa, Accel Portfolio
                                                                   penetration        penetration
       Accel Confidential                                                                         11
Accel 5 “Mantras” for ecommerce
in Turkey



1 “Me too” is not enough
1.

2 eCommerce is not a cheap journey: be prepared!
2.

3 Run your business with numbers
3.

4 Build your brand by focusing on user experience
4.

5 Mobile will be bigger than you think
5.



 Accel Confidential                                 12
Thank you!

                     Follow me on Twitter @pbotteri




Accel Confidential                                    13

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The Accel 5 mantras of e commerce in Turkey

  • 1. The Accel 5 “Mantras” of Ecommerce in Turkey Philippe Botteri Webrazzi Summit October 4th 2012, Istanbul
  • 2. Disclaimer This document has been prepared by Accel Partners Management LLP (hereinafter Accel). Accel is a limited liability partnership incorporated in England and Wales with registered number OC303424, having its registered office at 16 St James’s Street, London, SW1A 1ER. Accel is authorised and regulated by the Financial Services Authority (the "FSA") and is entered on the FSA register with registration number 222503. This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This document forms part of a presentation to persons who have been invited to attend such presentation and must be read and considered in the context of that presentation only. This document does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of Accel and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of Accel. Accel Partners Confidential 2
  • 3. We mean “Global” Track record of 225+ exits • Founded in 1983 • Over 500 companies - 100+ public offerings • $9 billion in capital under - 125+ mergers or sales management • Stage agnostic • Added-value partner Accel Confidential 3
  • 4. Key trends we are betting on Big Data & Cloud Computing Gaming Mobile Social Next Generation ecommerce & marketplaces Emerging Markets (Turkey is next!) Accel Confidential 4
  • 5. Turkey is next Strong Macro • 2011 GDP growth 8.1% Trends • GDP per capita grew from $6k in 2001 to $14k in 2011 • 5th European country by internet users (38m) Good Infrastructure • Mobile penetration rate of 90%+ Large and fast • Strong logistics and payments infrastructure growing Internet market, but • Very high credit card penetration (45M+) underpenetrated • 3rd most engaged online audience in Europe Attractive (hours spent) Demographics • Extremely social demographics (no. 5 country on Facebook, no. 8 on Twitter) • Young population (half of the population below 30) Accel Partners Confidential 5
  • 6. The Accel Five Mantras of eCommerce in Turkey Accel Confidential 6
  • 7. 1 “Me too” is not enough Stay Away from the “Clone War” Number of clones created in Turley • To be successful, you 150 need to be clearly differentiated: − Product − Segment − User acquisition 70 channels • Competition drives margin down: Gross Margin in Turkey usually ½ of what we see in EU/US for comparable 1 2 businesses Source: Forbes Accel Confidential 7
  • 8. 2 eCommerce is not a cheap journey: be prepared! Successful ecommerce companies have raised $45m+ Institutional capital raised to date, USD 174 Key drivers of cash consumption: 104 • Working Capital: building inventory is 79 65 costly 45 • Marketing costs: second or third baskets are usually NOT FREE Source: Accel Analysis, Ventur Source, TechCrunch Accel Confidential 8
  • 9. 3 Run your business with numbers eCommerce is all about numbers and doing a 100 small things right Customer • CAC (Customer Acquisition Cost): by channel, for 1st basket, 2nd metrics basket… • CLTV (Customer Lifetime Value): revenue - all direct costs – CAC 1st basket – CAC 2nd basket… Website • CPC by channel metrics • Google Quality score • Conversion rate: ratio visitors/ buyers • Traffic sources: evolution of traffic by channel, paid vs. non paid… Financial • Gross Margin/ Contribution margin metrics • EBITDA • Working Capital and Inventory: % of inventory write-off, days payables, % of sales through inventory/consignment, cost of storage by SKU… Source: Accel Analysis • Cash flow Accel Confidential 9
  • 10. 4 Build your brand by focusing on user experience The strength of your brand will define your profitability Build your brand by providing an outstanding user experience: More Stronger Volume Brand • Product: choice, easiness to use, social features…(measured by conversion) • Service: Fast delivery & Higher Free responsive customer Profitability Traffic service • Payment: Variety of Lower payments and financing CAC options Source: Forbes Accel Confidential 10
  • 11. 5 Mobile will be bigger than you think Mobile already a significant share of … and mobile penetration is quite traffic & transactions in EU/US… high and growing fast Accel Portfolio Examples % of population • Blablacar: Mobile phone • 15% of transactions booked via ~92% penetration expected mobile app to be >100% by 2014 • 20%+ of trips posted via mobile app • US ecommerce: 40%+ of Holiday season traffic coming from tablets • EU ecommerce: 20%+ of sales coming ~25% from mobile app …and this is just the beginning as smartphone and tablet sales are still soaring! 1 Mobile phone 2 Smartphone Source: ComScore, IPSOS, Google, Informa, Accel Portfolio penetration penetration Accel Confidential 11
  • 12. Accel 5 “Mantras” for ecommerce in Turkey 1 “Me too” is not enough 1. 2 eCommerce is not a cheap journey: be prepared! 2. 3 Run your business with numbers 3. 4 Build your brand by focusing on user experience 4. 5 Mobile will be bigger than you think 5. Accel Confidential 12
  • 13. Thank you! Follow me on Twitter @pbotteri Accel Confidential 13