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Paul Schulte, MA, MALD
Paul@schulte-research.com
www.schulte-research.com
(+852) 9705 0777
Gavin Liu, CFA – Senior Analyst
BABA, AMZN, WALMART, TENCENT IN INDIA:
A PETRI DISH FOR A GLOBAL BATTLE IN 020 FIN TECH
2
SchulteResearch
India E-Commerce Overview: Great Growth Potential:
Analog India becomes digital
Source: eMarketer, Statista, Schulte Research
98%
2%
INDIAN RETAIL SALES
IN 2017
Physical Stores E-Commerce
10000
20000
30000
40000
50000
60000
70000
80000
2016 2017 2018E 2019E 2020E 2021E 2022E
Indian E-Commerce Sales (in Millions of
Dollars)
Although India’s e-commerce
makes up only 2% of the total
retail sales in India, it may rise to
50% by 2023.
Indian e-commerce sales estimated
growth rate in 2018 is 31%. The
estimated CAGR from 2018 to 2022
is 23%. By 2022, India’s ecommerce
sector will be worth $70 billion.
CAGR: 23%
3
SchulteResearch
Alibaba has stake in the biggest online grocer in India: Indian
agriculture and groceries has 0 online & 30% of food is lost in delivery.
Source: Statista, Reuters, Schulte Research
Founded: October 2011
Net Sales: $190 million (2017)
Users: 6 million
40%
Market Share
~20%
Alibaba Stake
Alibaba has
largest stake
Competitors
Two competitors command
~30% market share each
Huge untapped potential for online grocers
Other retail
spending Groceries Online Groceries
Retail Spending in India (2017)
4
SchulteResearch
Indian Beauty Products: All cash market.
Source: Redseer, Schulte Research
Market Share
2%
98%
Beauty Product Market Share in India
Online Offline
33%
27%
25%
13%
12%
Online Cosmetic Market Share in India
Nykaa Amazon Flipkart Purplle Others
• Amazon India is already selling 2 million beauty products across
19,000 brands. $500 mn market
5
SchulteResearch
B. India e-Commerce is growing rapidly, driven by smartphone penetration
Source: eMarketer, Schulte Research
E-Commerce Sales: ↑42%
(#2 Fastest in Asia)
CAGR 45.1%
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E
Billion(USD)
Retail E-Commerce Sales in India
Two Key Figures from 2017
72% of E-Commerce
from Mobile Phones
1. 2.
6
SchulteResearch
Amazon in India
7
SchulteResearch
Amazon’s Acquisitions in India. Watch Amazon transform Indian agriculture
Online Payment
Lending
Insurance
Finance
E-Commerce
Home Services
Agriculture
$700 mn
May
2018
2015
2016
Apr
2018
May
2018
2015
2016
May
2018
Sept
2017
2015
Publishing
8
SchulteResearch
Amazon India VS Standard Chartered India
9
SchulteResearch
The Amazon moment for banks has arrived: Standard
Chartered Stock Price trashed. It’s trading at 0.4 x book.
52 WEEK RANGE: 52.00-94.80
In 2018, it is down 46% from its high
Does Standard Chartered have a plan?
So far, I think not.
India is (was) a $1 bn revenue business.
Will Stan Chart suffer the same Amazon fate
as B&N, Sears, JC Penney?
10
SchulteResearch
Alipay & Paytm have nearly identical user interfaces: Alibaba
gets 250 mn new customers in 24 months with Pay TM
Alipay Paytm
11
SchulteResearch Paytm app covers a comprehensive array of needs for the Indian consumer:
Alibaba has migrated to India. Pay TM IS Alibaba in India as of Jan 2019.
Source: paytm, Schulte Research
Transportation
Government
Ecommerce
Utilities & Bills
Entertainment
Financial Services
12
SchulteResearch
Paytm Mall brings to India the same hot strategies used by Taobao &
Tmall. PLUS, the ease of O2O retail delivery. People want value.
Source: Bloomberg Quint, Indian Times, Forrester, Schulte Research
Founded: February 2017
Net Sales: $47 million (2017)
Users: 80 million
Competitors
15%
Market Share
57%
Alibaba Stake
Market Share
Uphill battle against
Amazon and Flipkart
Paytm Mall gained 15%
market share in one year
BUT
Alibaba has proven
record of e-commerce
success in Asia-Pacific
AND
13
SchulteResearch
Walmart in India
14
SchulteResearch
History of Flipkart - NOW Walmart
Source: Flipkart, Schulte Research
(Credit)
(Content) (Electronics)
(Delivery)
(Fashion)
(White Goods)
(Advertising)
(Remittance)
(Payments)
(E-Commerce)
(Quality Assurance)
Tencent In India
16
SchulteResearch
Walmart in China So Far…
Source: Walmart, Statista, Schulte Research
• Walmart entered the Chinese market in 1996 under a joint venture
• Since 1996, Walmart has opened 424 retail stores in China & 15 wholesale
• Walmart China accounts for only 3% of total revenue
So what are the reasons for the sluggish growth?
17
SchulteResearch
Tencent and Flipkart (10 Apr 2017) - $1.4 bn for Amazon of India
Source: Flipkart, Reuters, Techcrunch, Schulte Research
• Flipkart is India’s leading e-commerce marketplace (40% market share)
• Tencent participated in Flipkart’s $1.4 Bn funding round (w/Microsoft &
eBay in April 2017)
• In the same month, Alibaba invested $45 Mn more in Paytm.
• Tencent continues to be an investor in Flipkart (6% shareholder post
Walmart deal)
18
SchulteResearch
Tencent and Ola (11 October 2017) – $1.1 bn for ride sharing app
Source: Ola, Reuters, Medianama, Schulte Research
• Ola is India’s leading ride-hailing service, operating in 110 cities
• Uber operates in 30 cities
• Ola FY17 Total Revenue – $110 Mn USD
• Tencent lead Ola’s $1.1 Bn funding round (w/Softbank in October 2017)
• Ola money, is Ola’s own payment system
• Ola is also investing in AI and machine learning as well as in-car
entertainment (Ola Play)

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VF2018: BABA, AMZN, WALMART, TENCENT In India: Turning payments into lifestyle companies (Paul Schulte, Founder and Managing Editor, Schulte Research)

  • 1. Paul Schulte, MA, MALD Paul@schulte-research.com www.schulte-research.com (+852) 9705 0777 Gavin Liu, CFA – Senior Analyst BABA, AMZN, WALMART, TENCENT IN INDIA: A PETRI DISH FOR A GLOBAL BATTLE IN 020 FIN TECH
  • 2. 2 SchulteResearch India E-Commerce Overview: Great Growth Potential: Analog India becomes digital Source: eMarketer, Statista, Schulte Research 98% 2% INDIAN RETAIL SALES IN 2017 Physical Stores E-Commerce 10000 20000 30000 40000 50000 60000 70000 80000 2016 2017 2018E 2019E 2020E 2021E 2022E Indian E-Commerce Sales (in Millions of Dollars) Although India’s e-commerce makes up only 2% of the total retail sales in India, it may rise to 50% by 2023. Indian e-commerce sales estimated growth rate in 2018 is 31%. The estimated CAGR from 2018 to 2022 is 23%. By 2022, India’s ecommerce sector will be worth $70 billion. CAGR: 23%
  • 3. 3 SchulteResearch Alibaba has stake in the biggest online grocer in India: Indian agriculture and groceries has 0 online & 30% of food is lost in delivery. Source: Statista, Reuters, Schulte Research Founded: October 2011 Net Sales: $190 million (2017) Users: 6 million 40% Market Share ~20% Alibaba Stake Alibaba has largest stake Competitors Two competitors command ~30% market share each Huge untapped potential for online grocers Other retail spending Groceries Online Groceries Retail Spending in India (2017)
  • 4. 4 SchulteResearch Indian Beauty Products: All cash market. Source: Redseer, Schulte Research Market Share 2% 98% Beauty Product Market Share in India Online Offline 33% 27% 25% 13% 12% Online Cosmetic Market Share in India Nykaa Amazon Flipkart Purplle Others • Amazon India is already selling 2 million beauty products across 19,000 brands. $500 mn market
  • 5. 5 SchulteResearch B. India e-Commerce is growing rapidly, driven by smartphone penetration Source: eMarketer, Schulte Research E-Commerce Sales: ↑42% (#2 Fastest in Asia) CAGR 45.1% $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E Billion(USD) Retail E-Commerce Sales in India Two Key Figures from 2017 72% of E-Commerce from Mobile Phones 1. 2.
  • 7. 7 SchulteResearch Amazon’s Acquisitions in India. Watch Amazon transform Indian agriculture Online Payment Lending Insurance Finance E-Commerce Home Services Agriculture $700 mn May 2018 2015 2016 Apr 2018 May 2018 2015 2016 May 2018 Sept 2017 2015 Publishing
  • 8. 8 SchulteResearch Amazon India VS Standard Chartered India
  • 9. 9 SchulteResearch The Amazon moment for banks has arrived: Standard Chartered Stock Price trashed. It’s trading at 0.4 x book. 52 WEEK RANGE: 52.00-94.80 In 2018, it is down 46% from its high Does Standard Chartered have a plan? So far, I think not. India is (was) a $1 bn revenue business. Will Stan Chart suffer the same Amazon fate as B&N, Sears, JC Penney?
  • 10. 10 SchulteResearch Alipay & Paytm have nearly identical user interfaces: Alibaba gets 250 mn new customers in 24 months with Pay TM Alipay Paytm
  • 11. 11 SchulteResearch Paytm app covers a comprehensive array of needs for the Indian consumer: Alibaba has migrated to India. Pay TM IS Alibaba in India as of Jan 2019. Source: paytm, Schulte Research Transportation Government Ecommerce Utilities & Bills Entertainment Financial Services
  • 12. 12 SchulteResearch Paytm Mall brings to India the same hot strategies used by Taobao & Tmall. PLUS, the ease of O2O retail delivery. People want value. Source: Bloomberg Quint, Indian Times, Forrester, Schulte Research Founded: February 2017 Net Sales: $47 million (2017) Users: 80 million Competitors 15% Market Share 57% Alibaba Stake Market Share Uphill battle against Amazon and Flipkart Paytm Mall gained 15% market share in one year BUT Alibaba has proven record of e-commerce success in Asia-Pacific AND
  • 14. 14 SchulteResearch History of Flipkart - NOW Walmart Source: Flipkart, Schulte Research (Credit) (Content) (Electronics) (Delivery) (Fashion) (White Goods) (Advertising) (Remittance) (Payments) (E-Commerce) (Quality Assurance)
  • 16. 16 SchulteResearch Walmart in China So Far… Source: Walmart, Statista, Schulte Research • Walmart entered the Chinese market in 1996 under a joint venture • Since 1996, Walmart has opened 424 retail stores in China & 15 wholesale • Walmart China accounts for only 3% of total revenue So what are the reasons for the sluggish growth?
  • 17. 17 SchulteResearch Tencent and Flipkart (10 Apr 2017) - $1.4 bn for Amazon of India Source: Flipkart, Reuters, Techcrunch, Schulte Research • Flipkart is India’s leading e-commerce marketplace (40% market share) • Tencent participated in Flipkart’s $1.4 Bn funding round (w/Microsoft & eBay in April 2017) • In the same month, Alibaba invested $45 Mn more in Paytm. • Tencent continues to be an investor in Flipkart (6% shareholder post Walmart deal)
  • 18. 18 SchulteResearch Tencent and Ola (11 October 2017) – $1.1 bn for ride sharing app Source: Ola, Reuters, Medianama, Schulte Research • Ola is India’s leading ride-hailing service, operating in 110 cities • Uber operates in 30 cities • Ola FY17 Total Revenue – $110 Mn USD • Tencent lead Ola’s $1.1 Bn funding round (w/Softbank in October 2017) • Ola money, is Ola’s own payment system • Ola is also investing in AI and machine learning as well as in-car entertainment (Ola Play)