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					         The Only Group  (working title)




         Company Presentation

Gareth Knight | gareth.knight@technovated.com | +447766006656
             http://uk.linkedin.com/in/garethknight/
        The European eCommerce Market
                               Retail e-commerce sales in Europ (Bn) - 2009
                UK (9.5%)
      Germany (6.9%)
          France (4.9%)
        Benelux (3.5%)
              Italy (0.8%)
               Spain (1%)
      Denmark (6.1%)
        Sweden (4.8%)

                                  0            5           10           15          20           25           30           35           40


1   Boston Consulting Group “The Connected Kingdom”; 2 InternetRetailer Top500 list; 4eMarketer “Retail eCommerce in Western Europe”;    2
           Many underexploited UK categories
                                                         Market value (Bn)
                        Housewares (2009)
           Home improvement (2010)
      Shoes, Bags, & Luggage (2008)
                                     Pets (2008)
                 Health & Fitness (2006)
        School & Office supply (2007)
                        Home decor (2009)
                         Baby & Kids (2008)

                                                         0             2            4             6             8            10   12
Household Textiles Market - UK 2010-2014 – Market research.com; Home Retail Group annual report 2009; ReportLinker - UK
Kitchenware ; Emerald - Challenging conventional wisdom: a reappraisal of the UK DIY market; UK baby and nursery market, Mintel
report; CBI EU: The stationery, office and school supplies market in the EU; Hand Luggage and Leather Goods - Market Report
Key Note's Footwear Market Report Plus; Pet accesories market - UK - http://www.amaresearch.co.uk; Health and Fitness Market       3
Focus on clubs and equipment - UK - http://www.amaresearch.co.uk
   Niched online retailers in the UK are
           unsophisticated...
• Little
      – focus on trust or authority
      – emphasis on UX
      – mobile innovation
      – search optimisation
      – use of multi-channel approach
• Legacy software expensive


 Source: 6 weeks of 90 calls per week, to retailers in 5 categories   4
       Proposition:
Next generation multi-niche
       ecommerce

     Vision is multiple stores,
  £1m to £5m+ revenue p/y each
             only-beds.co.uk
          only-mattresses.co.uk
           only-lighting.co.uk
                   etc
                  Highlights
•   Multi-channel customer acquisition
•   Multi category
•   Multi lingual / multi territory
•   Mobile access and superior UX
•   Highly optimised online marketing
•   Common platform, technology scaling faster
•   No warehousing, direct to customer
•   Small call centre, overflow outsourced

                                                 6
Benefits of new ecommerce model

•   Margins are high
•   Less working capital
•   No overstock risk
•   Less seasonal, understock risk
•   Accelerated growth
•   Economy of scale
•   Operational cost lower

                                     7
                     A proven model
• CSNStores – US, c 200 stores, $200m+ revenue
  Hayneedle – US, c 200 stores
  Mercantila – US, “hundreds” of stores *




* Company websites                           8
              European incumbents
Worldstores (UK)                        FP Commerce (DE) - Samwers
Approx 50 stores and growing            Categories include lighting, pushchairs &
Series A with Balderton, late 2009         buggies, hammocks, garden furniture,
At 70+ people in London                    wine
                                        Dropshipping all product lines from
Hiring to maintain and develop on
                                        manufacturer or suppliers *
    bespoke platform
Operate own warehouse, do pick & pack




                                                                                                      9
                                        * Conversation with Felix Leuschner, went to university with founders
          A highly skilled team

• Serial Entrepreneur: Founder / MD Gareth
  Knight (33) has built, grown and exited an
  online business, selling Kindo to MyHeritage.




                                                  10
             Deep experience

• Stephen (ex Kindo, MyHeritage) has
  deep Magento experience, approached
  recently by Venda & WorldStores
• Grant was Google UK’s 5th employee,
  and first Ad Words hire outside the US;
  has worked on EBay, Amazon,
  Moneysupermarket,
  Lastminute.com, Expedia,
  Dell, PriceRunner

                                            11
     Magento eCommerce at scale
•   Technology overhead lower
•   Leverage best practices
•   Shared payment / login info across niches
•   Pushes to Amazon, eBay, CSE’s
•   Mobile version for each store
•   Facebook integration, coupons, gift
    certificates, rewards, store credits,
    private club, daily deals
                                                12
       Cutting edge competitive advantage
                   (IBM POC)
   • Efficiently automate price optimisation against
     multiple competitors




Product               Our price   SportsShoes   Barrington   Achilles Heel
Asics Gel Nimbus 11   69.95       64.95         80.00        74.95
                                                                        13
                                                      Case studies
Spoken to these                     Sports supplier Adult novelties                             Furniture                       Beds & mattress
people:                                             supplier                                    supplier                        supplier
Search volume p/m                         6.64m+                           3m+                            18m+                          15.7m+
Our margin                                   15%                       80-110%                         80-105%                          60-100%
Avg order value                             £75+                           £45                            £280                             £270
Avg order cost                                 -                         £20.25                           £119                          £114.75
Avg order margin                                                         £24.75                           £161                          £155.25
Avg CPA                                      £6+                          £9.72                          £42.34                          £48.60
Avg profit per                             £5.25+                        £15.03                         £118.66                         £106.65
order                                     (LV,CRM)                       (LV,CRM)                        (LV,CRM)                          (CRM)

Comparable                          c £240k p/m                 £166k p/m                       £208k p/m                       c £150k p/m
revenue
UK market size                           c £7.7bn                c £600mill, £1bn                    c £10bn+ at                 c £830m in 2008
                                          (2006)                    within 5 yrs                        factory

No niches.                                   10+                             3                             10+                              10+
                                                                                                                                                  14
Sources: Calls with suppliers ; Interactive Investor; Real Business; UK Furniture industry; Bharat Book; Boston Consulting Group; Companies House reports
                                              Economics
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
         -
                     Q1 (2 stores)                 Q2 (3 stores)                 Q3 (6 stores)              Q4 (10-12 stores)
                                    Overheads                 Mktg Spend                 Revenue

* Assumptions to be validated; Assumes mktg spend is 30% of avg order size; excludes multi-channel, organic search & return traffic   15
                      Financials

• Revenue drivers
  – Assumes acquisition cost < 30% avg LV
  – Excludes multi-channel, organic search, lifetime value
• Capital requirement £600k
  –   Funds for team, license fees & marketing for Year 1
  –   Hiring senior merchandising person
  –   Aggressive revenue £730k p/m end 2011
  –   Conservative revenue £400k p/m end 2011
• Takes us to breakeven, growth position for 2012

                                                             16
Appendix
            Mobile searches are increasing




3ChannelAdvisor report   “Navigating Google’s complex eCommerce landscape”; Google “Mobile-ize your Business”   18
          Example sports supplier

• 30k sq/ft warehouse in Chester
• 30k SKU’s with product lines that include baselayers, court
  sports, cricket, darts, eyewear, football, hockey, outdoor,
  rugby, running, sail, ski, snooker and snowboard
• One relationship to manage
• Will grow product lines with / for us
• All POS inventory managed digitally
• 15% margin for us
• Manages returns & refunds
• Provides product stock feed integration


                                                                19
     Example adult novelty supplier

•   Huge warehouse in Herts
•   Over 50k products and growing
•   Avg 100% retail margin
•   Conversions are 2-3x retail industry average
•   40% customers repeat purchase
•   Delivers worldwide
•   Manages returns & refunds
•   Product stock feed integration
                                                   20
        Example furniture supplier

•   30k sq/ft warehouse in Oxford
•   8 product lines and growing
•   SAP integration, all inventory digital
•   Product stock feed integration
•   60 to 105% retail margin
•   Operates own distribution company
•   Manages returns & refunds

                                             21
        Example beds supplier

• 20k sq/ft warehouse in Leeds
• 4 ranges of beds, also does memory foam
  mattresses
• Beds made to order, NightFreight to pickup &
  deliver
• 80 to 100% retail margin
• Manages returns & refunds
                                                 22
             Development plan

• Agreements in principle with 9 suppliers
• New store every 4 to 6 weeks; 8 – 12 stores Y1
  – Includes store, SEM setup, SEO setup, multi-channel
    setup
  – Priority is adult novelties, sporting goods, furniture,
    beds, housewares
• Dependancies
  – Number of people
  – Suppliers

                                                              23

				
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posted:2/9/2011
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