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18
Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 1 2010 Capital Markets Day Mikael Olander, CEO CDON Group Internet Retailing

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Mikael Olander, CEO CDON Group. MTG Capital Markets Day 2010

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Page 1: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 1

2010 Capital Markets Day

Mikael Olander, CEO CDON Group

Internet Retailing

Page 2: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 2

Where do you put your money?

Indexed growth

performance2003–2009

Swedish retail sector

Swedish internet retail

CDON Group

So

urc

e:

Ha

nd

eln

s U

tre

dnin

gsin

stitu

t H

UI

Page 3: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 3

Background

Segments and brands

Fashion

NELLY.COM

LINUSLOTTA.COM

Health &Sports

GYMGROSSISTEN.COM

BODYSTORE.COM

Entertainment

CDON.COM

BOOKPLUS.FILEKMER.SE

Page 4: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 4

What is bought online?

1. Clothes/shoes 46 %

2. Home electronics 39 %

3. Movies and music 25 %

4. Books 24 %

5. Home decoration 9 %

6. Sports- and leisure 5 %

7. Cosmetics and hair-care 4 %

8. Food 4 %

Background

Positioned in the largest segments

So

urc

e:

Po

ste

n N

ord

en 2

01

0

Page 5: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 5

Cdon.comCdon.com is the Nordic online market leader on DVD’s,

games, CD’s and entertainment. Primary target group is men/women 18-45. Main online competitors are Ginza.se,

Webhallen.se, Adlibris.se and Coolshop.dk

Nelly.comNelly is the Nordic online market leader on fashion in the

target group women 18-35. Main online competitors are Bubbleroom.se, and Asos.com

Gymgrossisten.comGymgrossisten is the Nordic market leader, on- and off-line, in sports nutrition. Primary target group is men 18-35 that work-out +4 times/week

Background

Competitive position

Page 6: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 6

Background

Tripled sales in four years

Starting in 1999 with Cdon.com selling CD’s in the Scandinavian countries the last decade has been characterized by significant organic growth, launch of new product lines, geographic expansion and e-commerce acquisitions.

Maximizing sales on each siteAggressively expanding assortment and adding new product groups

Pan-Nordic rollout utilizing the Internet Retailing setupCdon.com and Nelly.com are Pan-Nordic today

Expanding the product portfolio through acquisitionsBought three companies in 2007, one in 2008 and one in 2010

Page 7: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 7

Background

Timeline – key events

1999

Founding of CDON.com as an

online record store within MTG in

Sweden, Norway and Denmark

1999 2000 2003 2004 2005 2006 2007 2008 2009 2010

2000

New stores for DVD movies

and computer games

launched as well as launch in

Finland

2003

Swedish bookstore

launched

2004

CDON.com is first to launch a

Nordic online digital music store

2005

Mobile phones and consumer

electronics store launched

2006

Digital movie-rental store

(VoD) added

2007

Mp3 bookstore

launched

2007

Acquisition of Nelly.com

Acquisition of LinusLotta.com

Acquisition of BookPlus.fi

2008

Downloadable PC games store, merchandise

store and Norwegian bookstore launched

2008

Gymgrossisten.com and Bodystore.com

acquired and rolled out in Norway

2008

Pan Nordic roll-out of Nelly.com

2010

Acquisition of Lekmer.se

2009

Integration of BookPlus.fi in

CDON.com, expansion of

Fashion’s and Health &

Sports’ private label offerings

Page 8: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 8

Background

Sales and EBIT development (TSEK)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2005 2006 2007 2008 2009

Health & Sports

Fashion

Entertainment

EBIT

+25 %

+23 %

+41 %

+36 %

Page 9: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 9

Health

& S

port

sE

nte

rtain

men

t 76

Sales 2009: SEK 1,337m

Growth: 26 %

EBIT 2009: SEK 93m

Sales 2009: SEK 203m

Growth: 157 %

EBIT 2009: SEK 6m

Sales 2009: SEK 213m

Growth: 47 %

EBIT 2009: SEK 26m

Background

Sales by segment and market

%Share of CDON Group sales

Norway

Denmark

Sweden

Finland52

15

24

9

Fash

ion

12

12

Page 10: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 10

Business model

Growth platform

Get big fast

Synergies of scale leads to a

positive sales spiral increasing

our competitive advantage

building barriers of entry

All segments within Cdon Group

shall have potential to reach

market leading positions and

correspond to the entertainment

segment in revenues.

Larger volumes

Lower costs

Customer

benefits

Larger

volumes

Lower costs

Customer

benefits

Larger

volumes

Lower

costs

Customer

benefits

Page 11: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 11

Business model

Scale impact on cost structure

CDON Group cost drivers

72 % Cost of goods sold

13 % Direct selling costs (postage, fulfilment, bank&cc

and bad debt)

6 % Marketing & IT

8 % Organisational (salaries, rent, admin)

1 % Other opex

Vari

ab

le c

osts

Fix

ed

co

sts

85 %

15 %

Page 12: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 12

Business model

Focus areas

Ny bildUnique reach

Three focus areas that sets us apart from our competition

are our:

• Mass marketing through Internet and TV advertising,

driving sales and building brand awareness. MTG’s

channels are our preferred choice but also working

with TV4, Pro7 and WSOY media group (Finland)

• Huge cross sale and CRM potential in two million

active customers

• Best in class in-house SEO/SEM competence

Nordic brand awareness

General share of all 18-47 year old that know either brand, ranging from ’heard

of’ to ’know very well’

Cdon.com 95 %

Nelly.com 64 %

Gymgrossisten 46 %

YouGov, Oct 2009

Page 13: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 13

Aggressively grow existing brands Grow existing brands by concept development and product range expansion

Example:

Private label collection

Launched 2008. It nowconstitute approximately

20 % of total sales

Business model

Strategy

Page 14: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 14

Geographical roll-outGrow existing brands by geographic roll-out

Business model

Strategy

Example:

Lekmer to launch Pan-

Nordic in Q4, 2010

Page 15: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 15

Acquire new brandsContinued growth through CDON Group growth vehicle, utilizing existing

infrastructure, through acquisitions and inhouse start-ups

Example:

Acquired in 2010. Broadening ofassortment in progress, Pan-Nordic

roll-out to be executed this year. Scale-synergies with IT-platform migration, postal and payment

agreements, group marketingetc. initiated

Business model

Strategy

Page 16: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 16

Internet retailing

Large and growing market

Large marketThe Nordic online retail market is valued at SEK 61 billion, corresponding to approximately

3,8% of the total retail sales in 2009

Untapped potentialThe penetration in more mature markets like the US is more than 50% higher than in theNordics1. Posten Norden expects the total Swedish distance retail market to double in the

next five years

So

urc

es:

1. Sw

ed

ish

Re

tail In

stit

ute

HU

I, P

ost

en

No

rde

n,

an

d F

orr

est

er

Re

sea

rch

6.0%

4.7%3.8% 3.7% 3.5% 3.4%

0%

2%

4%

6%

8%

US Denmark Nordic avr. Sweden Norway Finland

Online Retail Penetration 20091

Page 17: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 17

• E-commerce is growing explosively

• Acquisitions are successfully integrated combined

with strong organic growth

• Posting record sales and EBIT in 2009 and Q1, 2010

The most powerful e-commerce company in the

Nordic region is poised for continued fast and

profitable growth!

Summary

Conclusion

Page 18: Internet Retailing

Modern Times Group MTG ABNasdaq OMX Stockholm : MTGA, MTGB 18

2010 Capital Markets Day

Mikael Olander, CEO CDON Group

Internet Retailing