subscription e-commerce - principia sgr

e-Commerce B2C – the new trendse-Commerce B2C – the new trendsSubscription commerce, is it the next big wave?

Principia Open Office – March 2012

� Principia is the leading Italian Venture Capital firm focusing on the ICT industry..

� Principia has 90 millions(€) under management (part deriving from the government and part from privates) divided into two funds.

� The new management company has used the second fund to invest in 8 companies over the last 8 months.

Team

Principia SGR

Team� Michele Costabile (CEO), Research Assistant at Harvard University and Professor at BocconiUniversity

� Andrea Di Camillo (Managing Partner), experienced European VC (Kiwi I and CIR Ventures), co-founder of Banzai Group and Vitaminc, Advisor of Yoox and Venere

� Marco Magnocavallo (Venture Partner), serial enterpreneur (Blogo, Maki, Communicate! and Livesupport ) and angel investor (Webmynd, NextDigest, NoiseToys, Fubles, Pusher and Iubenda)

� Rita Polarolo (Fund Manager) experience in other Italian VC firms (TTVenture, Innogest)

� Massimiliano Cerilli (Fund Manager) experience in Private Equity at BNP Paribas Group.

� Matteo Panfilo (Investment Analyst), M.Sc on B&A and past experience on KPMG.Matteo Panfilo (Investment Analyst), M.Sc on B&A and past experience on KPMG.

� Armando Golia (Investment Analyst), M.Sc on General Management and startup co-founder.

Portfolio:

Principia SGR Open Office - e-Commerce B2C, the new trendCopyright 2012 Principia SGR, All rights reserved

General overview US

22,2% Growth Rate (’09 vs.’10)9,23% CAGR (‘06-’10)

US - eCommerce Sales (€ Bln)

9,23% CAGR (‘06-’10)


Source: 1.Forrester 2. CB Insights data

General overview Italy

Italy - eCommerce Sales (€ Bln)

news & music

3%

Purchase categories

+17% ‘09-’10+20% ’10-’11

apparel

10%

other

18%

insurance

9%

tourism

49%

+20% ’10-’11

Source : 1.MIP, 2. Casaleggio associati, 3. MIP e Netcomm

9%

grocery

1%IT &

electronics

10%


General overview Italy, the opportunities

Apparel 20% 5% 0,8%

News & music 39% 15% 6%

USA EU Italia

News & music 39% 15% 6%

Grocery 2% 1% 0,1%

IT & electronic goods 42% 37% 5%

Tourism 27% 25% 13%

Italian excellence:

Source : 1. MIP, Forrester Research & eMarketer

Design

Fashion

Art

FoodWine


The new eCommerce trends

o Mass customization (NikeID, Zazzle e CafèPress)

o Collaborative consumption (Rent the Runway o Bag Borrow or Steal)Steal)

� Subscription e-commerce

Monthly subscription for a selected kind of product which is then sent directly at home.

“directly at home.The selection of products is based on extremely deep profiling of customers made by 10-15 initial questions and the selection of the curator.

By 2015, 35% of Global 2000 companies with non-media digital products will generate incremental revenue of 5% to 10% through subscription-based services and revenue models. ”Gartner


Subscription eCommerce, key players

At scale

FemaleMale

Beta or New

Source : seanpercival.com data


Subscription eCommerce, key players (Europe)

Europe

Male Female

Rest of the world


Subscription eCommerce, key players (segments)

Curated

Male Female

Standard


Subscription eCommerce, US investment trend

$ Mln N. deals

Company Location Investors

BeachMint Santa Monica, CA NEA, Trinity Ventures, Lightbank

H. Bloom New York, NY Battery Ventures, Thomas Lehrman

ShoeDazzle Santa Monica, CA LightSpeed, Polaris, Andreesen Horowitz

BrichBox New York, NY Accel Partners, First Round Capital

Relevant operations:

Source : CB Insights


Example of Metrics (Fashion and Apparel)

Unique visitors

Registered users

CPC (€)

Subscribers

20-28%

2-3% 0.4%-0.85%

CPC (€)

0,3 0,4 0,5 0,6

CR* %

0,40% 75 100 125 150

0,55% 55 73 91 109

0,70% 43 57 71 86

0,85% 35 47 59 71

* Conversion Rate form unique visitors to subscribers


�StartupThreads (startup merchandising)

The evolution..

�StartupThreads (startup merchandising)

� EcoEmi (green multi-products)

� Ybuy (electronic goods with 30-day trial)

� Little Black Bag (black box with the possibility of exchanging the � Little Black Bag (black box with the possibility of exchanging the content with other users)


� Efficient net working capital management, reduced cash

requirements for the short term.

Main advantages

requirements for the short term.

�Greater subscription sales predictability.

�Recurring revenues.

� Efficient inventory management due to fast rotation and low stock

level.

�Higher average Lifetime Value per customer, due to recurring �Higher average Lifetime Value per customer, due to recurring

purchases.

�Higher retention rates, are associated with

the subscription mechanism.


� Large capital requirements for acquiring customers and starting

the business.

Critical points

the business.

�More challenging customer engagement because of the increased

financial commitment of subscription.

� Need for deep profiling of customers and tastes that are necessary

for inventory management and logistics.

� Requirement for“Try&buy”””” that is difficult to manage in terms of stocking

and logistics.

� High product specialization and curation for unique products not

easily found in traditional e-commerce settings


THANK YOU

www.principiasgr.it

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Principia SGR

subscription e-commerce - principia sgr

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