eCommerce

February 2014

2

Contents

approach

1. Market overview

2. Case studies

3. M&A market

3

• UK is one of the most mature markets

- Largest market in EU- 39m out of 63.3m of UK population already buy

online

• 2013 ‘year of the mobile’

- Twice as much spent on mobile devices in December 2013 compared to December 2012

• Growth in 2013, supported by:

- Increase in services such as click/reserve and collect

• US retailers fail to capitalize on overseas market

- Over 1/3 of US retailers have not expanded internationally

• In 2014, consumers in APAC will spend more online than those in North America

- APAC will claim more than 46% of digital buyers, onlly16.9% of population

• Growth in 2014 will come from:

- Expanding online and mobile user bases in emerging markets

- Increasing mCommerce sales- Advancing shipping and payment options- Push into new international markets by major brands

eCommerce – key stats

Sources: eConsultancy (January 2014), IMRG (January 2014), International Business Times (October 2013), eCommerce week (January 2014), bpost international (January 2014)

$trn

35%

32%

23%

4%4%

2%

APAC

North America

Wesern Europe

Central & Eastern Europe

Latin America

Middle East & Africa

1.058

1.248

1.5

1.763

2.043

2.345

0

0.5

1

1.5

2

2.5

2012 2013 2014 2015 2016 2017

B2C eCommerce Sales Worldwide

B2C eCommerce Sales Worldwide in 2014, by region

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Trends – 7 predictions for 2014

1. Tablet first design – default for responsive websites is still desktop – with tablets overtaking PCs in 2016 it is likely that responsive websites will be designed for tablet first

2. Cross-channel purchase journeys – currently cross-channel purchase journeys are being enabled by location and identification tools / solutions, i.e. iBeacons, and wearables such as Galaxy gear

3. Mobile payments won’t take off until 2015 – consumers still need a convincing reason on why they should use mwallets and until then retailers are unlikely to invest in this technology. A large number of different mwallet technologies have come to market recently – still not known which of these will make the biggest impact

4. Consumers learning value of data and privacy – consumers are becoming more savvy about their digital presence and the value of their data to advertisers. Needs to be a clearer value exchange – so consumers are incentivised to provide etailers with data about themselves and are aware on where that data is going

5. Mobile and tablet purchase points – according to some sources one in five store checkouts will take place on a mobile / tablet by 2015

6. Reduce high return rates – etailers currently face high return rates, on average return rates are 25% but some etailers face return rates of >50%. Customers need to have enough information to make an informed purchase and there is too much inconsistency in sizing – solutions such as virtual changing rooms are attempting to combat this

7. Learn how to accelerate growth – for bricks & mortar retailers it was easy to accelerate growth by opening a new store – online retailers need to master how to continue growth of their online stores, by both attracting new customers and retaining existing customers

Sources: The Drum (February 2014), Talk Business Magazine (December 2013),

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eCommerce platform / full solution providers landscape

Platform Providers Full Solution Providers

Provide fundamental eCommerce platform. Re-usable software that can be implemented by third

party or in-house developers

Use either third party or proprietary software as a starting point in delivering a fully functional online

store

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eCommerce agency landscape

Magento Hybris Demandware Other

Ag

en

cie

sA

gen

cie

s &

Syste

ms

Inte

gra

tors

Syste

ms

Inte

gra

tors

Agencies looking to move into ‘full solution provider’ landscape

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Contents

approach

1. Market overview

2. Case studies

3. M&A market

8

What do they do?

Establish a new eCommerce platform

• Developed and implemented solution architecture

• Brand• Creative• Technical strategies• Hybris platform – local

integration hubs, templates and merchandising configurations

• Harmonised digital presence, brand consistency to user experience and product representation

Results

• Roll out of platform in- US (April 2013)- Japan (September

2013)- UK (December 2013)

Platform

Example – Case study

Systems Integrator

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What do they do?

• Magento Gold Solution Partner

• Delivers Magento Enterprise platform but as a Summit Magento solution

- Summit delivers, maintains and hosts this platform

• Integrating back end systems (ERP) e.g. SAP, Navision, Axapta, Sage

• Digital marketing services

- SEO – ensure platform is SEO friendly- UX – optimise user experience and maximise

conversion through MVT, analytics and usability testing

• Provide advice and recommendations to improve platform every month

• Solution architects, developers and testers to improve functionality and performance of platform

• Clients

Platform

Service Offering

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Contents

approach

1. Market overview

2. Case studies

3. M&A market

Adtech

Adtech

2013 Global M&A Deals – Infographic

Geographical Split Subsector Split

Major Buyers

Other – 27 deals

By quarter

Deal type 1Q4

2

9

PE/VC backed deals

Cross border deals

South America0 deals

North America7deals

Africa0 deals

Western Europe6 deals

UK7 deals

Eastern Europe0 deals

Canada1 deal

Middle East0 deals

APAC9 deals

Q1

11

Q3

8

Q2

10

Social Media Agency

Total deals = 30

6

10

14

Marketing services

Digital media

22

eBay Yahoo

12

M&A market overviewDate Buyer

Country of Buyer

TargetCountry of Target

EV (£m)

EV/REVEV / EBIT

Target Description

Oct-13 RIESTER US Search-Werks US n.a. n.a. n.a.Full service eCommerce agency

Oct-13 UK UK 6* n.a. n.a. Digital solutions provider

Aug-13 Newgistics USTacit Knowledge

US n.a. n.a. n.a.eCommerce development and consulting services

Aug-13ICF International

USeCommerce Accelerator

US n.a. n.a. n.a.Multi channel eCommerce integrator

Aug-13Hirschen Group

Germany Tengelmann Germany n.a. n.a. n.a.Full service eCommerce agency

Jun-13 Otto Germany NetImpact Germany n.a. n.a. n.a.Digital agency that specialises in eCommerce

May-13 Accenture UK Acquity Group US 186 2.0x 16.6xFull service eCommerce agency

Aug-13 Publicis France Neev India n.a. n.a. n.a.Technology services provider in eCommerce

Mar-13 Seren UK BaoBaz UK n.a. n.a. n.a.Full service eCommerce agency

Mar-13 St Ives UK Amaze UK 15 1.2x 9.4xDigital marketing and technology agency

Mar-13 BiteDigital UK LoSource UK n.a. n.a. n.a.Magento team – specialists in Magento eCommerce platform

Jan-13 WPP US Salmon UK n.a. n.a. n.a. eCommerce digital agency

Nov-12 LbiThe Netherlands

Sceneric UK n.a. n.a. n.a.eCommerce consultancy and systems integrator

Sep-12 Navarre US SpeedFC US 43  1.1x  35.0x eCommerce service provider

Jun-12 GroupFMG US Pod1 US n.a. n.a. n.a.eCommerce website design & development agency

Jan-12Zeon Solutions

US Grand River US n.a. n.a. n.a. eCommerce development firm

Note:*Deal size rather than EVInitial consideration has been used to calculate EVEBIT is adjusted for exceptionals where appropriate

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News

PFSweb, an ecommerce solutions provider, looks to make both systems integrator and pure-play digital agency acquisitions

Webtise, an eCommerce agency is looking to acquire a specialist eCommerce digital agency to strengthen expertise in SEO, PPC, social media & conversion rate optimisation

Sources: The Business Desk (December 2013), Mergermarket (January 2014)