Internet Retailing

Internet Retailing

• 1.
  2010 Capital MarketsDay Mikael Olander, CEO CDON Group Internet Retailing Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 1
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  Where do youput your money? Indexed growth performance 2003–2009 Swedish retail sector Swedish internet retail CDON Group Source: Handelns Utredningsinstitut HUI Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 2
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  Background Segments and brands Entertainment Fashion Health &Sports CDON.COM NELLY.COM GYMGROSSISTEN.COM BOOKPLUS.FI LINUSLOTTA.COM BODYSTORE.COM LEKMER.SE Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 3
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  Background Positioned in the largest segments 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% Source: Posten Norden 2010 8. Food 4% Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 4
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  Background Competitive position Cdon.com Cdon.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.com Nelly 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.com Gymgrossisten 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 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 5
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  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 site Aggressively expanding assortment and adding new product groups Pan-Nordic rollout utilizing the Internet Retailing setup Cdon.com and Nelly.com are Pan-Nordic today Expanding the product portfolio through acquisitions Bought three companies in 2007, one in 2008 and one in 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 6
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  Background Timeline – key events 2009 2007 Integration of BookPlus.fi in Acquisition of Nelly.com CDON.com, expansion of Acquisition of LinusLotta.com Fashion’s and Health & Acquisition of BookPlus.fi Sports’ private label offerings 1999 Founding of CDON.com as an 2005 2007 online record store within MTG in 2010 Mobile phones and consumer Mp3 bookstore Sweden, Norway and Denmark Acquisition of Lekmer.se electronics store launched launched 1999 2000 2003 2004 2005 2006 2007 2008 2009 2010 2000 2003 2006 2008 New stores for DVD movies Swedish bookstore Digital movie-rental store Downloadable PC games store, merchandise and computer games launched (VoD) added store and Norwegian bookstore launched launched as well as launch in Finland 2004 2008 CDON.com is first to launch a Gymgrossisten.com and Bodystore.com Nordic online digital music store acquired and rolled out in Norway 2008 Pan Nordic roll-out of Nelly.com Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 7
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  Background Sales and EBIT development (TSEK) 2,000,000 200,000 +36 % 1,800,000 180,000 1,600,000 160,000 1,400,000 +41 % 140,000 1,200,000 120,000 Health & Sports +23 % 1,000,000 100,000 Fashion +25 % 800,000 80,000 Entertainment EBIT 600,000 60,000 400,000 40,000 200,000 20,000 0 0 2005 2006 2007 2008 2009 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 8
• 9.
  Background Sales by segment and market 76 12 Entertainment Fashion Sales 2009: SEK 1,337m Sales 2009: SEK 203m Growth: 26 % Growth: 157 % EBIT 2009: SEK 93m EBIT 2009: SEK 6m 15 24 52 Finland Health & Sports 12 Norway Sweden Sales 2009: SEK 213m 9 Share of CDON Growth: 47 % % Group sales EBIT 2009: SEK 26m Denmark Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 9
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  Business model Growth platform Get big fast Customer Synergies of scale leads to a benefits positive sales spiral increasing Lower our competitive advantage costs building barriers of entry Larger volumes All segments within Cdon Group Customer benefits shall have potential to reach Lower costs market leading positions and Larger correspond to the entertainment volumes segment in revenues. Customer benefits Lower costs Larger volumes Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 10
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  Business model Scale impact on cost structure CDON Group cost drivers Variable costs 72 % Cost of goods sold 13 % Direct selling costs (postage, fulfilment, bank&cc 85 % and bad debt) 6% Marketing & IT Fixed costs 8% Organisational (salaries, rent, admin) 15 % 1% Other opex Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 11
• 12.
  Business model Focus areas Ny bild Unique reach Nordic brand awareness Three focus areas that sets us apart from our competition General share of all 18-47 are our: year old that know either brand, ranging from ’heard • Mass marketing through Internet and TV advertising, of’ to ’know very well’ driving sales and building brand awareness. MTG’s channels are our preferred choice but also working with TV4, Pro7 and WSOY media group (Finland) Cdon.com 95 % • Huge cross sale and CRM potential in two million Nelly.com 64 % active customers Gymgrossisten 46 % • Best in class in-house SEO/SEM competence YouGov, Oct 2009 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 12
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  Business model Strategy Aggressively grow existing brands Grow existing brands by concept development and product range expansion Example: Private label collection Launched 2008. It now constitute approximately 20 % of total sales Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 13
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  Business model Strategy Geographical roll-out Grow existing brands by geographic roll-out Example: Lekmer to launch Pan- Nordic in Q4, 2010 Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 14
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  Business model Strategy Acquire new brands Continued growth through CDON Group growth vehicle, utilizing existing infrastructure, through acquisitions and inhouse start-ups Example: Acquired in 2010. Broadening of assortment in progress, Pan-Nordic roll-out to be executed this year. Scale-synergies with IT-platform migration, postal and payment agreements, group marketing etc. initiated Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 15
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  Internet retailing Large and growing market Large market Sources: 1. Swedish Retail Institute HUI, Posten Norden, and Forrester Research The Nordic online retail market is valued at SEK 61 billion, corresponding to approximately 3,8% of the total retail sales in 2009 Untapped potential The penetration in more mature markets like the US is more than 50% higher than in the Nordics1. Posten Norden expects the total Swedish distance retail market to double in the next five years Online Retail Penetration 20091 8% 6.0% 6% 4.7% 3.8% 3.7% 3.5% 3.4% 4% 2% 0% US Denmark Nordic avr. Sweden Norway Finland Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 16
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  Summary Conclusion • 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! Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 17
• 18.
  2010 Capital MarketsDay Mikael Olander, CEO CDON Group Internet Retailing Modern Times Group MTG AB Nasdaq OMX Stockholm : MTGA, MTGB 18