Home24 presentation Building the online destination for home & living August 2018
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home24 presentation Building the online destination for home & living August 2018 0
Our mission: to be the online destination for home & living
1
Thinking of customers in home & living offline retail today –
does this look familiar to you?
2
3
We offer the best value and an inspiring home & living
experience to mass market consumers
Superior Great value Fast & convenient Amazing
assortment for money delivery experience
Private label
50+ carriers
managed
#1
50/501 via home24
Home & living
destination4
platform
3rd party
Broad and relevant Superior price / value for Fast and reliable delivery, Unique home & living tailored
selection money, with 100% free into your home with shopping experience online
delivery and returns2 flexible slot scheduling3 and in showrooms
3
1. Approximation of 2017 revenue split. 2. On all items in Europe. 3. In Europe for 2 man handling. 4. Best iOS shopping app in Apple app store for Germany (2015).
Founder-led management team
Marc Appelhoff Christoph Cordes Philipp Kreibohm Johannes Schaback
Founder Fashion For Home Founder Fashion For Home Founder home24 Founder Visual Meta
Management Board Management Board Management Board Management Board
Marketing, Sales, Finance Operations, Assortment Business development, HR, Legal Technology, Data
4
We are the #1 pure-play home & living e-commerce platform
in continental Europe and Brazil
#1
In continental
Europe
#1
In Brazil
€117b+ €276m 85% c.€350 45% First
1
Huge and uniquely
attractive home & living
market opportunity with
high barriers to entry
6
We target a huge addressable market Global home & living market1 > €550bn Europe and Brazil home & living market > €200bn home24 footprint2 home & living market > €117bn Source: Euromonitor International. 1. Home & living market defined as Euromonitor Passport: Home and Garden categories “homewares” and “home furnishings” (EUR using 2017 fixed exchange rates) 7 2. home24 markets consisting of Germany, France, Italy, the Netherlands, Belgium, Austria, Switzerland and Brazil.
Home & living is on the verge of online acceleration
with potential already proven in the US and UK
Online penetration by industry in home24 markets1 Home & living online penetration by geography
25% 25%
Consumer
electronics:
23.7%
20%
5x Traditional
toys and
games: 20.0%
20%
3x
Penetration Upside Penetration Upside
15% Consumer 15%
UK: 14.2%
appliance: 13.9%
Fashion: 12.0% US: 12.2%
10% 10%
4.8% Home & living 4.8% Home & living
0% 0%
Early days Acceleration Growth Early days Acceleration Growth
Source: Euromonitor International, 2017A (except for Traditional Toys and Games, which is 2017E). 8
1. Consists of home24’s target markets Germany, France, Italy, the Netherlands, Austria, Belgium, Switzerland and Brazil.
Online home & living growth expected to accelerate,
supported by millennials becoming nest builders
Home and living online sales volume in home24 markets1 Home & living spending per age group
Online growth to
accelerate as
digitally savvy
millennials enter
home shopping age
11%
CAGR
2022
2017
2012
65 years
Sources: Euromonitor International, Management estimates.
1. Consists of Germany, France, Italy, the Netherlands, Belgium, Austria, Switzerland and Brazil. 9
2. Management estimates.There are no strong consumer brands in home & living
SOFA
?
10Market ripe for disruption due to highly fragmented supplier
landscape and retail landscape
Fragmented supplier landscape1 Fragmented retail landscape2
c. 97% 72%
of all suppliers have of the market
limited market highly fragmented
power with no
strong brands
28%
3% c.1%
Companies with Companies with Companies with Top 5 Rest of the market
revenue < €10m revenue of €10m – €100m revenue > €100m
Huge private label opportunity International market leader IKEA only has 16% share3
Negotiation power lies with the Market beyond top 5 is extremely
strongest retail platform fragmented with mostly local / regional players
Opportunity to build a leading platform brand No strong online presence even by offline market leaders
Source: PwC – “PwC Marktstudie Möbelbranche 2017”; Euromonitor International.
1. Germany only.
2. 2016 revenues in home24 markets converted to EUR using 2016 exchange rates; refers to Euromonitor “homewares and home furnishings stores” segment by brand shares. 11
3. Blended share across home24 markets.2
Leading pure-play
online platform in
continental Europe
and Brazil
12Home & living challenge I:
• Products with high basket size / AOV and without established consumer brands in mass market
Low value High value
High brand trust low brand trust
13We have built the leading pure-play online home & living
brand in Germany
Brand awareness1
67%
#1
67%
brand in Germany
36%
36% 33%
33%
26%
26% 26%
26%
23%
23%
15%
15% 15%
15% 14%
14% 13% 13%
13% 13% 12%
12%
2
Sources: EY Report (‘Einrichtung Online – was will der Kunde, was kann der Handel?‘).
1. Proportion of interviewed people (by EY) aware of those brands. Excl. price comparison website Moebel.de, which had a brand awareness of 68%, but does not sell any home & living products itself. 14
2. Shopping club.3
Unique home24
business model
driving superior
economics and
customer proposition
15Home & living challenges II and III:
• Identify and source relevant assortment in a market with no brands and abundant product variety
• Inventory management: make bulky and high value items available at short delivery times and
still remain working capital neutral
16home24 solves these challenges by combining non-inventory
3rd party model with vertically integrated private label model
Model
3rd party products Private label
Assortment Broad assortment Attractive bestsellers
focus (high conversion, mostly long tail) (high margin)
Sourcing & Mostly non-inventory and Vertically integrated,
fulfilment drop-shipped Big data to mostly held on stock
identify
• Broad but curated assortment bestsellers • Superior gross margin & pricing
• No inventory risk • Minimal inventory risk
Benefits
• Negative working capital • Direct sourcing focus
• Rich data on customer preferences • Very short delivery times
• c.50% of sales • c.50% of sales
Economics1
• c.75% of SKUs • c.25% of SKUs
17
1. Based on FY2017 financials.4
Scalable end-to-end
automated and
vertically integrated
value chain
18Home & living challenge IV:
• Extremely complex logistics and delivery for multi-component and heavy/bulky products
19We invest heavily to create an end-to-end process optimized
and automated fulfilment platform
Integrated end-to-end automated platform
Automated
End-to-end
Sourcing Warehousing Delivery
• 500+ supplier network1 • 3 centralised scalable • Self-managed inbound /
warehouses mid-mile logistics
• Seamless ERP integration
to drive transparency and • c.137,000 sqm capacity2 • Network of 3rd party last
speed with expansion mile providers managed
headroom by home24 Scalable
• On the ground quality
control • Automated data driven • Own last mile delivery in
reordering Brazil
1. As of December 31st, 2017. 20
2. Expected capacity by end of 2018.5
Scalable first order
profitable customer
acquisition
21Home & living challenge V: scalable online demand largely in
short tail generic search without brands
\ Strong brands –
multiple specific
search terms
No brands –
few generic
search terms
22First order profitability driven by unique home24 model
• Large relevant assortment More impressions & higher
• Short delivery times conversion
• Attractive consumer prices
• c.50% private label share
+
• High AOV Superior contribution margin
• Low returns
+
• Automated proprietary
Ability to scale top line at stable CAC1
marketing engine
=
First order profitability
1. Customer acquisition costs (CAC) defined as marketing costs (performance marketing + ATL marketing) divided by new customer share (based on net sales order view, defined as GOV after estimated returns, 23
cancellations, rebates and VAT and prior to IFRS realization profile) times total orders for the respective quarter.6
Best-in-class
technology platform
empowering
data-driven decision
making and
automation
24We collect vast volumes of data on a daily basis to drive
superior decisions across the value chain
Input Customer data Assortment data Fulfilment data 3rd party data
Order history Browsing Available Crawling of competitor price &
Supplier Availability Stock levels delivery times
carriers
Google 360 Marketing
Demographics Session
analytics costs
data Product Delivery
Pricing Item location
Decision time Reviews features mode Industry X-Device
lag fairs/events session
Design trends ! Risk scoring
Accurate Audience Optimise
Identify & fill Optimise Automated
Sorting Curation marketing optimised warehouse
white spaces availability re-stocking
contribution acquisition utilization
Predict & Develop Personalised Optimise
marketing Live delivery Minimise
stock superior Search Personalisation suggestions/
channel on information delivery time
bestsellers private label offers
daily basis
Output Assortment Webshop Marketing & CRM Fulfilment
257
Multiple drivers for
sustainable long-
term growth with
significant margin
upside
26home24 has multi-dimensional drivers for sustainable
long-term growth
Structural Market Platform Market
growth + penetration + development + expansion
Expand into
Accelerate Introduce new Enhance Adopt new
Benefit from Enhance new
through further categories e.g. shopping technologies to
increasing product offering geographies
roll-out of to drive journey to foster
online in existing and capitalize
“go-to-market” purchase increase brand competitive
penetration categories on high market
approach frequency loyalty advantage
fragmentation
27We are in a unique position to be the online destination for
home & living
Market Offering
Online penetration on We have cracked the code:
tipping point of right balance of private label
acceleration to follow and 3rd party products to offer
UK and US the most relevant choice at
superior gross margins
Growth Value chain
Established marketing Our platform is ready:
machine with first order scalable end-to-end
profitable customer automated value chain
acquisition at scale
28Disclaimer
This presentation has been prepared by home24 SE (the “Company“). All material contained in this document and the information presented is for
information purposes only and does not purport to be a full or complete description of the Company and its affiliated entities. This presentation must
not be relied on for any purpose.
This presentation contains forward-looking statements. These statements are based on the current views, expectations, assumptions and information
of the management of the Company. Forward-looking statements should not be construed as a promise of future results and developments and
involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from
those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions
expressed in this presentation or the underlying assumptions. The Company does not assume any obligations to update any forward-looking
statements.
This presentation contains certain financial measures that are not calculated in accordance with IFRS and are therefore considered “non-IFRS financial
measures”. The management of the Company believes that these non-IFRS financial measures used by the Company, when considered in conjunction
with, but not in lieu of, other measures that are computed in accordance with IFRS, enhance an understanding of the Company’s results of
operations, financial position and cash flows. A number of these non-IFRS financial measures are also commonly used by securities analysts, credit
rating agencies and investors to evaluate and compare the periodic and future operating performance and value of other companies with which the
Company competes. These non-IFRS financial measures should not be considered in isolation as a measure of the Company’s profitability or liquidity,
and should be considered in addition to, rather than as a substitute for, income data or cash flow data prepared in accordance with IFRS. In particular,
there are material limitations associated with the use of non-IFRS financial measures, including the limitations inherent in determination of each of
the relevant adjustments. The non-IFRS financial measures used by the Company may differ from, and not be comparable to, similarly-titled measures
used by other companies.
Certain numerical data, financial information and market data, including percentages, in this presentation have been rounded according to
established commercial standards. Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the
respective tables and charts.
29Investor Contact Media Contact Philipp Steinhäuser Viktoria Solms VP Finance & Investor Relations VP Corporate Communications home24 SE home24 SE Greifswalder Str. 212/213 Greifswalder Str. 212/213 10405 Berlin 10405 Berlin E-Mail: ir@home24.de E-Mail: viktoria.solms@home24.de Phone: +49 30 201 634 728 Phone: +49 162 244 07 65
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