9. SHOP.CA Overview TECH15 Oct. 14 15

TECH15
October 14th, 2015
CONFIDENTIAL | 1
Table of Contents
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Introduction
!
Strategic Direction
!
Strategic Partnerships
CONFIDENTIAL | 2
INTRODUCTION
CONFIDENTIAL | 3
Market Opportunity
Significant
Addressable
Market Size
Canadian
Market
Growth has 2
Unique
“Rising Tides”
eCommerce
Globally
!
Canada projected to be $35 billion in 2016
!
10%+ CAGR over next five years
!
Canadian eCommerce Under-Developed
!
!
Canada = 4 to 6% of total retail
Cross Border Shopping
!
+/-50% of dollars spent online go to US sites
!
Stronger USD keeping more dollars in Canada
!
Projected to hit $1.9 trillion by 2016
!
Expected to grow by 53% over next 3 years
No Canadian market leader exists
CONFIDENTIAL | 4
Sources: StatsCan, eMarketer
Marketplace :: Aggregate Merchants & Shoppers
Merchants
Shoppers
Connecting Merchants & Shoppers
Supplier
World
Unique IP to Support Multi-Merchant Product, Order Management, Inventory, and Pricing Engine
Merchant
Products
! 
! 
! 
! 
Virtual Inventory
Price & Promotion
Brand Content
Channel Control
Demand
! 
! 
! 
! 
Merchandising
Single Cart
Loyalty
Customer Service
Send Orders
Ship Products
!  Pick
!  Pack
!  Ship
Get Orders
Receive Product
!  Receive Miles
!  Write Reviews
!  Share Experience
!  Merchant of Record
!  CRM & Repeat
Charge Card
Pay Merchant
CONFIDENTIAL | 5
Multi-Merchant Marketplace
For Canadian Consumers
Premium Experience
Inspired Discovery Online
Inspirational Brands
!  Segment Content & Product
!  Focused Premium Audience
!  Personalized Curation
!  Efficient Mix of Luxury-Mass
!  Bundles & Easy Subscriptions
!  Fashion, Baby, Home & More
For Merchants
Merchants
Customer Experience
!  Relentless Commitment to
WOW Every Engagement
!  Free Shipping & Returns
Marketplace-as-a-Service
Offering
!  Retailers
!  Hardware, Software, Pipe
!  Brand & Brand Aggregators
! eStore, Demand, Orders
!  Distributors
!  Customer Support & Loyalty
Benefits
!  Channel Control of Brand
Experience & Price
!  Known ROI via Post Order %
Loyalty
!  Aeroplan Premium
Experience
!  Share MORE, Earn MORE
For SHOP.CA
Business Model
!  Virtual Inventory / No Capital
!  Product Breadth & Drop Ship
!  Post Order
CONFIDENTIAL | 6
eCommerce Marketplace Importance in Global
Landscape
Globally, marketplaces are the most successful eCommerce model by sales, growth, profitability and
valuation.
!
These companies have proven it
!
Asset light business model is more capital efficient
!
Retailers looking to learn from marketplaces and increase the return on existing customer acquisition and
loyalty, and push larger returns on capital
!
U.S. Sears.com has run a marketplace for years, and now has over 110 million products on the
Sears.com marketplace that it neither holds inventory nor has available for sale in the physical
stores
And Now… Marketplaces Are Changing the Canadian eCommerce Landscape
The SHOP.CA Marketplace = Complete Accelerator and Defense
!
!
Complete integrated platform of technology, unique IP, merchant onboarding, CRM and loyalty
SHOP.CA’s existing Marketplace-as-a-Service breadth of premium merchants, product categories and
brands is:
!
!
An accelerator to any global marketplace, global retailer, or Canadian retailer
A defensive/early mover position to capitalize on the investment SHOP.CA has made to establish
Canada’s first marketplace
CONFIDENTIAL | 7
Canadian eCommerce & Marketplace Landscape
Company
Launched July 2012
!  27 Merchants
!  25 Product Categories
!  15 Million Products
!  Canada’s 1st Marketplace
Series A
$27.4 million
(Pre-Launch)
Series B
$31 million
Launch Aeroplan
partnership
500,000
Members
100
Merchants
700
Merchants
$100,000
Day
2012
450% YoY
Sales Growth
2013
1st Marketplace in
Canada Launches
Target Canada Opens
1st Store (no online)
Series C
$13.4 million
1 Million
Members
$1 Million
Day
2014
Signs 1st
China Based
Merchant
2015
Target Announces
Closing in Canada
Best Buy & Future
Shop Launch Drop Ship
Industry
Best Buy Closes 66
Future Shop Stores
Rakuten Closes
Canadian eReader &
eBook Acquisition
eBay Reports $1 Billion
in Canadian Sales
Amazon.ca Launches
Fulfillment by Amazon
in Canada
Amazon.ca Reports $1.5
Billion in Canadian Sales
Hudson’s Bay | Saks Deal
Accelerates Canadian
Luxury eCommerce
Drop
Ship
Best Buy Announces
Marketplace
Canada Post Opens State-ofthe-Arte Vancouver Parcel
Facility; Part of $1.7 billion
Modernization
Walmart.ca Drops
Free Shipping
CONFIDENTIAL | 8
Market Leadership Opportunity
!
eCommerce in Canada has many ‘rising tides’ that support outsized growth for
many years to come
!
No Canadian market leader exists, yet SHOP.CA is the best positioned:
!
!
Team and Expertise
!
Growth in Customers, Repeats, Merchants, Merchandise, Profit Margin
!
Platform and IP
!
Merchant and Supply Network
!
Strategic Partnerships
!
Customer Demographic
!
Focus
!
Existing Investors
As the leading Canadian pure play eCommerce/marketplace company, SHOP.CA
offers investors excellent exposure within a fragmented market
CONFIDENTIAL | 9
Marketplace-as-a-Service Technology Platform
!
SHOP.CA has combined its own in-house proprietary technology with systems from world-class technology partners
to develop SHOP.CA MaaS Technology Platform including SHOP.CA Supplier Word for MaaS Merchant Management
!
SHOP.CA’s ability to integrate and deploy the combination of leading-edge eCommerce application and technology
components and unique key differentiating solutions is a strong display of the team’s talent and expertise
Storefront
Marketing Campaigns
CRM, Personalization
Social Commerce
StoreCREDIT
Customer
Care
Campaign
Social Loyalty
Network
LIVEmail
EMM
Supplier World
Software
Development
Infrastructure
& Integration
Data Analytics
Finance
ImagePROCESSING
CONFIDENTIAL | 10
Supplier World :: Enables the Marketplace
Supplier Word
!
SHOP.CA Platform to Connect Merchants to Store Front
!
Data Integration for Product Catalog, Price, Inventory with
Distributed Order Management Across Multi-Merchant Stores
Product
Price
Inventory
Orders
!
Robust and Scalable Data Integration Layers with Flexible
Technologies to Support Near-Real-Time Flows of Price,
Inventory and Order Create, Fulfillment and Ship Notifications
Merchant Data Integration
!
Merchant User Web-Based Application to Manage All Aspects
of Product Catalog, Price, Inventory, and Order Management;
right down to Packing Slip Printing if Required.
Merchants
800+ Merchants
800+ Merchants
800+ Merchants
!
Dedicated Team at SHOP.CA Marketplace Operation Team &
Merchant Onboarding Methodology and Daily Operations
Management and Supported Wiki Site
!
Merchant Reporting & Dashboard for Performance and SLAs
!
Product Video Creation by SHOP.CA to Increase Conversion,
and Content Tuning for SEO and On-Site Search Optimization
!
SHOP.CA Merchandising Team, CRM Team and Marketing
Team Dedicated to Merchant
SHOP.CA’s World Class IP and Enterprise Global Scale
Via Unique Intellectual Property = “Supplier World”
CONFIDENTIAL | 11
2015 Key Performance Indicators
9-mths YTD vs PY
Visits
+1%
Conversion
+38%
Orders
+33%
AOV
+10%
Sales :: In-cart
+47%
Product Margin $
+50%
Product Margin %
+3%
New Members
157K; +36%
CONFIDENTIAL | 12
STRATEGIC DIRECTION
CONFIDENTIAL | 13
Continue Re-positioning to Premium
Market Position
Luxury
Premium
Exclusive
Mass
Outlet
Clearance
Wide Selection
Narrow Selection
Product & Category Selection
CONFIDENTIAL | 14
Premium Brands on SHOP.CA
CONFIDENTIAL | 15
2015 Initiatives :: Inspired Discovery
Transformation to Premium with Inspired Discovery
!
More Premium User Experiences & Features
!
More Premium Brands, Products and Content
!
Responsive Design to Enable Premium Tablet/Mobile
!
New SHOP.CA Site Launch | Premium Look-n-Feel
!
New Mobile App for iOS and Android
!
New Data Analytics and Business Insights
!
Enhanced Merchant Alerts and Reporting/Dashboards
!
New Social Commerce and User Generated Content
!
New Member Sign-Up Experience
!
New SHOP.CA Local Pilot including Scheduled Delivery
Merchandised Buying Guides
Fashion Inspiration Look Books
of Local Merchant Products (Grocery, Wine, more)
!
B2B
Bundling User Experiences
Inspire Customers to Discover the Convenience, Quality
and Benefits of SHOP.CA
CONFIDENTIAL | 16
Customer Base is Highly Affluent; Maturing
Stage in Life
!
Average customer age of 35-49
!
Families with children at home
!
Above average ethnic diversity
!
Above average household income of >
$96,000
!
28% of SHOP.CA customers have annual household income
above $100K, compared to ~19% of Canadian population
$100K+
27.6%
<$50K
37.2%
$50K $100K
35.1%
Tend to be homeowners, primarily
dwelling in single detached homes
!
Customer Base by Household Income
Customer Base by Age
Higher than average home value of
$450,000
65+
13.2%
50 - 64
19.7%
20 - 34
21.7%
35 - 49
22.3%
CONFIDENTIAL | 17
Product Category Performance
2014 Sales
Top 4 Leaders = 74% of Sales:
24%
26%
!
Home
!
Family/Baby
!
Fashion
!
Electronics
2015 Premium Focus on:
6%
24%
20%
Electronics
Home
Fashion
Baby
!
Home
!
Family/Baby
!
Fashion
Other
CONFIDENTIAL | 18
SHOP.CA Business Insights & Data Analytics
Business Insights & Data Analytics
!  Cohort Analysis
!  Media & Campaign Efficiency
!  Channel
!  Member Life-Time-Value
!  Brand and Product Profitability
Campaign Management
!  Campaign Setup
!  Offering Definitions
!  Segmentations
!  Multi-Wave Campaigns for New
Members, Repeat Members and
Onboarding Strategies
LTV
Cohort Analysis
Experience ONE
(Unica)
Exact Target
Salesforce.com
Coremetrics
WCS
Media & Marketing
Costs
Google AdWords
ZenDesk
GoodData
eBay PepperJam
Bazaarvoice
Share-IN
(StoryBox)
Data-Mart
Google Analytics
Supplier World
NetSuite
Social
Integration Layer
Aeroplan
Rich Relevance
Data Sources
Enhanced BI & Analytics will Empower Greater Personalization for Customers
CONFIDENTIAL | 19
SHOP.CA
Margin Opportunities
Gross Margin Opportunities
Merchandise higher margin
categories
‘Launch’ Supplier Agreements
rolling off
Acquire customers that shop in
higher margin categories
Listing fees for merchants
Merchant funded ‘miles’
Shipping Policies
Exclusive inventory to Canada
Service businesses
EBITDA Margin Opportunities
Increase repeat, lower overall
CPO
Constant cost containment
CONFIDENTIAL | 20
STRATEGIC PARTNERSHIPS
CONFIDENTIAL | 21
Customized Marketing Value
Unique Access to Canadians
!
!
!
!
!
4.8 Million Aeroplan Members
800,000 TD | Aeroplan Members
400,000 AMEX | Members
3.2 Million Shaw Subscribers
Other Partnerships Include:
CONFIDENTIAL | 22
Exclusive Strategic Alliance
!
SHOP.CA launched an exclusive loyalty partnership with Aeroplan on May 2014
!
Aeroplan acquires customers for SHOP.CA, and SHOP.CA offers these customers ‘Aeroplan Miles’ on purchases
!
AIMIA, parent company of Aeroplan, is a global leader in loyalty management
!
Beyond Aeroplan, AIMIA has 30+ million loyalty customers worldwide
Products
Platform
Innovation
Branding
Customers
New Partnership is Performing Very Well
!
Gross Margins and Average Order Value Up Dramatically Since Launch of Aeroplan Partnership in May 2014
!
!
Gross profit up 590% YoY in 2015 Q1, Aeroplan Customer AOV LTD is $238
Very strong over-penetration of high value, high AOV Distinction members (35% of member customers since
launch vs. 15% for general Aeroplan base)
CONFIDENTIAL | 23
Exclusive Partnership with Aeroplan Drives
Growth and Retention
SHOP.CA’s Aeroplan partnership provides access to one of Canada’s most desirable customer bases, while
helping to increase repeat behaviour.
Gross Margin Before / A0er Aeroplan % of Net Revenue Pre-Aeroplan
•  SHOP.CA launched an exclusive loyalty partnership with
Aeroplan in May 2014
•  Aeroplan = Customer acquisition & retention
•  The Aeroplan partnership has been a resounding
success for SHOP.CA
•  Gross Margins and Average Order Value have risen
dramatically since launch of partnershi
•  Gross Margin up 460 bps and AOV up $68 since
inception •  Aeroplan members tend to spend more online, on
premium, high margin merchandise
•  Very strong over-penetration of high value, high AOV
Aeroplan Distinction members (31% of member
customers since launch vs. 15% for general Aeroplan
base)
Post-Aeroplan
11.2%
6.6%
Jan 13
-­‐ Apr 14
May 14
-­‐ May 15
AOV Before / After Aeroplan
Pre-Aeroplan
C$
Post-Aeroplan
$199
$131
Jan 13
-­‐ Apr 14
May 14
-­‐ May 15
% of Active Members Who Have Repeated in
Last 12 Months Before / After Aeroplan
% of Active Customers
Pre-Aeroplan
27.5%
Apr 14
Post-Aeroplan
36.1%
May 15
CONFIDENTIAL | 24
Shaw :: Investor & Strategic Partner
!
Shaw Communications is one of Canada’s largest telecommunications & media companies and
they participated in SHOP.CA’s Series B & C capital raises
!
SHOP.CA works closely with Shaw on many strategic initiatives in television and beyond
!
Future opportunities include:
!
Mobile apps, and possible interactive TV commerce
!
Monthly subscription services to Shaw’s 3.2 million customers (home care bundles, pet
care bundles, beauty kits, baby care)
Products
Platform
Innovation
Television Ad
Partner
Online/App
Partner
Interactive TV
CONFIDENTIAL | 25
SUMMARY
!
One of Canada’s Largest eCommerce Destinations and Fastest Growing
Retailers
!
Strong Fundamental eCommerce Opportunity in Canada
!
Exclusive Partnership with Aeroplan Drives Growth and Customer Retention
!
Young and Affluent Customer Base
!
Premium Product Offering Enabled by Broad Network of Merchants
!
Powerful Technology Platform, Intellectual Property & Data Analytics
!
Wide Customer Reach Through Unique Marketing Partnerships
!
Significant Incremental Growth Opportunities Available
!
Experienced Management Team of Technology, Media, and eCommerce
Professionals
Canada’s First Multi-Merchant Multi-category
Marketplace…..and only Pure-Play
CONFIDENTIAL | 26
Thank You
CONFIDENTIAL | 27