Mobile CommerceAcross the US and China

@GGVCapital

• The US and China Markets

• The Critical Role of Social and Payments

• Relationship to Offline

• The Trends to Watch in 2014

Contents

Special thanks to researchers Andy Bromberg, Jacob Cooper, Kai Jiang and Karine Hsu

3

The US and China Markets

4

US mobile commerce market is growing with

the rise of smartphones – with $41.7B spent in 2013 and $113.6B projected by 2017.

2.7XG R O W T H I N

N E X T 4 Y E A R S

Source: eMarketer, “US Retail Mcommerce Sales, By Device, 2011-2017,” Sep 2013.

5

China is leading the US in m-commerce adoption

Sources: Nielsen, “The Asia Mobile Consumer Decoded,” September 2013(1) Mastercard Online Shopping Survey, 2013. Represents percentage of respondents who have made a

purchase on a mobile phone in the past 3 months.(2) Business Intelligence by Business Insider, 2013. Represents percentage of US consumers who have

ever purchased something with their smartphone; percentage who have made a mobile purchase within 3 months would be lower than this.

U S C H I N A

46% of mobile users have ever purchased something on their device

59% of mobile users have purchased something on their device in the last three months

China will soon outpace the US in mobile spend

Sources: US data is from ComsCore and eMarketer, 2013. China data is from iResearch, 2013. Note: Chinese m-commerce figures have been converted from RMB at the rate of 6.23RMB per dollar.

In 2013, users in China spent $26.7B through mobile, representing 51% average quarterly growth – compared to only 15% in the US.

Top shopping apps have very high engagement in US

Source: Mobidia, as cited by Internet Retailer, 2014. 7

% of Users Who Use App At Least Weekly on iOS

50%

Wish

76%

H&M

79%

Retailmenot

74%

Shopkick

76%

Victoria’s Secret

8

But China is already 12-18 months ahead of the US

Meilishuo via iOS mobile app. Disclosure: GGV is an investor in Meilishuo. Source: (1) China Network Information Center (CNNIC), as cited by The Next Web, Jan 2014, press releases, Enfodesk.

2 0 1 1 2 0 1 2 2 0 1 3

1.5M

10M

60M

Meilishuo Mobile Downloads (approx.)

Mobile commerce platforms like Meilishuo and Mogujie are already generating billions of dollars in GMV.

Top categories in Asia vs. North America

Source: SAP Mobile Consumer Report, 2013.9

Clothes/Footwear

Book/E-Books

Telecom Bill

Groceries/Food

Entertainment

Travel/Transport Tickets

Music Downloads

49%

47%

46%

45%

44%

44%

42%

33%

36%

22%

20%

39%

20%

39%

Product Categories for Mobile Shoppers by Region (by % Who Have Bought Something)

North America Asia Pacific M-Commerce is more prevalent in Asia across all categories.

10 Source: eMarketer, April 2013; ComScore MobiLens, August 2013.

Clothing and accessories are one of the top products purchased on mobile, with 54% of tablet shoppers in the US making a purchase in the category

Mobile shoppers are fashion shoppers

11Sources: eMarketer, 2013; Expedia / Egencia “Future of Mobile Travel” Survey, 2013; Hotwire / Harris Interactive “The American Travel Behavior Survey”, 2013.

Mobile travel dollars are forecasted to make up 25% of total digital travel spend in the US by 2016.

But travel is also gaining traction

12

The Critical Role of Social and Payments

13

Pinterest Facebook Twitter

71%62%

78%

7%

9%

4%14%

21%

13%

8% 8% 5%

P U R C H A S E S M A D E O N M O B I L E

All of them Most of them Some of them None

M-Commerce correlates strongly with social

Source: Vision Critical, “From Social to Sale” report, based on a survey of 6,000 users of Pinterest, Facebook and Twitter, 2013.

Purchases that are driven by social platforms are predominantly made on mobile.

14

The convergence of social and retail is strong in Asia

Xiaomi sold 150,000 smartphones in under 10 minutes on WeChat in November 2013

R E T A I L E R S D I S T R I B U T E T H R O U G H S O C I A L

S O C I A L C H A N N E L S A D D I N G M - C O M M E R C E

T O P E - C O M M E R C E D E S T I N A T I O N S I N V E S T I N S O C I A L

In Feb 2014, WeChat announced the support of payments to merchants from Meilishuo, a top social fashion site in China

In April 2013, Alibaba bought an 18% stake in Weibo, China’s Twitter equivalent, for $586M

Growth of mobile payments supports m-commerce

15 Source: (1) Gartner, “Forecast: Mobile Payment Worldwide, 2013 Update.”

2010 2011 2012 2013 2014 2015 2016 2017

$53 $101

$163

$235

$325

$431

$563

$721

G L O B A L M O B I L E P A Y M E N T S ( B I L L I O N S )

The growth in mobile payment volume, expected at 35% CAGR, will bolster the growth of mobile commerce.

O N L I N E M E R C H A N T P R O C E S S I N G

The mobile payment space has boomed and diversified

M O B I L E P O S

P 2 P P A Y M E N T T R A N S F E R

C A R R I E R B I L L I N G

Classifications are based on key strengths of each company, but companies may offer feature sets that span multiple categories.

W A L L E T S

Branded White-labelled

17

Case Study: Starbucks

Starbucks is a leader in mobile commerce and payments, with its loyalty-based prepaid cards, apps and partnership with Square.

• Engagement is high, with 5M weekly mobile transactions from an install base of 10M customers

• Recently, Starbucks announced the addition of mobile tipping for baristas, and is considering licensing its mobile payments technology to retailers

July '13 Nov '13 Mar '14

10% 11%14%

M O B I L E A S % O F T O T A L P A Y M E N T S

18

Relationship to Offline

19

Mobile is still a small percentage of sales

Source: Internet Retailer, “2014 Mobile 500.” Total sales figures are from Capital IQ.

Apple

Amaz

on

Wal

mar

t

Group

onHSN

Overs

tock

Costc

o

Office

Dep

ot

Best B

uy

5%

11%

<1%

21%

9%

19%

<1%

2%

<1%

2 0 1 3 M O B I L E S A L E S A S % O F T O T A L S A L E S

Retail leaders – even e-commerce leaders – are still behind the mobile curve

20 Source: ComScore, “Multiscreen Path to Purchasing,” 2013.

67% of consumers have started a shopping process on a mobile device, but completed the purchase elsewhere

21

Mobile touches many parts of the buying process

Source: Nielsen Mobile Shopping Report, Q3 2013. Includes 3,032 respondents over the age of 18.

Using store locator to find store

Checking price

Researching item before purchase

Using lists while shopping

Using mobile coupon

Reading review of future/recent purchase

Making a digital purchase

Using a device for payment

Purchasing a phyical item on device

Purchasing a service

Writing a review of a purchase

Using social media to comment on a purchase

0% 10%20%30%40%50%60%70%80%

% Tablet Shoppers % Smartphone Shoppers

Only 40-45% of smart-phone shoppers have actually made a purchase on their device, but they are using for related tasks.

22

Huge opportunities to align offline and mobile

Prepaid Accounts / Apps - Prepaid cards, available on a mobile app, can drive huge sales and traffic.E X : S T A R B U C K S

Same-Day Delivery – These networks rely on physical store inventory, but offer the same convenience as standard e-commerce and are accessible from mobile apps.E X : I N S T A C A R T - P O S T M A T E S - D E L I V - S H Y P

Location-Based Marketing - A slew of these companies exist, but retail adoption has just started to accelerateE X : R E T A I L N E X T - E S T I M O T E - S H O P K I C K -B E L L Y C A R D - A I S L E 4 1 1 - E U C L I D

Trends to Watch in 2014

24

Payments and Social Advances

Mobile payments beyond phones and tablets

• eBay has developed shopping apps for both the Samsung Gear and Pebble smart watches

• Paypal has partnered with Samsung to enable in-store check-ins and payments on Gear 2 watches

• Wallaby, a mobile wallet that helps users optimize credit card rewards, has released apps for Google Glass and Pebble watch

• Who to watch:

Mobile Vertical Commerce + Communities

• Fast-growing private companies that are mobile-first and have launched in the last 5 years

• Picking large categories served traditionally by horizontal e-commerce players and offline retailers with little mobile presence

• Innovating through user experience, curation, trust, social recommendations

• Integrating experience across content, commerce, and community

• Who to watch:

Disclosure: GGV is an investor in Square, Houzz, Citrus Lane and Wish

25

Mobile – Offline Experiences

Beacon Technologies in Retail Stores

• Apple is placing a big bet on its iBeacon technology, which enables iOS devices to communicate with Bluetooth Low Energy (BLE)-enabled sensors to send proximity-based promotions, track foot traffic or potentially enable payments

• Retailers such as American Apparel are piloting the technology for in-store payments and ads (powered by loyalty app Shopkick)

• Android devices running KitKat are already able to detect BLE-enabled sensors, which will help drive adoption beyond Apple users

• Who to watch:

Same-Day Delivery Services

• Crowd-sourced, courier-based, same-day delivery networks are fairly prevalent in large Chinese cities and are just now coming to the US.

• Services like Deliv and Postmates offer inexpensive, same-day delivery from physical stores, accessible from a mobile app

• Such services are partnering with local merchants and retailers to offer the same convenience as e-commerce.

• Who to watch: