Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B...
Transcript of Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B...
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Retail B2B e-Commerce Leadership
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We Provide B2B e-CommerceServices to the Retail Industry
QRS Mission
Retailers
Vendors
Manufacturers
Carriers
eCommerceeCommerce ContentContent ApplicationsApplications MarketplaceMarketplace
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QRS Snapshot
• Founded in 1988, IPO in 1993 at $8.00 per share
• Four B2B e-commerce service groups
• Established user base of approximately 8,500 customers
• Headquartered in San Francisco Bay Area
• Approximately 400 full-time employees
• LTM revenues of $119 million, net income of $22 million
• Sequential revenue growth over past 25 quarters
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Investment Highlights
• Huge B2B e-commerce market opportunity
• Leader in retail B2B e-commerce services
• Recently introduced Tradeweave Internet community andmarketplace
• Leverageable industry expertise, customer network andcontent assets
• Highly efficient distribution strategy
• Expanding into new markets - grocery and international
• Proven recurring revenue model
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1998 2003
$43 Billion
$1.3 Trillion
Very Large Market Opportunity
B2B e-Commerce GrowthGlobal Retail Sales
Source: Euromonitor, US Government. Source: Forrester Research.
Total size = $6.5 trillion
U.S. = $2.7 Trillion
CAGR=98%
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Retail Industry Today
• Highly fragmented and highly competitive
• Enormous inefficiencies– Estimated $102B in operating inefficiencies per year
– Merchandise stock-outs occur 8% rate
– 20% of U.S. retail sales is excess merchandise
– Over 80% of transactions still paper-based
• Opportunity and dislocations due to Internet– e-Retailing
– Access to global customers and suppliers
• Limited time or resources to implement key technologies
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From Supply Chain to Demand Chain
Manufacturer
Wholesaler/Distributor
Import/Export
Transportation
Retailer
Raw Materials
Pull
Push
θ Consumer-centric
θ Move information
θ Just-in-time everything
θ Product-centric
θ Move goods
θ Inventory-buffers
Customer
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Retail still predominately paper based Collaborative efforts are in their infancy
Reduced expenses
Reduced cycle time
Reduced inventory costs
Network benefits
New customers and markets
Retail industry savings opportunity is $102B
Stages of B2B e-Commerce Implementation
Collaborativeand HostedApplications
Shared Product Information / UPC Catalog
ElectronicExchange ofDocuments
Online Marketsand TradingCommunities
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B2B e-Commerce Services to theRetail Industry
Manufacturers
Vendors
Carriers
Retailers
MarketplaceServices
ContentServices
ApplicationServices
eCommerceServices
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QRS B2B e-Commerce Services
Collaborativeand HostedApplications
Shared Product Information / UPC Catalog
ElectronicExchange ofDocuments
Online Marketsand TradingCommunities
eCommerce Services Content Services Application Services Marketplace Services
ECESEC Enabling ServicesEC Enabling Services
Internet Community & MarketplaceInternet Community & Marketplace
Tradeweave
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“Point to Point” ProblemsNo standards
Pockets of informationNo collaboration
Redundant efforts
“Network” BenefitsTime to market
Shared informationIncreased efficiency
Customer / market insight
QRS Advantage
Grocery Store
ApparelVendor
SpecialtyStore
DiscountStore
ShoeVendor
FoodVendor
Dept.Store
HardwareVendor
FoodVendor
Dept.Store
ShoeVendor
DiscountStore
SpecialtyStore
GroceryStore
ApparelVendor
HardwareVendor
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eCommerce Services100% solution for electronic exchange of documents
Electronic exchange ofbusiness documents
Foundation for QRS B2Be-commerce services
Outsourced e-commerceservices
• Services span the breadth of e-commerce technologies- EDI, XML, proprietary networks, Internet
Shipping application fore-Retailers
ECESEC Enabling ServicesEC Enabling Services
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Provides access to our databaseof product information with over70 million items
Content Services
Backbone content for retail B2B e-commerce
• Retail industry’s largest database of product information• Increases information accuracy and speed• Efficient means to maintain currency of dynamic
information
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Sales analysis tools forretailers and vendors
Provides logisticsinformation and carriertendering to improvemerchandise movementand tracking
Data collection andmarket analysis ofcompetitive retailpricing, promotion anddistribution information
Application Services
Hosted applications available online
• Access to sophisticated applications as an outsourcedservice
• Lowers upfront investment and ongoing costs andincrease speed of implementation
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Marketplace Services
Internet community and marketplace linking retailersand their trading partners
Online trading and auction of first-run and excessretail merchandise. Retail portal of industry content.Launch partners include Liz Claiborne, Donna Karan,and Dillard Department Stores.
• Reduces transaction and brokering costs• Increased manufacturers’ ability to service retailers with
in-season merchandise• Ability to target focused group of buyers
Internet Community & MarketplaceInternet Community & Marketplace
Tradeweave
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Tradeweave Opportunity
• Significant inefficiencies exist today– 20% of U.S. retail sales is excess merchandise
– Excess merchandise typically disposed of at 25-40% ofwholesale prices
• History– Initiated in Summer 1999
– Time-to-market achieved through unique operating structure
– Announced on December 1, 1999
• Market strategy– Initial focus on apparel and excess merchandise
– Opportunities to cover full spectrum of first-run, in-season andexcess merchandise
– Longer term expansion into other retail segments and B2C
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Tradeweave Market Sizing
Total Apparel Retailers
QRS Customers
Vendors
QRS Customers
57% 70%20%
Excess Merchandise
$40B
$115B
$200B $75B$200B
$52B
25%
$50B
Off-Price Merchandise
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Paper-based ProcessesRetailerRetailer VendorVendor
Tradeweave Leverages QRS
TradeweaveTradeweave
ElectronicExchange
ElectronicExchange
Retail ProductInformation
Catalog
Retail ProductInformation
Catalog
• Access to QRS technology, services and installed base• QRS reputation as a trusted third-party
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Retail Industry Leadership
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Strong & Growing Customer Base
Network of approximately 8,500 retailers, vendors,manufacturers and carriers
0
2,000
4,000
6,000
8,000
10,000
1996 1997 1998 Nov 1999
$0
$3,000
$6,000
$9,000
$12,000
$15,000
$18,000
1996 1997 1998 Nov 1999
Number of Customers Revenue per Customer
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Benefits:
• “Mandated” by large retailers• Cooperative marketing• 95%+ recurring revenues• Lower customer acquisition costs
Efficient Distribution Strategy
Apparel Vendor
Apparel Vendor
Shoe VendorShoe
Vendor
Accessories Vendor
Accessories Vendor
Food VendorFood
Vendor
CosmeticsVendor
CosmeticsVendor
HardwareVendor
HardwareVendor
Book VendorBook
Vendor
RetailHub
“Hub & Spoke” Distribution
One large retailer Thousands of trading partners
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Distribution Case Study
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1997 1998 Nov 1999
An
nu
al P
rog
ram
Rev
enu
es
980
1,000
1,020
1,040
1,060
1,080
1,100
Pro
gra
m T
rad
ing
Par
tner
s
Large Department Store
($M)
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QRS B2B e-Commerce Roadmap
QRS eCommerce ServicesQRS eCommerce Services
QRS Content ServicesQRS Content Services
QRS Application ServicesQRS Application Services
QRS Marketplace ServicesQRS Marketplace Services
Manufacturers / Vendors Retailers
TransportationManagement
WarehouseManagement
OrderManagement
TransportationManagement
PurchasingManagement
Suppliers WarehouseManagementE
RP E
RP Consumers
Retail Information Infrastructure
QRS positioning
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eRetailers’ ChallengesSales
• Customer acquisition
• Pricing and promotions
• Customer retention and growth
Distribution
• Customer fulfillment
• DC and vendor logistics
• Operations staff
Merchandising
• Assortment editing and presentation
• Inventory management
• Merchandising staff
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New Markets
Grocery
• $550 billion market
• Similar challenges toother retail segments
• Next, natural expansionarea for QRS services
• Leading customerbase through RDS
International
• Globalization of retailindustry and sourcing
• Leverage existingcustomer base,relationships andtechnology
• Early stage of adoption
• Significant destination forexcess goods
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Competitive Environment
Internet Capital Group
CMGI
VerticalNet
Ariba
CommerceOne
Tradeout.com
Sterling Commerce
GEIS
Retek
JDA
Breadthof
B2BServices
Retail Industry Focus / Expertise
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Experienced Management Team
Peter Johnson
John Simon
Shawn O’Connor
Peter Papano
Glenn Dubois
Gopi Sankarasubramani
Allison Nelson
Phil Woodworth
Chairman
Chief Executive Officer
President and Chief Operating Officer
Chief Financial Officer
VP, Sales
VP, Technology
VP, Business Development
VP, Content Services
PositionName
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Financial Highlights
• Recurring revenue model
• 25 quarters of sequential revenue growth since IPO
• Significant growth potential
• Huge opportunity in Tradeweave
• Attractive margins and cash flow
• Strong balance sheet
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$3 $5 $7 $9$13 $17
$22
$31
$42
$57
$72
$92
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1993 1994 1995 1996 1997 1998
Annual Results
($ M)
Revenue CAGR = 33%
Operating Income*Revenues
* Excludes non-recurring charges
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Nine Months Comparison
$65
$91
$0
$20
$40
$60
$80
$100
1998 1999
($’s in Millions)
$12
$18
$0
$10
$20
$30
1998 1999
Revenues Operating Income*
42%
47%
* Excludes non-recurring charges
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Quarterly Revenue Growth
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
1993 1994 1995 1996 1997 1998 1999
25 consecutive quarters of revenue growth since IPO
($M)
$32.4
$4.4
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Tradeweave Opportunity
• Structured as a “startup” within QRS– Time to market is critical– Focused incentives to attract key talent– Joint management
• Total investment to date of approximately $5 million
• 90% QRS, 10% individuals• Financial impact:
Near Term Longer Term
Investment in:• Infrastructure• Sales & Marketing• Product Development
Investment in:• Infrastructure• Sales & Marketing• Product Development
Revenue GrowthRecurring RevenuesAttractive Margins
Revenue GrowthRecurring RevenuesAttractive Margins
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Financial Model9 mos1999
Long-TermTarget Considerations
$M % %
Revenue Growth $91.3 42% 40%+ • 25-35% near-term outlook
• Upside from Tradeweave inlate 2000
Gross Profit 44.2 48 50+
Operating Expense 27.7 30 25 - 30 • Near-term impact frominvestment in Tradeweave
Operating Income 17.5 18 20+ • Near-term impact frominvestment in Tradeweave
• Upside from Tradeweavelong-term marginimprovement opportunities
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Investment Highlights
• Huge B2B e-Commerce market opportunity
• Leader in retail B2B e-Commerce services
• Recently introduced Tradeweave Internet community andmarketplace
• Proven recurring revenue model