Why O2O is the Next Big Thing in Mobile

What is O2O?

Alex Rampell, Co-founder of TrialPay, coined the term "O2O" in 2010, which refers to the bus iness model that leverages online channels to acquire offline services & products , or VICE VERSA.

. . .

O2O Definition

Why O2O Fits in Brazil Reality?

Growing young population demands more quality s ervices . Brazil mains tream workforce much younger: Bras il 41% vs . China 33% in Y+Z Generation

Brazilian population will keep growing up to 225MM, until 2040.

Fonte: Population Pyramid

Population Factor

O2O is a smart way to pursue service and user experience perfection, ins tead of pure technology revolution.

1% Brazilian inves ts +-1% of GDP in its

current R&D, while +-2.8% in US

Fonte: Wikipedia

Technical Competitiveness

Local Brazilian O2O players unders tand and are deeply rooted in the local offline bus iness operation.

Global giants don't & won't do "Dirty Work".

Natural Barrier

Why O2O is The Next Big Thing in Brazil?

Fonte: Teleco – Baidu BI Internal Data

Even with bigges t housekeeping workers in the world, it is s till hard to find over qualified workers .

7,233 4,206

2,405 1,926 1,851

Domes tic Workers by Country (Top 20) in MM

O2O Boom Prerequisites Met – Unbalanced Info Flow

Fonte: Teleco – Baidu BI Internal Data

42 52

Brazil (U$ Bi) China (U$ Bi)

O2O Boom Prerequisites Met – Over-production

Brazilian Beauty Market in 2012 compared with that of China, which is with 7x more population

Fonte: Teleco – Baidu BI Internal Data

Average Rate of Hotel Room

₤ 77.00 ₤ 82.00 ₤ 86.00 ₤ 90.00 ₤ 92.00

₤ 104.00 ₤ 109.00

₤ 118.00 ₤ 147.00 ₤147.00

China India

UK Germany

Japan France

Italy USA

Russia Brazil

O2O Boom Prerequisites Met – Service Fee Inflation

205,500

382,400 436,100

519,700 574,200

624,700 672,100

704,100

2011 2012 2013 2014 2015 2016 2017 2018

19.0%

26.3%

33.1% 38.5%

42.2% 45.5%

48.6% 51.6%

China Smartphone Penetration

Smartphone Users

China Entered into Fast O2O Development Phase in 2013, followes by Smartphone Penetration Rate above 30%

12,100

21,600 27,100

38,800

48,600

58,500 66,600

71,900

2011 2012 2013 2014 2015 2016 2017 2018

7.0%

19.0% 20.8%

28.3%

34.4%

40.4% 45.0%

47.6%

Brazil

Fonte: Emarketer – Teleco 2015

Smartphone Penetration

Brazil Started to Achieve Smartphone Penetration above 30% Apart from 2015

Smartphone Users

O2O Boom Prerequisites Met – Mobile Broadband Ready

Current O2O Scenario in Brazil

300

300

116

48

37

25

20

10

8 6 1.9

1

HOME IMP ROVEMENT

GROCERY DELIVERY

FOOD DELIVERY

OTA BEAUTY MOTOBOY TAXI J OBS WEDDING MOTEL MOVIE TICKET TABLE RES ERVATION

R$ BILLION

Fonte: ABO2O

R$1 TRILLION

This is a R$ 1 TRILLION Market

Empresa Tipo $ Ativos Gerenciados Ex 1 Ex 2 Ex 3 Escritório

LatAm

VC/PE $ 62 Billion SP

PE $ 17.4 Billion SP

VC/PE $ 10 Billion NO

VC $ 9 Billion NO

VC $ 7.5 Billion SP

VC/PE $ 8 Billion NO

VC/PE $ 4.4 Billion NO

VC/PE SP/RJ/MG

VC $ 640 Million SP

VC $ 270 Million SP

VC/PE SP

VC $ 230 Million SP/BA

Fonte: Tech Crunch and Lavca 2015

O2O is Where Investment Looking At

GroupOn Initial Services

(Web only)

Peixe Urbano & GroupOn entering into O2O market

(Web only)

O2O takes on mobile format through Taxi,

Mobile payments, etc.

Fast O2O growth in mobile

O2O Mobile App appears

O2O Mobile services reach a

new high penetration

2008 2015 Future

Will O2O marketplace be

born?

O2O spreads to secondary

cities

2013 2014 2010

EARLY STAGE

EARLY STAGE

INITIAL STAGE FAST GROWTH

FAST GROWTH INICITAL STAGE

2012

2 years gap

Fonte: AppAnnie – Baidu BI Internal Data

2015 Future 2013 2014 2010 2012

2 years gap

Current Stage: 2~3 Years Behind China & Into Fast Growth

55% YoY

56% YoY

360% YoY

-13% YoY

94% YoY 44% YoY

222% YoY

45% YoY

229% YoY

240% YoY

OTA

Taxi

Food

E-Learning

Group Buying

Review

Real Estate

Cars

Tickets

Room Rental Logistic

Pet

Housekeeping

Motel

Reservation

Top 15 Downloads IOS & Android

Fonte: AppAnnie June 2015– Baidu BI Internal Data – Teleco 2015

104,897

406,589

1,060,000

518,418

1,177,092

356,503

1,339,369

1,535,600

1,671,423

1,690,904

2015 2014

Top 15 Downloads IOS & Android Top 15 Downloads IOS & Android

9,702

528

413

46,419

188,897

28,481

31,024

66,584

195,073

223,019

2015 2014

18% YoY

320% YoY

16K% YoY

5776% YoY

194% YoY

1,800,162

4,060,066

884,758

3,500,342

3,350,149

2,787,330

3,546,495

4,072,278

5,458,863

6,490,172

2015 2014

O2O Growth is Mobile First

Food Delivery OTA Taxi According to SPC

Brazil, online delivery orders

represent 23% of

total s ales ; 40% in pizza delivery.

Fonte: Associação Pizzarias Unidas, SPC Brazil,

Associação Brasileira de Bares e Restaurantes (Abrasel )

Almos t 20% of internet users call a taxi at leas t once

in the las t 6 months .

1 in every 5 Brazilian

smartphone users buy tickets

online.

Movie Ticket

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil

According to Criteo, 57%

leisure travelers book their flight

online.

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil. And Emarketer

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil

O2O Changing Consumer Behavior Drastically

Outlook on Brazil O2O

Fonte: ABO2O

50%

50%

42%

35%

30%

30%

14%

10%

O TA BEA UTY T ICKETS TA XI WED D ING MOTEL JOBS MOTOBOY

YOY GROWTH 2015-2016

Upcoming Fast Growth in O2O

Double-Digit

Brazil

19%

18%

45%

8%

10%

OTA

Taxi

Food

Group Buying

Tickets

China

Fonte: AppAnnie June 2015– Baidu BI Internal Data.

OTA

Food

Group Buying

Taxi

Tickets

42%

27%

14%

12%

5%

Initial Stage Growth Stage

Evolution: Vertical vs. Marketplace

Vertical China Brasil Educação X X

Imóveis X X

Recrutamento X X

Lavanderia X

Impres são X

Casamento X X

Reciclagem X

Decoração X X

Motoris ta de Aluguel X

Reparos X

Logís tica por Motos X

Chef em domicílio X X

Serviços para Pets X

More Sub-Verticals to Come in Mobile

Group Buying

Free WiFi

Hardware /OS

Review

O2O Marketplace is Not One, But Many

Services Services

Services Services

Services Similar to mobile Internet, O2O evolves towards an fragmented ecosys tem of “Carrier Battle Groups” : Multiple Marketplaces & Multiple Vertical Services

User Experience： convenience, efficiency, cos t

Business Model：transaction-driven, close loop w/ payment

Evangelization：promote bes t practice, awareness among users , merchants and players

Investment：dedicated financial / traffic/ technology resources

Brazil Challenges in O2O

Thank You!