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e-Commerce in Asia Satish Tamboli US-Asia Ventures Feb. 9, 2006

e-Commerce in Asia Satish Tamboli US-Asia Ventures Feb. 9, 2006. Business Case for a “Safe & Effective” on-line purchase product for Asia. Distrust of On-Line Retailers Higher occurrence of Fraud Lack of effective consumer protection agencies

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e-Commerce in Asia Satish Tamboli US-Asia Ventures Feb. 9, 2006

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  1. e-Commerce in Asia Satish Tamboli US-Asia Ventures Feb. 9, 2006

  2. Business Case for a “Safe & Effective” on-line purchase product for Asia • Distrust of On-Line Retailers • Higher occurrence of Fraud • Lack of effective consumer protection agencies • Highly inefficient retail market (less usage of credit cards, mom & pop stores) • Poorly designedwebsites and Frustrating user experience with on-line retailers. • APAC E-Commerce driven by expanding middle class & internet penetration. • 7 – 8 % GDP growth in China and India • $752 Billion in APAC e-commerce (2005). • E-Commerce is 8.5% of GDP. Internet pop. is only 10.9% of total pop. (62% in US) • Gross Merchandise Volume (GMV) of $117 million per day worldwide. • Exceptional YoY Growth in New listings ( HK : 161%, Eachnet : 94% , Korea : 48%) • Increase in “foreign” sellers will accelerate demand for on-line safety & efficiency. • Foreign retailers catering to US Market and vice versa. Fraud is a major impediment. US Shoppers wary of sending personal info overseas. • Skype’s presence in 225 countries and viral growth will open new geographies and accelerate listing categories that are complex, expensive, and high involvement.

  3. Registered Users of eBAY

  4. eBAY Listings

  5. Gross Merchandise Volume on eBAY

  6. eBAY Footprint

  7. Size of APAC e-Commerce market

  8. Growth in International Listings

  9. Velocity of Trading • Digital Camera sells every 30 minutes in India. • Video Game sells every 12 minutes in Singapore. • A Laptop sells every 3 minutes in Korea. • Jewelry Item sells every 23 seconds in Australia. • T-Shirt sells every 10 seconds in China.

  10. Internet Auction Co (IAC), Korea

  11. Internet Auction Co(IAC), Korea

  12. Annex A – U.S. • US On-line Retail market : $ 172B in 2005. Includes auctions & travel (Forrester Research). • Consumer on-line retail spending growing at 24 % YoY (Merrill Lynch). Holiday E-Commerce growth at 30% YoY to $30 B. (Goldman Sachs). • Foreign retailers only 1% of Total ($1.7B). Will go to 3% ($5.7B) within next five years. Fraud remains a major concern. • Broadband internet access is leading driver of on-line shopping growth. • Customer experience is important to repeat business - Allurent’s 2005 Holiday Online Customer Experience survey: • 82% said less likely to return if negative experience • 33% said reluctant to shop at brick-and-mortar if negative on-line experience. • Search engines playing an increasing role by enabling consumers to find online merchants. • Local listing platforms such as Craiglist are gaining importance (eBay acquired a stake). • With the exception of eBay, margins are under pressure. Competition from comparison shopping sites and brick-and-mortar retailers moving on-line.

  13. Annex B - China • Chinese Internet population ≈ 120 million (end 2005). Listings growth rate ≈ 6 x the growth rate of other platforms. • Highly competitive & rapidly evolving market. • Major players - Eachnet (eBay), Alibaba-Yahoo (Taobao), Netease.com. Alibaba growing much faster than eBay in user base and transaction volume. • eBay is waiving the listing and transaction fees for sellers using eBay’s payment services. • Skype launched co-branded service with Chinagate to enable free overseas voice and video calls. • Mobile users in China ≈ 400 million. M-commerce applications and mobile providers will be strategic to future growth and access to on-line marketplaces. • Intel & Alibaba partnership to build m-commerce platform for China

  14. Annex C - India • Internet population : 38 million. E-Commerce population : 6 – 7 million. • E-Commerce volume in 2005-2006: $262 million. • Growing at 100% YoY for the next 3 years (source : Internet and Mobile Association of India). • Total retail business : $250 B; world’s eighth largest. Expected to reach $400 B by 2010 (source : McKinsey Quarterly, 01/28/06). Brick-and-mortar retailers moving on-line. • Highly inefficient retail market.12 million mom & pop stores • Mobile users : 70 million growing at 4.5 million subscribers per month. Landline users ≈ 50 million. M-Commerce applications and mobile service providers will be crucial for future growth. • According to Times Internet, one of the leading portals, E-Commerce is impeded by safety and security issues. Lack of effective consumer protection agencies. • Major E-Commerce marketplaces • eBay acquired Bazee.com in Aug. 2004. One million registered users in 240 cities • Yahoo! India • Indiatimes Auctions

  15. References • www.ebay.com • Bear Stearns Equity Research, Internet/E-Commerce, January 30, 2006. • Goldman Sachs, US Technology, Internet Outlook, January12, 2006. • Merrill Lynch, FlashNote, Internet/e-Commerce, 28 November 2005. • Merrill Lynch, Internet/e-commerce Bi-Weekly, 30 January, 2006. • Merrill Lynch, E-Commerce Implications for Yahoo! Results, January 18,2006. • PiperJaffray, Industry Note, Technology, Silk Road, Sept12& Oct31 2005, January 3 & 30, 2005. • CIBC World Markets, Equity Research, Netease.com Inc, Nov 2, 2005. • The Wall Street Journal, Foreign Shopping Sites Cater to US Customers, October 12, 2005. • The Wall Street Journal, Wal-Mart Trains Sights on India’s Retail Market, January 18, 2006. • The Economist Intelligence Unit, Country Commerce 2005. • www.Rediff.com. The Other Big Retail Story, Dec 20, 2005 • The McKinsey Quarterly, Winning the Indian Consumer, January 28, 2006. • Business Week, The MySpace Generation, Dec.12, 2005. • The Economic Times, New Delhi, Buying Goods is Just a Click Away, Dec. 29, 2005 • www.iamai.com. Internet and Mobile Association of India. • Business Today, Tween Power, January 1, 2006.

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