~75% of total gross revenue, and ~75%% of search revenue for Google is still derived from desktop in what appears to be an increasingly mobile app world as Google arguably remains the most important company in the (digital) media and tech industries.
As Per data from RKG, desktop’s share of clicks has declined by 19% since 4Q12, while the share of spend has only declined by 14%. This widening delta between desktop’s share of spend and share of clicks implies that in recent years improving desktop CPCs have been an important driver of growth in search spend. This is clearly evident given that desktop click growth has been basically flat in the U.S. in 2013 and 2014 while Google’s desktop search revenue has continued to grow. We believe this is due in large part to a higher percentage of desktop clicks coming from PLAs, which monetize at higher rates than standard text ads. Accordingly, assuming overall desktop clicks do not re-accelerate, desktop CPCs will need to continue to grow at rates similar to those seen recently, fueled by continued mix impact from PLAs. However, without PLAs desktop search revenue growth is likely to Read the rest of this entry »
Our positive view on the outlook for e-Commerce growth globally is driven by the theme of expanding online access. Internet penetration for a number of developed markets has now reached more than 80% while a number of European countries now have internet penetration rates of as high as 95%.
At the same time and supportive of the growth outlook for e-Commerce, in our view, is the fact that internet access across the developing world is rapidly increasing. For example, our Emerging Consumer Survey showed that increasing internet penetration among all of the countries surveyed, with greatest momentum in those countries with the lowest rate of internet access. For example, our recent Emerging Consumer Survey showed increasing internet penetration amongst all of the countries surveyed, with the greatest momentum in those countries with the lowest rate of internet access (India and Indonesia).
Mobile internet access is driving the theme
Whereas internet access initially and especially in the developed world was Read the rest of this entry »
Recent TRAI’s performance indicator report suggest that roaming revenue contributes to only 5.5% of total subscription revenue and hence lowering the roaming tariff could have limited impact as increase in volume would compensate for decrease in tariff. However lower roaming tariff on local call / sms (i.e. 65p/min) could cap the local tariffs in home circle as a local call (or a sms send) made from a sim acquired from another circle would become cheaper than that of a home circle sim (home circle tariff is technically under forbearance). Currently local calls contribute to 80% of the total outgoing MoU i.e. ~155min per sub per month.
TRAI has proposed reducing ceiling for: 1) Local outgoing calls while national roaming – Rs0.65/min (Rs1/min); 2) Long distance outgoing while national roaming – Rs1 (Rs1.5); and 3) Incoming call while roaming – Rs0.45 (Rs0.8/min). The last review was done in 2013. This proposal is aimed at the NTP 2012’s intention of “One Nation – Free Roaming.” TRAI has, however, rejected possibility of eliminating roaming charges completely. Local tariffs remain under forbearance (not controlled by TRAI).
As eCommerce / mCommerce retailing in India touched 10% of the overall organized retail volumes, competition gets fierce with Private Equity backing even small startups with niche ideas and ready to market portals. India’s online market comprises of various players with different models. Players that retail pretty much everything from electronics to FMCG products follow a version of Read the rest of this entry »
Key areas of investments would be to build innerwear, ethnic wear and sportswear brands. India business
should be profitable in the coming year; however, there will be investments in new areas (new categories and
new regions like new website in Singapore). Product mix is currently at 45% apparel, 45% footwear and another
10% from accessories.
Average ticket size is US$10-11 and tier 1 cities contribute 30-35% of its revenues. Yepme sells products through partner websites (like Myntra, Flipkart) which account for 15-20% of total sales. Organic traffic to website is 60% (direct traffic and organic search).
YepMe has 3 million transacting customers, 48% gross margins and 28% contribution margins. Visitor to customer conversion rate is healthy at 5%. Over 65% of its transactions come from mobile. The company maintains 2 months of inventory. YTD write off is less than 0.6%.
The company considers its Read the rest of this entry »
Xiaomi has surpassed Samsung/Lenovo to become the #1 smartphone brand in China in 3Q14, within four years of launch. Despite selling high-end hardware at a mid-range price point, our detailed pricing / cost analysis suggests an e-Commerce model of Xiaomi’s scale could have an operation margin of nearly 7-8%. If true, this would make the “Xiaomi model” one of the most profitable among global Android brands.
We think Xiaomi’s high volume per model (and thus BOM cost advantage) can be applied to other markets. But it may have to overcome challenges in Intellectual Property Rights, global branding and data security, while the availability of Google Mobile Services also lifts the Read the rest of this entry »
Reliance Jio Infocomm is all set for a Big Launch in India in the next few months. Globally, there are no examples of a new entrant in a new technology who has ventured out successfully. Several new entrants have entered the US and Canadian markets over the past five years, but currently their combined market share is in the mid-single digits.
What Lessons we learn from Global Telcos Who Ventured to Challenge Incumbents ?
3 in the UK and Italy have gathered just 9%-10% share of service revenues and 10%-12% share in subscriber market share. They have positioned themselves as the ‘value proposition’ in the UK and have pushed dongles quite hard with moderate success. Yoigo who launched in 2008 has also struggled in Spain. Iliad entered France in 2012 with 3G and 4G technology. It offered cheap value proposition with large bundles. Market share of SIMs is 11% (but just 5% of service revenues).
Zain KSA in Saudi Arabia was Read the rest of this entry »
In its Jun-14 earnings call, Info Edge management suggested that real estate advertising market / opportunity is much larger than even jobs (a business that is 5x 99acres’ size for Info Edge). Hence, the growth opportunity is quite sizable in the real estate market for Info Edge.
99acres delivered 48% Y/Y growth in FY14 despite the tough macro environment. The online real-estate business is highly underpenetrated and there is significant headroom for growth. Also, management suggested that there is an incremental
shift from print real-estate advertisements to online portals, a trend Read the rest of this entry »