Concept Overview:
The Company is an online shopping mall offering daily sales on top-quality apparel and other products for moms, babies and children.
Management:
The management team of the company has extensive experience and strategic contacts with the strategic partners who are key stakeholders in the industry. The whole management team is from the market leading privately held E-commerce company with an estimated market value of more than 600 million dollars.
Economic & Market Overview:
The Turkish economy is currently growing and is expected to experience increasing GDP growth, diminishing unemployment, credit enlarging, and further strength of financial markets.
E-commerce, in general, in Turkey has been experiencing high growth and strong demand for products that are sold online. It is expected that the segment for moms & kids will follow through.
The Client will market its products both in Turkey and in the MENA region, which have a total of market value of $1.2 billion, in moms and kids clothing segment.
According to experts, the potential of the mom & kids e-commerce market will reach 10.4 million orders with a $58 lift value as at 2017.
The management team created the Company to target the niche market in high-quality clothing that most of the e-commerce entities in Turkey ignored including their former employer.
Financial Indicators:
The Company will generate $25.1 million cumulative EBITDA between the years 2013 to 2017.
EBITDA in 2017 is projected as $14.09 million.
The enterprise value is projected to be $147.9 million in 2017 (at 10.5x EBITDA Multiple).
The investment has an estimated IRR of 119%.
Competitive Advantages:
Management Expertise:
The management were the past key staff of the biggest fashion driven private shopping company in Turkey with more than 600 million dollars in enterprise value and 368 million dollars in annual net sales.
The management team has proven skills especially in e-commerce sales and operations; strategic marketing and effective financial management.
Large Database of Prospective Customers:
The Company has a huge confidential strategic user database that differentiates it from its competitors.
2.4 million unique customers who previously shopped online are in its database.
Exclusive rights for shop & ship and international trade:
The Company has exclusive agreement rights with Aramex, Middle Eastern logistics company, for shop & ship sales strategy that will result in global presence.
The Company has rights to freely reach Aramex’s unique customers located in the MENA region that are estimated to be 9.6 million customers.
Vendors and Transportation Agreements:
The Company contracted the best transportation agreement with UPS. In each order it ships to its customers, it will have a cost efficiency of $0.52 per order in relation to the price the market leader unnado.com gets.
The Company contracted with the distributor and the manufacturer of Zara Kids, Bershka and Stradivarius as 45 days forwarding with a consignment sales agreement whereas it is 30 days in its competitors’ ecosystem. The Company’s major vendors are Kimberly Clark, Zelman (Distributors of Zara Kids and Bershka), Chicco, and other local vendors.
Investment Considerations:
Investing in a company with established competitive advantages expected to witness exponential growth and a remarkable IRR.
Investing in a management with aligned interests that are contributing equity into the company.
Capitalizing on management’s proven expertise in the same activity.
Investing in a niche market segment with an identified supply shortage and a growing economy.