AccentricInv

Accentric: If your view about "heavy logistics" businesses vs. Amazon is correct, Wayfair should also be in a good competitive position. Have you looked at it at all? I don't want to derail this thread, but I was trying to think about whether Zooplus or Wayfair is better positioned to deal with Amazon over the next 10 years. KJP - I actually took a look a month or two ago after someone pointed out the similarities. However, my concerns (albeit from a cursory glance) is that Wayfair isn't a commoditied product. My fundamental thesis for all retail and eccommerce businesses is that at a pure level, it's a logistics business. WMT only had stores because it was too expensive to ship directly to a customer's door 30 years ago. You can buy Kellogg cereal from any number of stores, but customers choose WMT because it's the cheapest. And it's the cheapest, because they have the best in class logisitics and inventory fulfillment system. Now that the logistics economics have changed, so have the "right to win" business models. So going back to the commoditized topic, I believe the easiest way to win in ecommerce is to sell a commoditized product at the cheapest price, and with the best service. Those are the only two qualities care about from a retailer (quality, safety, etc largely is attributed to the brand, not to the retailer). Because price search is so easy online, it's very easy to see which online retailer you should choose (and thus makes Zooplus' advantage that much clearer to customers). My fear with Wayfair is that it's a "discovery / showroom" business. Unlike commoditized products, where you know what you get online is the same as in-store, with Wayfair you really have to "trust" the quality and that it will look how you envision it to. Also with pet food, you generally order the same brand for years. With furniture, it's something new each time. However, it's 30%+ growth certainly shows there are others out there who enjoy shopping on it. Also I've done some checks with consumers, and most of the purchases seems to be smaller ticket items (lamps, pillows, etc) that some people change every few months (ie new look for ever season). It's not going to break the bank if it's not exactly what you wanted. (Also you can corroborate this by backing this out / calc'ing the basket size per order, which if I remember right is <$200 per order. They're not buying big ticket items here). So all this to say the company will probably do well, and I know a few very smart people that are invested. However, I just think Zooplus is a "cleaner" business model, for my view of how ecommerce works best. Lastly, I'd like to make a disclaimer that I took down my LT margin assumptions since speaking with mgmt after publishing the report. I was told optimized logistics will likely hit ~17% vs the 15% I indicated, as Poland, Czech Republic, and Germany were unique case (Eastern Europe has very low labor costs, and Germany has been operating for a decade so it's very efficient). All else equal, this takes normalized op margins to 5 - 8% (let's call it 7%). However what's not priced into this figure is 1) Private label taking off (which it has. still a tiny absolute number, but growing ~70% y/y). 2) Gross margins hitting a bottom / recovering. Grocers are the most competitive, and I'm hearing many of them are selling break even / below cost in order to drive traffic to store. Suppliers are giving a lot of credit now, so if that ever turns, it should be a positive for margins. And yes, let's please get the discussion back on track. What makes markets is disagreement, but it's more productive if done in a friendly manner.

Actually, they've been involved even earlier, since at least Q2 2012 (http://investors.zooplus.com/downloads/zooplus_report_H1-2012.pdf). See pg. 5 "Shareholder Structure" chart. Also if we're pointing out other notable investors, I'd note that Nomad was involved for several years up until they closed the fund. I believe Mr. Sleep still sits on the board (slide 5 of attachment). 2016_AR-Elections_to_Supervisory_Board.pdf

Devils - glad you found the thesis helpful, and hopefully shed some light on a situation that we find very interesting. (By the way, I can attest there's no relationship, but always glad to have smart investors invest alongside). On Amazon, it would be idiotic to ignore them. I know the management team at Zooplus is keeping a close eye on Amazon (just look at the Analyst Day... they spent 50% of the time talking about the Amazon threat). However, we believe there are pockets of eCommerce in which Amazon doesn't have a "right to win", and pet food/heavy logistics is one them (at least not yet). I'd encourage anyone interested to take a look at the Investor Day Presentations first, and reach out with any follow up questions. On Chewy's projected revenue, the $2BN 2017 number is a bit iffy... I've seen other reports cite $1.5BN. I've heard thru my VC contacts that the CEO is notorious for not letting anyone disclose the valuation of each individual round. However, I've heard from reliable sources that the total valuation was actually closer to $4BN including earn-outs, rather than the $3.35BN reported by recode. Multiple analysis is never accurate, but it does give a ballpark figure. I see Chewy's slightly higher growth rate ($900M in 2016 -> $1.5BN in 2017; vs ZO1's $950M -> $1.2BN) countered by the fact that they're still unprofitable while Zooplus is. When thinking about a "fair multiple", I'd think of those two factors cancelling each other out. Even at a 3.35BN price, that's 2.2x EV/Sales. Applied to Zooplus, that'd equate to a ~EUR 380 stock price (vs. EUR 150 today). Even if you give it a significant haircut (say 1.5x sales), you can still see a large valuation gap. https://www.forbes.com/sites/susanadams/2017/01/10/the-man-who-found-gold-in-dog-food/#6023c1b53095

Anyone else annoyed they raised the price of real-time data to $122/mo for professional users? Used to be free / waived as of last month. Are people paying for this, or are you finding a way around it? (I'm very cheap...) That said, I still wouldn't think of leaving IB and guess that attests to their customer stickiness. I also agree that their prime desk is very good, and I've never had an issue with it. Longest I've been on hold is for a few minutes. Also their reporting and compliance tools are much much better that even some of the paid options out there, which you get for free. Their automation is fantastic, and not given enough credit. Was just talking to someone who primes at one of the larger IB's the other day (he multi-primes at IB too), and he said has to pick up the phone for routine tasks that IB provides automatically. Described it like going from Google to back to Netscape...

Any idea if they finally hired a REAL professional marketing firm, instead of trying to do everything in-house? Between this, their witty Barron's ad, and the increased number of ads I've seen at industry events, it recently seems Petterfy's finally loosening the marketing purse-strings?

http://www.wsj.com/articles/new-china-mongolia-mining-deal-economic-windfall-or-environmental-threat-1485000058

Thanks for this. On a side note, I can't emphasize enough how great the careers section is for finding out what a company's expansion plans / new initiatives are before they're bragged about to shareholders.

We just published a piece this morning on Zooplus (ETR: ZO1), the largest online pet food retailer in Europe, which I hope the board will find interesting. It's a fantastic business model, which should continue growing at 20%+ rate over the next decade, trading at a cheap valuation of only .9x sales or 10x normalized EBIT. I haven't seen too many European ideas posted on this board, and would greatly appreciate any feedback, criticism, or just telling me my thesis is flat out rubbish. Additionally if anyone has first hand experience with the company, even better! Enjoy! http://www.haydencapital.com/wp-content/uploads/2017/01/ZO1_Writeup.pdf

This is different than their proserve number? How'd you get the number?

It's nearing the end of the year, and time to think about taxes... curious, which tax lot methods members use / think are best? Interactive gives the options of FIFO, LIFO, Highest Cost, Maximize LT Gain, Maximize LT Loss, Maximize ST Gain, Maximize ST Loss. Any thoughts on which you'd choose and why?

Called the Reno Chamber of Commerce, and found the proposal they made to Nevada. Looking at $270M revs, $13M in capex and 50-150 new employees over the next two years. There's some interesting data points in there if anyone's interested. Cimpress_Reno_Facility_Details.pdf

Just noticed today that they're hiring for the first US production facility in Reno. This should help with their initiative to lower shipping costs. Guess this is what they alluded to at the analyst day...

Wow that's a very amusing quote. I remember speaking with the guys at Stone House Capital (seeded by Ackman) in 2014 about the name, and they seemed pretty intelligent. I'm surprised at 18% ownership, they haven't replaced him yet.

Also remember, that 2008 vs today isn't an apple to apples comparison. In 2008, prime wasn't nearly as popular it was today, and many items were still shipped in 5-7 days. Since shipping costs rise exponentially (not linearly) as the ship time decreases, it only makes sense for fulfillment costs to increase as a % of the price, only partially offset by the benefits of increased shipment density in the last 8 years. It's going to be fun to see what AMZN does on the logistics side, especially on last-mile. This could be the third leg of their business if done right (e-commerce, aws, logistics). After the article this morning, I reached out to a PE friend who's involved with a last-mile logistics company on the West Coast. He reported that last-mile is typically 30% of the overall shipping cost, and that traditional last-mile fulfillers earn 10% margins. If AMZN can solve this segment, it means huge savings for the amount of volume they're shipping. Things are going to get interesting.

Hmm seems like a one-stop shop for Sell-Side research, as opposed to logging into each bank's "research portal" individually? Interesting...