Kolektiva - Jeffrey Treichel - The Moment of Truth

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The Moment of Truth
October 27, 2010

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An interesting thing happened last week…
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An observation is made …
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WHAT?!!!
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Can we buy, can we buy?
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And then in Serbia …
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But Croatians are least likely to buy ANYTHING online!
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*Source: Nielson, Global Trends in Online Shopping, June 2010

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Exactly …
WTF ?!
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Deal is SIMPLE: 1 city, 1 huge deal, 1 day
We offer 50-90% off fun things to do If enough people buy in, the deal is on!
Time limit =viral, word-of-mouth effect If deal works, buyers receive e-coupon
• Buyer simply prints and redeems any time

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Intriguing, Indeed

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Intriguing, Indeed

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S&P 500 Index
Bad Day!!!

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Let’s travel back in time …
• The economy was tanking … With no end in sight

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What are pain points in Croatia & Serbia?
• Small business problems
- Fewer customers due to
recession
- No idea how to start with
marketing
- Agencies are expensive
- No guaranteed results
• Problems for customers
- Tightened budgets due to
recession
- Either laid off, or working 1.5+
jobs
- HIGHER taxes

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How can they be solved?
1) Create/Advertise deal 2) Gather customers 3) Deliver customers 4) Guarantee a result

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Collective buying model could work …
• Small business problems
- Fewer customers due to
recession
- No idea how to start with
marketing
- Agencies are expensive
- No guaranteed results
• Problems for customers
- Tightened budgets due to
recession
- Either laid off, or working 1.5+
jobs
- HIGHER taxes
• Small business solutions
- Deliver 1000’s of new customers
- Kolektiva creates ads
- Zero upfront costs
- We guarantee results
• Solutions for customers
- 50%+ off on great things to do
- No hassles, redeem anytime
- Pay LESS PDV

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…
Except almost NO ONE in ex-YU
buys online!!!

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Why not?!
• Identify pain points
• Competitive advantage can be created through superior customer
insight and understanding
• Companies that create products/services that meet customer needs
will win if they can relentlessly execute against superior insights

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Croatian online shopping experience
• Small market issues
-Largest sites still don’t have scale for great discounts
-Niche sites are almost invisible
• Few incentives to buy online
-Online is often a MORE expensive channel
-Distribution of physical goods is problematic
-Limited online payment mechanisms
• Consumer issues
-Mentality of wanting to touch & feel merchandise
-Security, fraud concerns

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Kolektiva delivers a SUPERIOR experience
Avg Cro/Serb e-commerce site
• No incentives to buy
• Poor customer service
• Lack of transparency
• Cost/hassle of shipping
• Cost of returns
• Items not in stock

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Kolektiva delivers a SUPERIOR experience
Avg Cro/Serb e-commerce site
• No incentives to buy
• Poor customer service
• Lack of transparency
• Cost/hassle of shipping
• Cost of returns
• Items not in stock
KOLEKTIVA
• Exclusive, attractive deals
• Customer loyalty team
• Fully transparent
• Immediate delivery @ no cost
• No cost to return
• Consumers trust auction model

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Deal # 1 - June 15, 2010
• 36 coupons sold
• Kolektiva in 5 cities, 2 countries
• 8.500+ TOTAL coupons sold
Deal #1 - Jan. 22, 2010
• 42 coupons sold
• Kolektiva present in 1 city
Kolektiva’s evolution

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• Award for most innovative contribution to e-commerce in 2010
Kolektiva as an innovator

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Michael Brehm
CEO & Founder
Previous Executive Director of Germany's biggest Social
Network (VZnet Netzwerke)
Michael Brehm
CEO & Founder
Previous Executive Director of Germany's biggest Social
Network (VZnet Netzwerke)
Stefan Glänzer
Chair & Co-Founder
Founder of Whitebearyard.com and Executive Director at
mendeley
Ex- CEO of Ricardo & last.fm
Stefan Glänzer
Chair & Co-Founder
Founder of Whitebearyard.com and Executive Director at
mendeley
Ex- CEO of Ricardo & last.fm
Our partners

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So where are we now?
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Most
Deals
Sold:
8.592
Most
Deals
Sold:
269
Most
Deals
Sold:
1.376
Most
Deals
Sold:
5.725
Most
Deals
Sold:
11.708

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So what’s going on in Serbia?
• Online payment is a HUGE pain point
-Only 7,6% of sites claim to offer
“online” payments/uplatnica)1
• No startup culture?
• No credit/debit cards?
• Paying online isn’t safe?
- Online fraud big in Serbia?
- No trust in banks?
• Banks open for business?
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• Uplatnica have a major breakage
rate. It comes down to the moment
of truth!
• We’re all here aren’t we?!
• 914.402 individuals w/ 1.169.528
CREDIT CARDS in Feb. 20092
- 0,5% fraud claim rate in Serbia3
,
1.13% in USA!!!4
- 48% trust banks, but ONLY 26%
trust gov’t!!!!5
• Impossible to hook up to payment
gateways, no competition, no PR, no
discussion on safety!

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So what’s really going on in Serbia?
• Critical mass is formed
• Tipping point for e-commerce
adoption still elusive
• Serbian checkout is complicated,
time consuming
- Register as user on Kolektiva
 1 click FB connect
- Intent to purchase
 Fill out info
 Accept terms/submit
- Register as user on EMS
 4 step process
- Accept terms
- Register on EMS
- Choose card
- Enter card info/pay
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*Source: Clifton, Advanced Web Metrics with Google Analytics, 2008

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The Moment of Truth?
• Group buying and social commerce have the potential to “tip” e-
commerce adoption
• Tens of thousands “friends” in social networks are interested buyers
• If Croatians are willing to buy in Serbia, why aren’t Serbs?
- Requires more proactive focus, funding, development, attention and PR
from banking sector
- Requires competition
- Requires easier, more integrated payment solutions
 APIs
 1 click process
- Requires lawsuits and swift decisions against cheaters and illegal webshops
- Requires bloggers in this room to discuss the issue, take a stand!
• We’re on the cusp of making it happen. It’s the moment of truth …

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External Sources
1. Republički Zavod za Statistiku Srbije (RZSS), Upotreba
Informaciono-komunikacionih tehnologiji u Republici Srbiji, 2010.
2. http://www.bifonline.rs/vesti/article.php?storyid=294
3. RZSS
4. https://www.paypalobjects.com/html/mit-1201.html
5. Goran Tintor, GFK Belgrade Custom Research Director
http://www.gfk.rs/public_relations/press/articles/005902/index.en.html