InvestNow News 11th Oct – Elevation Capital – Monthly Update – Sep 2019
INTRODUCING ZOOPLUS A.G.
Zooplus A.G. [ZO1G.DE – Market Capitalisation € 794.5 million is a specialised online realtor of petcare products which is well positioned to benefit from the favourable tailwinds in the Petcare Industry.
Founded in 1999, Zooplus has been operating for more than 19 years and is today’s leading online retailer for pet supplies in Europe. Zooplus already ranks as the second largest retailer in terms of sales in the overall European market, which includes both offline and online sales. The company sells around 8,000 products for the most popular types of pets. The product range includes pet food, accessories, and toys in all price categories. Zooplus customers not only enjoy an extensive product range with fast and free delivery, but also benefit from a variety of interactive content and community offers. Zooplus AG has already successfully launched its business model in 30 European countries. This makes Zooplus the only genuinely pan-European online retailer for pet supplies. Since its initial public offering in 2008, the company’s sales have risen from € 80million to a total of €1,342million in the 2018 financial year.
ONLINE ADVANTAGE
Zooplus currently has ~4%-5% of the European petcare market, and it is expected that this share will grow over time due to increasing online purchasing by consumers. Online retail in petcare currently represents ~10%-12% of petcare sales in Europe, of which Zooplus captures ~50%. It is highly likely that online share of petcare sales in Europe grows to be over 15% to 20%. If Zooplus retains or grows market share within online retail it should be able to claim ~10% to ~15% of overall sales in Europe.
FACTORS AFFECTING OFFLINE TO ONLINE PETCARE PURCHASES
Compared to the US, which has ~30% of consumers utilising public transport for short term errands, the European number 2 is ~70%. In addition, due to the relative density of cities in key markets, housing shortages, and population inflows,
Europeans increasingly display cost-conscious behaviour with many aspects of their consumer goods purchases. Such pressures have allowed for the proliferation of hard discount retailers such as ALDI and Lidl, which have taken significant market share from traditional grocery channel retailers. Pet care products are typically non-perishable, and as such it is generally preferable to buy in bulk. However, since European consumers typically perform errands by public transport, the possibility of increasing consumption basket size becomes impractical through physical retail channels. Online retailers solve this problem by delivering direct to the consumer’s door. This enables consumers to increase consumption basket size. Given that Zooplus offers attractive pricing on bulk products the recurring value proposition to consumers increases.