Author Topic: ZO1 - Zooplus  (Read 3173 times)

Schwab711

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Re: ZO1 - Zooplus
« Reply #10 on: April 21, 2017, 06:07:13 AM »
Margins for an etailer are as much a function of asset turns and packet throughput as it is of mix. As packet density rises with each year, the unit logistics cost falls as network gets better utilized and fixed assets are sweat better. As basket size grows (and it has consistently grown for Zooplus), the logistics cost would fall as % making the business gradually more profitable. Private labels would also help improve the margins. The key then becomes the volume growth and ticket size growth (both remain very healthy for Zooplus).

You should double check your marginal analysis for ZooPlus and Amazon. I'm guessing you have poor assumptions or you misunderstood the lesson. ZooPlus is not Amazon, best I can tell.

2. Zooplus has been around since late 1990s. It has seen the dot com bust and survived and flourished during the last 20 years. The founder still runs the business all these years later. Peers have come and gone; that it has survived and continues to flourish and has essentially a self funded business model now (not requiring dilution), i think that is its own statement of success.

Since 2004, share count has grown by > 25% CAGR. Over any reasonable time period you can pick, the lowest share growth CAGR you can find is 5% from 2008-2016. But other than that, yes, it was self-funded.

Those market sizing numbers are meaningless to be frank, Adam. Nobody knows how they pan out.

I found it so interesting that you didn't mention how meaningless they were when addressing the original report. If you'll notice, I was the first to point out how unreliable they are. I wonder how long it would have taken for you to acknowledge it without my post.

It's also interesting you are the first to use my name in > 1000 posts. You really have to dig through my post history to find it. I'd be more impressed if I didn't provide the info to you. Should I reference your name/firm now? I don't know why you made this personal.

Illiquidity also means this stock will have sharper up moves during accumulation.

Yup. I think you picked up on why I brought up the issue in the first place. If I were to look for a P/D stock for this board, it would be a story stock, with a recent catalyst, with low float and low vol.

Good luck with your trade!

Jurgis

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Re: ZO1 - Zooplus
« Reply #11 on: April 21, 2017, 06:26:31 AM »
I have better things to do then dig through 1000s of post of yours. Just looked at your XLS spreadsheet's properties.  Next time remember to clear it up.

The fact that you learned poster's identity does not mean that it's cool to start flouting it on the forum especially if it's done in confrontational way.

Good luck.  8)

Schwab711

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Re: ZO1 - Zooplus
« Reply #12 on: April 21, 2017, 06:40:30 AM »
I have better things to do then dig through 1000s of post of yours. Just looked at your XLS spreadsheet's properties.  Next time remember to clear it up.

As for dilution, I said they are self funded now as the CEO has also stated in calls. I didn't say they always were like that. No internet commerce company can grow to a critical mass without external funding.

As for P/D, if you think any of us on this board can manipulate a billion market cap stock, then you are deluded. Those that can rarely have time for stock boards.

Luckily, I'm not attempting to obfuscate my identity on this venue. As to the bolded part, again, we agree.

KJP

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Re: ZO1 - Zooplus
« Reply #13 on: April 21, 2017, 06:50:04 AM »
I have better things to do then dig through 1000s of post of yours. Just looked at your XLS spreadsheet's properties.  Next time remember to clear it up.

The fact that you learned poster's identity does not mean that it's cool to start flouting it on the forum especially if it's done in confrontational way.

Good luck.  8)

I wasn't confrontational in my initial numbered points post. Maybe read it again and see if it sounds confrontational ?

For whatever it's worth, I didn't read your numbered points as confrontational until you put the other poster's name in.  I don't know exactly why, but that read as overly aggressive and confrontational, rather than two people trying to have a friendly conversation and learn, which I assume is the purpose of posting on this board.

I hope the back-and-forth doesn't derail the discussion you were having on a key point, which I quote below:

"Margins for an etailer are as much a function of asset turns and packet throughput as it is of mix. As packet density rises with each year, the unit logistics cost falls as network gets better utilized and fixed assets are sweat better. As basket size grows (and it has consistently grown for Zooplus), the logistics cost would fall as % making the business gradually more profitable. Private labels would also help improve the margins. The key then becomes the volume growth and ticket size growth (both remain very healthy for Zooplus)."

"You should double check your marginal analysis for ZooPlus and Amazon. I'm guessing you have poor assumptions or you misunderstood the lesson. ZooPlus is not Amazon, best I can tell."

KJP

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Re: ZO1 - Zooplus
« Reply #14 on: April 21, 2017, 06:55:17 AM »
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).   


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. 

glorysk87

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Re: ZO1 - Zooplus
« Reply #15 on: April 21, 2017, 07:58:26 AM »
what is with the bitchiness and fighting on these message boards lately? same thing is happening in the FB thread.

can we keep it on topic instead of personal criticisms?

premfan

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Re: ZO1 - Zooplus
« Reply #16 on: April 21, 2017, 08:00:57 AM »
what is with the bitchiness and fighting on these message boards lately? same thing is happening in the FB thread.

can we keep it on topic instead of personal criticisms?

The trump effect. Our collective software shifting. This shall too pass.

AccentricInv

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Re: ZO1 - Zooplus
« Reply #17 on: April 21, 2017, 09:13:41 AM »
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).   


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.
« Last Edit: April 21, 2017, 09:17:31 AM by AccentricInv »
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KJP

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Re: ZO1 - Zooplus
« Reply #18 on: April 21, 2017, 10:40:52 AM »
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).   


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.

Thanks for the thoughts.  It makes sense that if you're selling a commodity into a market with price transparency, the only way to get a competitive advantage is to be the lowest cost seller, which, in turn, means having high volume and the most efficient logistics infrastructure.   

spartansaver

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Re: ZO1 - Zooplus
« Reply #19 on: April 21, 2017, 11:22:46 AM »
All else equal, if e-commerce players are turning their assets at a faster rate than in the past and returns maintain long term averages, margins should compress going forward.