HW eCommerce Introduction

Harris Williams (“HW”)

  • 25+ years and more than 1,000 closed transactions
  • 350+ professionals across eight offices globally
  • 170+ closed transactions in the last 24 months
  • 10 industry groups

Focused Advisory Services

  • Mergers and acquisitions (M&A)
  • Capital raises
  • Corporate divestitures

Consistent Recognition for Quality

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HW Technology, Media & Telecom (“TMT”) Group

  • 35+ dedicated TMT professionals
  • TMT offices include Boston, San Francisco, and London

Key TMT Themes

  • SaaS / Cloud
  • Data & Analytics
  • Digital Transformation
  • A.I. / Machine Learning

Horizontal Focus Sectors

  • Application Software
  • Cloud Managed Services and Hosting Solutions
  • Compliance Solutions
  • CRM and Marketing Automation
  • Human Capital Management
  • Infrastructure and Security Software
  • IT and Tech-Enabled Services
  • Marketing, Research, and Insights Software

Vertical Focus Sectors

  • Architecture, Engineering, and Construction Software
  • Education Technology and Services
  • Energy Technology
  • Facilities and Real Estate Software
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • Internet and eCommerce
  • Retail Technology

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HW Current Market Observations and Insights

HW Technology, Media and Telecom Mid-Year Review

screen_shot_2020-10-30_at_1.49.03_pm.pngFor access to HW’s optimizing the Outcome: Dealmaking in TMT During COVID-19, visit here.

 

TMT Roundtable: M&A Insights and Outlook

A conversation with global leaders in private equity. For access please visit here.

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Latest HW Market Insights

For access to HW’s latest insights and perspective, email us at insights@harriswilliams.com or visit www.harriswilliams.com/news-insights.

Recent Publications:

COVID-19: Consumer Insights, New Normal Trends, & Investment Implications

M&A Learnings From Past Economic Disruptions

The Impact of 5G on Telecom

Deep Sector Expertise Across Key TMT Focus Areas

  • Architecture, Engineering, and Construction
  • Financial Technology and Payments
  • Government Technology
  • Healthcare IT
  • Industrial and Supply Chain Technology
  • …and more

For access to HW’s TMT content, email us at TMT_Insights@harriswilliams.com.

Harris Williams eCommerce Focus Areas

eCommerce Brands and Retailers

Internet-based brands and retailers that interact with their customers primarily through mobile or desktop devices

  • Direct-to-Consumer (“D2C”)
  • Digitally Native Brands 
  • Online Marketplaces
  • Subscription-Based Services 
  • B2B eCommerce
  • Gig Economy Marketplaces 
  • Mobile / Local eCommerce
  • Marketplace Optimization

Select Market Participants

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Key Trends

  • Ongoing shift from brick-and-mortar retail to eCommerce is expected to accelerate due to COVID-19, perhaps resulting in permanent consumer behavior changes
  • Personalization and customer experience are key to differentiating digitally native vertical brands and D2C models and driving repeat conversion
  • Leading niche marketplaces that facilitate and accelerate transition from offline to online are well positioned relative to large incumbents

eCommerce Enablement Software

SaaS- or usage-based software solutions that support eCommerce businesses, driving conversion and sales for merchants and a best-in-class experience for shoppers

  • Website Design & Hosting 
  • Marketing Automation & Engagement
  • Customer Engagement
  • Digital Experience & Personalization 
  • Payment & Checkout 
  • Order Fulfillment & Delivery 
  • Loyalty & Rewards 
  • Business Data & Analytics 

Select Market Participants

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Key Trends

  • Increasing competition requires software and tools that allow eCommerce businesses to differentiate every step of the customer journey
  • Integration of data-driven solutions addressing customer acquisition through fulfillment allows SMBs to effectively compete with much larger competitors
  • Software that personalizes and refines the shopping experience helps to create a foundation of repeat customers, maximizing customer lifetime value and delivering a meaningful ROI to the business

Long-term, Sustainable Market Tailwinds Driving Favorable Shift for eCommerce1,2

Tremendous Growth in eCommerce…

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  • eCommerce sales growth is significantly outpacing brick-and-mortar growth, resulting in growing share of retail sales
  • eCommerce sales growth is expected to continue as more consumers (B2C and B2B) shift their habits and mobile internet access becomes more ubiquitous

…Supported by Highly Favorable Long-term Trends.

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  • Dramatic increase in data-enabled device usage enables brands to better engage with customers at the most likely time to transact
  • Adoption of eCommerce is accelerating among the most attractive consumer demographics
  • Average order values (AOVs) and gross merchandise values (GMVs) are increasing as trust in eCommerce platforms grows and loyalty/cashback discounts increase value to/buying power of the consumer

Keys to Capturing Share

  • Data-driven, efficient customer acquisition
  • Best-in-class, seamless user experience across mobile and desktop platforms
  • Personalization capabilities that drive engagement and conversion
  • Frictionless experience at every step of customer journey (shopping, payments, fulfillment, reverse logistics, etc.)
  • Content, community, and rewards, all of which drive loyalty and LTV
  • Scalable, integrated software solutions that support and drive growth

Note: Projections for annual U.S. Retail eCommerce Sales were completed before the COVID-19 crisis

Notable Q3 2020 eCommerce Transactions3

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Verifone Acquires 2Checkout

  • 2Checkout is an online payment processing service, sold to point-of-sale solutions provider that primarily serves eCommerce customers
  • Verifone is a global provider of payment and commerce solutions that primarily serve brick-and-mortar customers, by leveraging 2Checkout's online presence, Verifone will have a new growth vector
  • 2Checkout will accelerate Verifone’s push into online retail and provide a new solution set that can be cross-sold into its existing, more brick-and-mortar focused customer base

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Episerver Acquires Optimizely

  • Optimizely is known for A/B testing, and boasts a suite of tools for marketers to experiment with and personalize their apps
  • Episerver offers tools that businesses use to create and manage customized digital experiences for customers
  • Optimizely will complement Episerver’s existing suite of tools and provide users with the necessary data to more confidently edit, enhance, and transform their websites using Episerver’s tools

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Novacap Acquires FortNine

  • FortNine is a leading eCommerce platform for motorcycle, dirt bike, ATV, snowmobile, and other powersports gear, accessories, and parts
  • As the eCommerce sector continues to grow it is difficult to identify differentiated platforms, Novacap recognized FortNine’s leadership position in the motorsports enthusiast vertical and appreciated the loyal/recurring nature of its customer base
  • FortNine intends to use this new partnership with Novacap to drive its next stage of expansion, continuing to work directly with technology and business intelligence teams that allow Fortnine to deliver on its mission of great customer service

 

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Blackstone Acquires Ancestry.com

  • Ancestry.com is a global leader in digital family history services, operating in more than 30 countries with more than 3 million paying subscribers and more than $1 billion in annual revenue
  • By harnessing the information found in family trees, historical records, and DNA kits, Ancestry.com helps people gain a new understanding of their family histories and health
  • Blackstone plans to invest behind further data, functionality, and product development across Ancestry’s market leading platform

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Thras.io Raises $260M at a $1B+ Valuation

  • Thras.io is a large acquirer of Amazon private label businesses, seamlessly onboarding, optimizing, and operating those brands
  • The company announced it raised $260 million in a Series C financing led by Advent International at a $1 billion pre-money valuation, making Thras.io the fastest US company ever to reach profitable unicorn status
  • The funding will fuel continued expansion, enabling Thras.io to accelerate its growth, acquire larger businesses, launch new products, and form meaningful strategic partnerships

eCommerce Landscape

Select Participants in the eCommerce Continuum

To receive the latest eCommerce market map, please contact HW at tmt_reader@harriswilliams.com

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*  Select market participants. Visit our website or submit email to *TMT_Reader@harriswilliams.com for access to HW’s Financial Technology Sector and Supply Chain Management Sector Readers.

Sector Spotlight: Marketplace Optimization

As adoption of online marketplaces continues to accelerate, a variety of models have emerged to address the increasing complexities of selling through these channels

Brand & Marketplace Channel Management

Third-party seller platforms - taking inventory - engaging directly with brands to optimize brand management and marketplace sales

Spotlight Platforms

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  • Sponsor: Trivest (2020)
  • Focus: VMS and health & beauty
  • Website
     

 

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  • Sponsor: Insignia (2019)
  • Focus: Outdoor and apparel
  • Website

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  • Sponsor: Carlson (2020)
  • Focus: Electronics, pet, and apparel
  • Website

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  • Sponsor: Topspin (2020)
  • Focus: VMS and health & beauty
  • Website

Emerging Players

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White-Label Product Consolidators

First-party seller platforms - own the brand(s) and inventory - aggregating micro-brands / white-label products and typically leveraging fulfillment-by-Amazon (FBA) model

Spotlight Platforms

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  • Sponsor: Various VCs (2018)
  • Website

 

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  • Sponsor: Various VCs (2020)
  • Website

 

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  • Sponsor: Various VCs (2020)
  • Website

 

Emerging Players

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eCommerce Public Market Observations4

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As of September 30, 2020

Public Comparables Analysis4

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As of September 30, 2020

Note: "NM“, or “not meaningful”, represents negative multiples, EV/Revenue multiples greater than 20x, and EV/EBITDA multiples greater than 50x.

1. Retail Dive

2. eMarketer

3. MergerMarket

4. CapIQ