Decisive is an international fund for Australian investors.
As consumers the majority of products and technology we use are foreign owned but as investors we typically only invest in Australia. We invest in global companies especially the US to give you exposure to these growth opportunities while diversifying your portfolio.
Glassdoor is a website that lets prospective employees know what a company is really like. We have all heard about how great companies are from their recruiters but what do their employees really think? Glassdoor helps answer that question with 6 million company reviews, CEO approval ratings, salary reports, office photos and more. Glassdoor was co-founded by Rich Barton who has a track record for disrupting industries being the co-founder of Expedia the travel bookings site and Zillow a housing research site.
Glassdoor is not listed but when it does list on the stock exchange Rich Barton will likely have the track record of co-founding three billion dollar businesses an unheard of track record in such a small amount of time. As an investor I personally use Glassdoor to help evaluate company management and find their CEO rankings useful in assessing management from an employee point of view. Glassdoor has recently revealed the highest rated CEOs for 2014 as voted by employees (see below).
Linkedin's (LNKD) Jeff Weiner took top honours with an amazing 100% approval rating. Though a quick check of the website now shows a 98% approval rating still amazing given the sample of 680 ratings. LNKD was also voted the 3rd best place to work in a separate survey. Jeff Weiner took the crown from last years winner Facebook's Mark Zuckerberg who was rated 99% in 2013 but dropped off a few points this year. Jeff Weiner was singled out for creating a culture of transparency holding bi-weekly all company meetings and for 'walking the walk'. LNKD is all about recruiting and connecting people to make them productive and successful. It is only fitting that LNKD employees feel the same way giving high approval ratings to their CEO it seems LNKD really does walk the walk.
Disclosure: Decisive does not own a position in Linkedin (LNKD) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
Spam I'm not talking about the food but something closer to home the dreaded spam email. Spam is one of the worst email
experiences only bettered by emails from your boss with a deadline demand of now or better yet yesterday. Bill Gates famously said that spam will be solved in 2 years time
unfortunately this was back in 2004. While spam emails seem to target me well (tongue in cheek ie get rich quick, help me get out from
debt, earn $10k a week working from home or even Viagra) they are very annoying. We have all personally experienced the rise of information and the overload it creates. As can be seen below the amount of digital information created and shared has multiplied and is expected to double over the next two years.
Email better than search? There are around 3.3 billion email accounts in the world (source Mashable). Spam still exists as emails are still one of the best ways to get in front of a customer. Apparently for every dollar
spent on email marketing in 2011 there was a $40.56 return whereas
search engine marketing produced a sold $22.44 return. (source Direct
Marketing Association). Spam straight to junk People are becoming more savvy and socially aware. Luckily it is getting easier and easier to opt out junk email lists. Spam filters try to target the worst offenders by looking for spammy keywords and phrases such as using ALL CAPS or too
many exclamation points!!!
Here’s a sample of criteria from
SpamAssassin Talks about lots of money (.193 points) Describes some sort of breakthrough (.232 points) Looks like a mortgage pitch (.297 points)
Contain urgent matter (.288 points) Money back guarantee (2.051 points) attracts the highest spam score! Apparently other words are help, percent off and reminders. If the total “spam score” exceeds a certain
threshold, then the email goes to junk. Hard to invest Even though email is
important the world is becoming multi-channel with email, mobile, social,
display, search you name it. It is widely expected that the Chief
Marketing Officer will spend
more on technology than than Chief Information Officer by 2017. In a digital world consumers have high expectations they expect companies to keep track of their purchasing history and communication preferences. Email
plays a major part as they might not visit your website or blog everyday but check their email multiple times a day. The only real pure play email/marketing stock listed on the exchange that you can invest in is Marketo
(MKTO). Unfortunately MKTO trades on a software as a service multiple which tends to mean it is not yet making money. Maybe I should re-open that money back guarantee email...
Disclosure: Decisive does not own a position in Marketo (MKTO) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
RetailMeNot (SALE) is the world's largest digital coupon marketplace with 500,000+ coupons covering 50,000 stores. Over the period of Thanksgiving to Cyber Monday SALE helped to process 2.6% of all e-commerce sales in the US. According to the CEO only 2-3% of visits to retail websites are converted to sales, offering coupons and discounts can increase these conversion rates. Apparently the company has not lost a contract with a retailer in the past 4 years.
Your first question might be just how is this different from Groupon? Well Groupon gives big discounts from smaller retailers sporadically while SALE gives small discounts from big companies every day of the week. Similar to Groupon SALE does not charge advertising but a commission on sales it helps to transact typically around 5% of the order value. SALE works with 90 of the top internet 100 retailers.
See SALE's advertisement below helping you cope with deal envy since 2010.
Coupons gone digital
Advertising can be difficult on the smartphone with a smaller screen, but in SALE's favor the coupon is their ad. According to the CEO of Qualcomm we check our phones 150 times a day or about once every 6.5 minutes, it is with us all the time and helps us to discover new deals. With digital coupons you no longer need to carry around paper coupon cut outs for your purchases. As a result redemption rates for digital coupons are much better between 5% and 20% compared to paper coupons around 1%. Even a small increase in conversion is extremely valuable for retailers as industry data note that up to 65% of shopping carts online are abandoned. A coupon with an extra discount might just help you to checkout.
As can be seen below mobile web visits consist of 30% of traffic and 15% of revenue.
Risks? Coupons not exclusive
Most of their content is not exclusive as 1/3 of coupons are contributed by consumers. Only around 5-10% of coupons are exclusive. Gross profits are also high at 93% potentially only room for them to go down. Also a worry are Google and Groupon who could crush the business if they decided to focus more on coupons.
Market expanded no longer just online
Having a mobile app means SALE has more than 6,000 shopping locations that the app can recognize (geofenced) when a user enters a shopping mall and offer discounts based on your location. This increases SALEs addressable market from just ecommerce to physical stores. So far 88 retailers have used their mobile app to offer discounts in store discounts for their 35,000 stores.
While the majority of coupons are American based. SALE does offer great access to Domino's Australia pizza codes coupon on!
Disclosure: Decisive does not own a position in RetailMeNot (SALE) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
KPMG has put out an interesting report on how the internet is affecting Chinese consumers. They have a few interesting charts I've shared below. The biggest impact is the effect the mobile phone is having on retail. Many Chinese have leapfrogged straight to the mobile phone as a computer in their pocket rather than experiencing a computer just on their desk. KPMG's survey found that 69% of respondents used a desktop computer while 53% said they used a smartphone.
No stores? Shop online
The Chinese consumer is not the least worried about physically trying on shoes. Sales on a % basis are now equal to the US. A reason for this is that some of the lower tier cities do not have the access to brands in physical stores creating a great opportunity for online retailers. The most popular online category is cosmetics.
No more twiddling thumbs
In the past whenever you used public transport you would see twiddling thumbs now you see those thumbs being put to good use buying goods and growing the economy! Being able to buy whenever and wherever is a major advantage. Social media also plays an important part and was rated as the best way to find information on purchases slightly ahead of word of mouth. With nearly instantaneous feedback consumers can receive immediate advice from friends on purchases through social media.
It seems mobile payments are connected to eCommerce which gives some credence to eBay's current argument against splitting up their eBay and Paypal businesses. The market in the US is still up for grabs with other companies like Square, Apple, Visa and even Starbucks competing in the mobile payment space. In China apart from Union Pay (a network much like Visa and Mastercard but government owned) the battle for consumers dollars online is between an eCommerce site and a social network. They are AliPay which is owned by Alibaba an eCommerce site and TenPay owned by Tencent a social messaging service. It is amazing to think that nearly half of the internet users in China have made a mobile purchase. Cash is no longer king!
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
How many retailers do you know have a game named after them? I can think of only one and that is Cabela's (CAB). The game developer Activision licensed CAB's brand name and released a number of hunter games the most well known being Cabela's big game hunter. Activision have also released mobile versions of the game. Don't worry as you'll see below no animals were harmed in this filming.
No animals harmed in this filming
As an investor this is important as it means the brand has authenticity with its customers. It is even more important in a world of show rooming where customers go and try on clothing and then buy it cheaper online. CAB is well protected as 33% of what it sells is its own branding. The percentage as a total of overall is even higher as it does not sell its own branded weapons though it does sell some ammunition.
Like Australia's BCF but with hunting and guns
45% of sales are hunting equipment this includes guns and ammunition. Sales spiked at the end of 2012 due to the re-election of Obama and concerns that he would push through stricter gun laws. This has not yet occurred but it has proven to be a boon for CAB sales. Apparently more than 2.7 million criminal checks on prospective gun buyers was carried out in December for a total of 19 million background checks in 2012. Apparently sales could have been even higher if there was adequate supply. CAB will have tough comps for the next two quarters see chart below as consumers stockpiled weapons.
Amazingly CAB has only 50 stores (4 in Canada) and plans to open their first stores in the South-East this year, see chart of stores below. CAB's estimate that they can grow to 225 stores with 14 new stores opening every year adding around 1 million square feet. These stores will be smaller than current stores but will provide for a better return on investment.
By the way we own a bank
CAB also owns a bank and issues its own general purpose credit card which is amazingly the 13th largest in the US by purchase volume ahead of such names such as Target. 97% is spent outside of CAB but this suggests strong loyalty as the more customers spend on the card the more points they generate to receive free merchandise. CAB awarded their customers nearly $200 million of freebies in 2012. Charge offs are also a lot lower than industry averages at 1.87% in 2012 this compares to AMEX at 2.1%. During the financial crisis credit card charge off rates were only 5.5-6% when peers were reporting 15%. Around 30% of CAB sales come from their credit card.
A retailer with its own computer game and credit card this retailer definitely has game.
Disclosure: Decisive does not own a position in Cabela's (CAB) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
Every technology player is chasing the opportunity of mobile payments, Apple with iTunes and its fingerprint login, Google with Google wallet, Ebay with paypal but what about Starbucks (SBUX)? It might seem a strange fit but SBUX is a leader in mobile payments. The upside is enormous as everyone now has a smartphone and of course everyone shops.
Not just free wi-fi
I can't think of many companies let alone a retailer that includes their Chief Digital Officer in on conference calls but SBUX does. For a retail company SBUX seems more focused on the digital opportunity than some other tech companies so much so that the CEO Howard Schultz is stepping back from operations to focus on mobile and all things digital full time. Mobile and loyalty card payments represent over 30% of US revenues. On a recent conference call they also hinted that mobile ordering was in the works.
Mobile payments star
In his words SBUX processes almost 5 million mobile transactions with no other retailer processing even 1 million payments a week this "has garnered the attention of leading tech companies all of whom are chasing with great fervor, who is going to be able to create the standard de facto of mobile payments. So what I will say is that I think that there are things that we can take advantage of and then we can leverage that are outside of the ecosystems of Starbucks. And this new organizational change will free me up to really create and innovate around, not only mobile payment, but the things that we are doing with new channels of distribution in which we can cross promote and cross reward our customers with Stars as currency."
Just like school its all about the gold stars
Each time you order a grande you can earn a digital star. Why is this important? If you can make it to a certain level you will be eligible for freebies such as free drinks, food and refills which is driving loyalty and mobile usage. The top status is the gold card, in the US almost half of the 7.3 million active SBUX reward members have made it to gold status. Collect 30 stars within 12 months and you'll be at the Gold level with a shiny gold card. You get to keep those benefits for another 12 months by earning another 30 stars from then on you will receive free food or drink rewards with every 12 stars. This indicates to SBUX that their star currency can go further in the future. SBUX was also an early investor in Square. Stars or bitcoin which do you prefer!
SBUX is even a great place to play pranks.
SBUX is benefiting from card sales with $1.4 billion loaded up on SBUX cards leading up to Christmas. The app and electronic card also help in marketing. SBUX has always been a savvy marketer this continues in the digital world as the app includes an inbox which allows SBUX to send personalized messages and promotions to its customers when they are nearby.
Like many consumer brands China is a big goal for SBUX, they have plans to open up more stores in China this year than in America. China is interesting because they are smartphone savy. Two years ago SBUX launched their rewards program in China and in a short period of time have reached nearly 4 million members. The US has 7.3 million in a market which has nearly 13,000 stores versus China which has slightly over 1,000 stores suggesting a higher loyalty rate than in America and with plenty more room to grow.
Source: SBUX investor day
Anything else? Tea, food and juices
While all this is happening SBUX has made acquisitions in three areas that are lacking tea, foods and juices. The beauty about mobile is that it speeds up transactions no fiddling around with change. This frees SBUX to offer other services like food. Good food also has the virtuous effect of driving beverage sales. Food has historically only been around 20% of revenues with 30% attach rates but historically the experience has not been great. The acquisition of La Boulange changes this with an elevated bakery offering that is legendary in San Francisco that will roll out all across America this year. The better quality foods gives customers more excuses to visit and helps SBUX to leverage fixed store costs (see store visits chart above). SBUX also plans to fully roll out Teavana its tea offering and Evolution Fresh its juice offering to help capture the trend to healthy eating. Bon Appetit!
Disclosure: Decisive has a long position in Starbucks (SBUX) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
Facebook (FB) is a data machine. They know nearly everything about you and your connections. Since Valentines Day has come and gone FB has decided to analyse their database of relationship status updates from 'single' to 'its complicated' to help you in yours. The worlds largest social network is also the worlds biggest relationship database. Men tend to be older than women in a relationship Yep in 67% of relationships the male is older, in 20% the female is older and 13% of couples are the same age. On average the male is 2.4 years older. Australia has the closest age parity with an average gap of only 1.8 years.
What's important? Religion does play a part. It seems that people are willing to date people with a different religion but are less likely to marry them. In Australia around 77% of relationships are with people of the same religion. Will we still be together? The most important aspect is time. The longer you have stayed together the less likely to split up. Most relationships end in only a few months. As the chart below shows if you can make it past 6 months your % chance of staying together dramatically increases.
How couples interact on FB Before a relationship starts there is a slow and steady increase in messaging. However as the relationship begins there is less messaging as couples spend more time together in the real world. Less FB can sometimes be a good thing! While users post less in a relationship FB found that they express more positive messages to each other.
Where to look? No information for Australia but the best places to look if you're an Australian in the US is by going to the towns with the highest % of most single people
1. Detroit, MI
2. Los Angeles, CA
3. New York, NY
4. Miami, FL
5. Memphis, TN
But don't people go to these places to be single? FB suggests that cities where everyone is paired up is actually a better place to find a relationship as the incentive or pressure to pair up is even stronger. Apparently Colorado Springs tops the list due to its strong links to the military and religious communities that promote and encourage traditional values in relationships. You can always count on your friends Things do not always work out as planned and if your relationship does go south you can count on your friends. Your support network on FB does seem to work with the amount of interactions increasing when a relationship status is updated on FB. As can be seen below messages increase by 225% on the day of the update versus the average volume of interactions the prior weeks.
Disclosure: Decisive has a long position in Facebook (FB) stock
The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.
