Brazil O2O Insight Report – 2015  

What is O2O?  

Alex Rampell, Co-founder of TrialPay, coined the term "O2O" in 2010, which refers to the business model that leverages online channels to acquire offline services & products, or VICE VERSA.

. . . �

O2O Definition  

How Does O2O Fit Into Brazil’s Reality?  

A growing young population demands more quality services. Brazil’s mainstream workforce is much younger: Brasil 41% vs. China 33% in the Y+Z Generation.

Brazilian population will keep growing up to 225MM, until 2040.

Fonte: Population Pyramid

Population Factor  

O2O is a smart way to pursue service and user experience perfection, instead of pure technological revolution.

1% Brazil invests +-1% of its GDP in its current

R&D, compared to +-2.8% in the US

Fonte: Wikipedia

Technical Competitiveness  

Local Brazilian O2O players understand and are deeply rooted in the local offline business operation.

Global giants don't & won't do "Dirty Work".

Natural Barrier  

Why is O2O The ‘Next Big Thing’ in Brazil?  

Fonte: Teleco – Baidu BI Internal Data

Even with the largest number of housekeeping workers in the world, it is still hard to find overqualified workers.

7,233

4,206 2,405 1,926 1,851

Domestic Workers by Country (Top 20) in MM

O2O Boom Prerequisites Met – Unbalanced Info Flow

 

Fonte: Teleco – Baidu BI Internal Data

42 52

Brazil (U$ Bi) China (U$ Bi)

O2O Boom Prerequisites Met – Overproduction

 

The Brazilian Beauty Market in 2012 compared with that of China’s, a country with a population 7x bigger.

Fonte: Teleco – Baidu BI Internal Data

Average Rate of a Hotel Room

₤ 77.00

₤ 82.00

₤ 86.00

₤ 90.00

₤ 92.00

₤ 104.00

₤ 109.00

₤ 118.00

₤ 147.00

₤147.00

China

India

UK

Germany

Japan

France

Italy

USA

Russia

Brazil

O2O Boom Prerequisites Met – Service Fee Inflation

 

205,500

382,400 436,100

519,700 574,200

624,700 672,100

704,100

2011 2012 2013 2014 2015 2016 2017 2018

19.0%

26.3%

33.1% 38.5%

42.2% 45.5%

48.6% 51.6%

China Smartphone Penetration

Smartphone Users

China Entered into the Fast O2O Development Phase in 2013, followed by Its Smartphone Penetration Rate exceeding 30%.

12,100

21,600 27,100

38,800

48,600

58,500

66,600 71,900

2011 2012 2013 2014 2015 2016 2017 2018

7.0%

19.0% 20.8%

28.3%

34.4%

40.4% 45.0%

47.6%

Brazil

Fonte: Emarketer – Teleco 2015

Smartphone Penetration

Brazil’s Smartphone Penetration Rate Exceeded 30% Starting in 2015.

Smartphone Users

O2O Boom Prerequisites Met – Mobile Broadband Ready

 

Current O2O Scenario in Brazil  

300

300

116

48

37

25

20

10

8 6 1.9

1

HOME IMPROVEMENT

GROCERY DELIVERY

FOOD DELIVERY

OTA BEAUTY MOTOBOY TAXI JOBS WEDDING MOTEL MOVIE TICKET TABLE RESERVATION

R$ BILLION

Fonte: ABO2O

R$1 TRILLION

This is a R$ 1 TRILLION Market  

Empresa Tipo $ Ativos Gerenciados Ex 1 Ex 2 Ex 3 Escritório

LatAm

VC/PE $ 62 Billion SP

PE $ 17.4 Billion SP

VC/PE $ 10 Billion NO

VC $ 9 Billion NO

VC $ 7.5 Billion SP

VC/PE $ 8 Billion NO

VC/PE $ 4.4 Billion NO

VC/PE SP/RJ/MG

VC $ 640 Million SP

VC $ 270 Million SP

VC/PE SP

VC $ 230 Million SP/BA

Fonte: Tech Crunch and Lavca 2015

O2O is Where the Investment is  

Groupon’s initial services

(Web only)

Peixe Urbano & Groupon enter

the O2O market (Web only)

O2O takes on the mobile format

through taxi apps, mobile payments,

etc. Fast O2O growth in

mobile

O2O mobile apps appear

O2O Mobile services reach a new height of

penetration

2008 2015 Future

Will an O2O marketplace

be born?

O2O spreads to secondary

cities

2013 2014 2010

EARLY STAGE

EARLY STAGE

INITIAL STAGE FAST GROWTH

FAST GROWTH INITIAL STAGE

2012

2 years gap

Fonte: AppAnnie – Baidu BI Internal Data

2015 Future 2013 2014 2010 2012

2 years gap

Current Stage: 2~3 Years Behind China & Into the ‘Fast Growth’ Stage

55% YoY

56% YoY

360% YoY

-13% YoY

94% YoY 44% YoY

222% YoY

45% YoY

229% YoY

240% YoY

OTA

Taxi

Food

E-Learning

Group Buying

Review

Real Estate

Cars

Tickets

Room Rental Logistic

Pet

Housekeeping

Motel

Reservation

Top 15 Downloads on iOS & Android

Fonte: AppAnnie June 2015– Baidu BI Internal Data – Teleco 2015

104,897

406,589

1,060,000

518,418

1,177,092

356,503

1,339,369

1,535,600

1,671,423

1,690,904

2015 2014

Top 15 Downloads on iOS & Android Top 15 Downloads on iOS & Android

9,702

528

413

46,419

188,897

28,481

31,024

66,584

195,073

223,019

2015

18% YoY

320% YoY

16K% YoY

5776% YoY

194% YoY

1,800,162

4,060,066

884,758

3,500,342

3,350,149

2,787,330

3,546,495

4,072,278

5,458,863

6,490,172

2015 2014

O2O Growth is Mobile-First  

Food Delivery OTA Taxi

According to SPC Brazil, online

delivery orders represent 23% of total sales; 40%

are in pizza delivery.

Fonte: Associação Pizzarias Unidas, SPC Brazil, Associação Brasileira de Bares e Restaurantes (Abrasel )

Almost 20% of internet users called a taxi at

least once in the last 6 months.

1 in every 5 Brazilian

smartphone users buys

tickets online.

Movie Tickets

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil

According to

Criteo, 57% of leisure travelers book their flights

online.

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil. And Emarketer

Fonte: Panorama Mobile Time/Opinion Box: M-commerce no Brasil

O2O is Changing Consumer Behavior Drastically  

Outlook on Brazil’s O2O  

Fonte: ABO2O

50%  

50%  

42%  

35%  

30%  

30%  

14%  

10%  

OTA   BEAUTY   TICKETS   TAXI   WEDDING   MOTEL   JOBS   MOTOBOY  

YOY GROWTH 2015-2016

Upcoming Fast Growth in O2O  

Brazil

19%

18%

45%

8%

10%

OTA

Taxi

Food

Group Buying

Tickets

China

Fonte: AppAnnie June 2015– Baidu BI Internal Data.

OTA

Food

Group Buying

Taxi

Tickets

42%

27%

14%

12%

5%

Initial Stage Growth Stage

Evolution: Verticals vs. Marketplace  

Vertical China Brasil Educação X X

Imóveis X X

Recrutamento X X

Lavanderia X

Impressão X

Casamento X X

Reciclagem X

Decoração X X

Motorista de Aluguel X

Reparos X

Logística por Motos X

Chef em domicílio X X

Serviços para Pets X

More Sub-Verticals to Come in Mobile  

Group Buying

Free WiFi

Hardware /OS

Review

The O2O Marketplace is Not One, But Many  

Services Services

Services Services

Services Similar to the mobile Internet, O2O is evolving towards a fragmented ecosystem of “Carrier Battle Groups”: Multiple Marketplaces & Multiple Vertical Services.

User Experience: convenience, efficiency, cost

Business Model: transaction-driven, close the loop w/ payment

Evangelization: promote best practices, awareness among users, merchants and players

Investment: dedicated financial/traffic/technology resources

Brazil’s Challenges in O2O  

Thank you!