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201810 / 1 Retail B2B e-Commerce Leadership

Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Page 1: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

201810 / 1

Retail B2B e-Commerce Leadership

Page 2: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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We Provide B2B e-CommerceServices to the Retail Industry

QRS Mission

Retailers

Vendors

Manufacturers

Carriers

eCommerceeCommerce ContentContent ApplicationsApplications MarketplaceMarketplace

Page 3: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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QRS Snapshot

• Founded in 1988, IPO in 1993 at $8.00 per share

• Four B2B e-commerce service groups

• Established user base of approximately 8,500 customers

• Headquartered in San Francisco Bay Area

• Approximately 400 full-time employees

• LTM revenues of $119 million, net income of $22 million

• Sequential revenue growth over past 25 quarters

Page 4: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Investment Highlights

• Huge B2B e-commerce market opportunity

• Leader in retail B2B e-commerce services

• Recently introduced Tradeweave Internet community andmarketplace

• Leverageable industry expertise, customer network andcontent assets

• Highly efficient distribution strategy

• Expanding into new markets - grocery and international

• Proven recurring revenue model

Page 5: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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1998 2003

$43 Billion

$1.3 Trillion

Very Large Market Opportunity

B2B e-Commerce GrowthGlobal Retail Sales

Source: Euromonitor, US Government. Source: Forrester Research.

Total size = $6.5 trillion

U.S. = $2.7 Trillion

CAGR=98%

Page 6: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Retail Industry Today

• Highly fragmented and highly competitive

• Enormous inefficiencies– Estimated $102B in operating inefficiencies per year

– Merchandise stock-outs occur 8% rate

– 20% of U.S. retail sales is excess merchandise

– Over 80% of transactions still paper-based

• Opportunity and dislocations due to Internet– e-Retailing

– Access to global customers and suppliers

• Limited time or resources to implement key technologies

Page 7: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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From Supply Chain to Demand Chain

Manufacturer

Wholesaler/Distributor

Import/Export

Transportation

Retailer

Raw Materials

Pull

Push

θ Consumer-centric

θ Move information

θ Just-in-time everything

θ Product-centric

θ Move goods

θ Inventory-buffers

Customer

Page 8: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Retail still predominately paper based Collaborative efforts are in their infancy

Reduced expenses

Reduced cycle time

Reduced inventory costs

Network benefits

New customers and markets

Retail industry savings opportunity is $102B

Stages of B2B e-Commerce Implementation

Collaborativeand HostedApplications

Shared Product Information / UPC Catalog

ElectronicExchange ofDocuments

Online Marketsand TradingCommunities

Page 9: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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B2B e-Commerce Services to theRetail Industry

Manufacturers

Vendors

Carriers

Retailers

MarketplaceServices

ContentServices

ApplicationServices

eCommerceServices

Page 10: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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QRS B2B e-Commerce Services

Collaborativeand HostedApplications

Shared Product Information / UPC Catalog

ElectronicExchange ofDocuments

Online Marketsand TradingCommunities

eCommerce Services Content Services Application Services Marketplace Services

ECESEC Enabling ServicesEC Enabling Services

Internet Community & MarketplaceInternet Community & Marketplace

Tradeweave

Page 11: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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“Point to Point” ProblemsNo standards

Pockets of informationNo collaboration

Redundant efforts

“Network” BenefitsTime to market

Shared informationIncreased efficiency

Customer / market insight

QRS Advantage

Grocery Store

ApparelVendor

SpecialtyStore

DiscountStore

ShoeVendor

FoodVendor

Dept.Store

HardwareVendor

FoodVendor

Dept.Store

ShoeVendor

DiscountStore

SpecialtyStore

GroceryStore

ApparelVendor

HardwareVendor

Page 12: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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eCommerce Services100% solution for electronic exchange of documents

Electronic exchange ofbusiness documents

Foundation for QRS B2Be-commerce services

Outsourced e-commerceservices

• Services span the breadth of e-commerce technologies- EDI, XML, proprietary networks, Internet

Shipping application fore-Retailers

ECESEC Enabling ServicesEC Enabling Services

Page 13: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Provides access to our databaseof product information with over70 million items

Content Services

Backbone content for retail B2B e-commerce

• Retail industry’s largest database of product information• Increases information accuracy and speed• Efficient means to maintain currency of dynamic

information

Page 14: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Sales analysis tools forretailers and vendors

Provides logisticsinformation and carriertendering to improvemerchandise movementand tracking

Data collection andmarket analysis ofcompetitive retailpricing, promotion anddistribution information

Application Services

Hosted applications available online

• Access to sophisticated applications as an outsourcedservice

• Lowers upfront investment and ongoing costs andincrease speed of implementation

Page 15: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Marketplace Services

Internet community and marketplace linking retailersand their trading partners

Online trading and auction of first-run and excessretail merchandise. Retail portal of industry content.Launch partners include Liz Claiborne, Donna Karan,and Dillard Department Stores.

• Reduces transaction and brokering costs• Increased manufacturers’ ability to service retailers with

in-season merchandise• Ability to target focused group of buyers

Internet Community & MarketplaceInternet Community & Marketplace

Tradeweave

Page 16: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Tradeweave Opportunity

• Significant inefficiencies exist today– 20% of U.S. retail sales is excess merchandise

– Excess merchandise typically disposed of at 25-40% ofwholesale prices

• History– Initiated in Summer 1999

– Time-to-market achieved through unique operating structure

– Announced on December 1, 1999

• Market strategy– Initial focus on apparel and excess merchandise

– Opportunities to cover full spectrum of first-run, in-season andexcess merchandise

– Longer term expansion into other retail segments and B2C

Page 17: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Tradeweave Market Sizing

Total Apparel Retailers

QRS Customers

Vendors

QRS Customers

57% 70%20%

Excess Merchandise

$40B

$115B

$200B $75B$200B

$52B

25%

$50B

Off-Price Merchandise

Page 18: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Paper-based ProcessesRetailerRetailer VendorVendor

Tradeweave Leverages QRS

TradeweaveTradeweave

ElectronicExchange

ElectronicExchange

Retail ProductInformation

Catalog

Retail ProductInformation

Catalog

• Access to QRS technology, services and installed base• QRS reputation as a trusted third-party

Page 19: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Retail Industry Leadership

Page 20: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Strong & Growing Customer Base

Network of approximately 8,500 retailers, vendors,manufacturers and carriers

0

2,000

4,000

6,000

8,000

10,000

1996 1997 1998 Nov 1999

$0

$3,000

$6,000

$9,000

$12,000

$15,000

$18,000

1996 1997 1998 Nov 1999

Number of Customers Revenue per Customer

Page 21: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Benefits:

• “Mandated” by large retailers• Cooperative marketing• 95%+ recurring revenues• Lower customer acquisition costs

Efficient Distribution Strategy

Apparel Vendor

Apparel Vendor

Shoe VendorShoe

Vendor

Accessories Vendor

Accessories Vendor

Food VendorFood

Vendor

CosmeticsVendor

CosmeticsVendor

HardwareVendor

HardwareVendor

Book VendorBook

Vendor

RetailHub

“Hub & Spoke” Distribution

One large retailer Thousands of trading partners

Page 22: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Distribution Case Study

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1997 1998 Nov 1999

An

nu

al P

rog

ram

Rev

enu

es

980

1,000

1,020

1,040

1,060

1,080

1,100

Pro

gra

m T

rad

ing

Par

tner

s

Large Department Store

($M)

Page 23: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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QRS B2B e-Commerce Roadmap

QRS eCommerce ServicesQRS eCommerce Services

QRS Content ServicesQRS Content Services

QRS Application ServicesQRS Application Services

QRS Marketplace ServicesQRS Marketplace Services

Manufacturers / Vendors Retailers

TransportationManagement

WarehouseManagement

OrderManagement

TransportationManagement

PurchasingManagement

Suppliers WarehouseManagementE

RP E

RP Consumers

Retail Information Infrastructure

QRS positioning

Page 24: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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eRetailers’ ChallengesSales

• Customer acquisition

• Pricing and promotions

• Customer retention and growth

Distribution

• Customer fulfillment

• DC and vendor logistics

• Operations staff

Merchandising

• Assortment editing and presentation

• Inventory management

• Merchandising staff

Page 25: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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New Markets

Grocery

• $550 billion market

• Similar challenges toother retail segments

• Next, natural expansionarea for QRS services

• Leading customerbase through RDS

International

• Globalization of retailindustry and sourcing

• Leverage existingcustomer base,relationships andtechnology

• Early stage of adoption

• Significant destination forexcess goods

Page 26: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Competitive Environment

Internet Capital Group

CMGI

VerticalNet

Ariba

CommerceOne

Tradeout.com

Sterling Commerce

GEIS

Retek

JDA

Breadthof

B2BServices

Retail Industry Focus / Expertise

Page 27: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Experienced Management Team

Peter Johnson

John Simon

Shawn O’Connor

Peter Papano

Glenn Dubois

Gopi Sankarasubramani

Allison Nelson

Phil Woodworth

Chairman

Chief Executive Officer

President and Chief Operating Officer

Chief Financial Officer

VP, Sales

VP, Technology

VP, Business Development

VP, Content Services

PositionName

Page 28: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Financial Highlights

• Recurring revenue model

• 25 quarters of sequential revenue growth since IPO

• Significant growth potential

• Huge opportunity in Tradeweave

• Attractive margins and cash flow

• Strong balance sheet

Page 29: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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$3 $5 $7 $9$13 $17

$22

$31

$42

$57

$72

$92

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1993 1994 1995 1996 1997 1998

Annual Results

($ M)

Revenue CAGR = 33%

Operating Income*Revenues

* Excludes non-recurring charges

Page 30: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Nine Months Comparison

$65

$91

$0

$20

$40

$60

$80

$100

1998 1999

($’s in Millions)

$12

$18

$0

$10

$20

$30

1998 1999

Revenues Operating Income*

42%

47%

* Excludes non-recurring charges

Page 31: Retail B2B e-Commerce Leadership · 2000-02-17 · 209636 / 4 Investment Highlights • Huge B2B e-commerce market opportunity • Leader in retail B2B e-commerce services • Recently

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Quarterly Revenue Growth

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

1993 1994 1995 1996 1997 1998 1999

25 consecutive quarters of revenue growth since IPO

($M)

$32.4

$4.4

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Tradeweave Opportunity

• Structured as a “startup” within QRS– Time to market is critical– Focused incentives to attract key talent– Joint management

• Total investment to date of approximately $5 million

• 90% QRS, 10% individuals• Financial impact:

Near Term Longer Term

Investment in:• Infrastructure• Sales & Marketing• Product Development

Investment in:• Infrastructure• Sales & Marketing• Product Development

Revenue GrowthRecurring RevenuesAttractive Margins

Revenue GrowthRecurring RevenuesAttractive Margins

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Financial Model9 mos1999

Long-TermTarget Considerations

$M % %

Revenue Growth $91.3 42% 40%+ • 25-35% near-term outlook

• Upside from Tradeweave inlate 2000

Gross Profit 44.2 48 50+

Operating Expense 27.7 30 25 - 30 • Near-term impact frominvestment in Tradeweave

Operating Income 17.5 18 20+ • Near-term impact frominvestment in Tradeweave

• Upside from Tradeweavelong-term marginimprovement opportunities

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Investment Highlights

• Huge B2B e-Commerce market opportunity

• Leader in retail B2B e-Commerce services

• Recently introduced Tradeweave Internet community andmarketplace

• Proven recurring revenue model