Demae-can 2484
出前館
Recent Updates
2022-04-27
2022-04-15
2022-01-28
Get in touch
Tokyo: Link Square Shinjuku (general reception: 11F) 5-27-5 Sendagaya Shibuya-ku, Tokyo, Japan151-0051
Osaka: Osaka Fukoku Seimei Building 27F,2-4, Komatsubarachō, Kita Ward, Osaka, Japan530-0018
Summary
Demae-can operates an eponymous specialized food delivery portal, and is looking to expand its delivery services to cover non-food items as well. Users can easily order from the Demae-can app or website to fulfill a variety of needs. It is one of the largest delivery services in Japan, available in all 47 prefectures.
Internet & Direct Marketing Retail
Key dates
2017-12-25
Coverage initiation
Executive summary
Business overview
Demae-can business: Demae-can Co., Ltd., operates the Demae-can food delivery service, which is one of the largest delivery services in Japan, allowing users in all 47 prefectures to place orders easily via the Demae-can app or website. Since Q3 FY08/20, amid a tough climate for the restaurant industry due to the COVID-19 outbreak, the company has grown revenue sharply by responding to demand for delivery from both restaurants and consumers and by investing aggressively. FY08/21 revenue was JPY29.0bn (+180.7% YoY). However, the company posted operating loss of JPY19.2bn for the year (versus loss of JPY2.7bn in FY08/20) due to marketing and other upfront spending. The Demae-can business accounted for roughly 98% of revenue in FY08/21, and the company only operates in Japan.
Outsourced delivery platform (Sharing Delivery): The company provides the Sharing Delivery platform to restaurants that do not have their own delivery infrastructure. The company covered 56% of households in Japan as of end-FY08/21, and Sharing Delivery generated more than 50% of gross merchandise volume (GMV) in Q1 FY08/22 (with the remainder from affiliates’ own deliveries). As of Q2 FY08/22, the company outsourced delivery of 90% of orders placed through the Sharing Delivery platform.
Key Performance Indicators: The company discloses several key performance indicators that it watches closely: GMV (JPY162.7bn in FY08/21, +58.4% YoY), number of orders (60.3mn, +62.7% YoY), and number of active users (7.34mn, +87.2% YoY), defined as users who have made an order within the past year. Although it does not disclose specific figures, the company also closely watches the number of registered delivery personnel, allowing it to respond to growth in the number of orders. Demae-can boasted more than 100,000 affiliated restaurants as of end-2021. It expects the order unit price to gradually decline as it makes food delivery an everyday occurrence. This is because prices for frequent customers tend to decline and the company also intends to boost its efforts to tap into those living alone as well as the family demographic. It also expects the repeat order rate to increase.
Revenue structure: As of April 2022, in principle, pay-for-use charges for affiliated restaurants were 10% of order cost as Demae-can service fees (before tax, including points cost); 25% of order cost as delivery commissions (before tax; no charge when affiliated restaurants handle delivery); and maximum of 3% of order value as payment processing fees. In addition, delivery commissions include the portion shouldered by users. The main costs in delivery services include outsourcing costs (cost of revenue), a variable cost that moves in line with the number of outsourced deliveries, part-time personnel expenses incurred on a fixed hourly basis (SG&A expenses), and rent (SG&A expenses). Marketing spending is a strategic expense, used mainly to boost recognition, acquire new users, and increase the repeat order rate.
Strengthening of capital and business alliance with LINE Corp. (unlisted): In March 2020, the company announced an agreement to strengthen its capital and business alliance with the LINE group. With the strengthening of ties between the two companies, going forward, Demae-can will be drawing upon the management resources of the LINE group in a number of different ways, including (1) making use of LINE’s LINE ID service, (2) procuring funding for growth-oriented investment, (3) procuring additional personnel from LINE to help with systems development work and marketing, and (4) receiving support to enable the expansion of its takeout food delivery service into new territories. By combining its own ID system with LINE ID to create a new ID system known as “ONE ID,” Demae-can hopes to make it easy for the more than 90mn LINE users (as of December 2021) to make use of its takeout food delivery service. Demae-can will also be able to draw upon LINE’s human resources to help with systems development and marketing.
Trends and outlook
FY08/21 results (after reflecting amendments): For FY08/21, the company reported gross merchandise volume (GMV) of JPY162.7bn (+58.4% YoY), revenue of JPY29.0bn (+180.7% YoY), operating loss of JPY19.2bn (versus loss of JPY2.7bn in FY08/20), recurring loss of JPY19.1bn (versus loss of JPY3.0bn in FY08/20), and net loss attributable to owners of the parent of JPY21.9bn (versus loss of JPY4.2bn in FY08/20). Profits were significantly lower YoY due to heavy upfront spending at the Demae-can business, including investment needed to expand delivery area and secure delivery personnel, along with spending on advertising and promotion.
FY08/22 forecast: For FY08/22, the company forecasts GMV of JPY330.0bn (+102.8% YoY) and operating loss of JPY50.0–55.0bn (versus loss of JPY19.2bn in FY08/21). The company only disclosed forecasts for GMV and an operating loss range, citing the possibility that earnings could be substantially affected by volatility in the delivery market environment. It plans to invest heavily in the view that now is the time to prioritize spending on consolidating business foundations. The company also made no decision on a dividend forecast. In terms of KPI projections for FY08/22, the company targets 1.2mn active users (+63% YoY) and a 3.6x increase in delivery personnel. It plans to focus on area expansion, improving user retention, and increasing GMV per affiliated restaurant.
Medium-term business plan (out October 15, 2020): On March 26, 2020, the company announced a business and capital alliance agreement with LINE Corp. (unlisted), and the signing of a separate agreement under which LINE Corp. and Mirai Fund Limited Liability Partnership pledged to underwrite the company’s issuance of new shares through third-party allotment, which in turn would lead to changes in the company’s principal shareholder and controlling company. With the conclusion of these agreements, the company on October 15, 2020, created a new medium-term management plan spanning the three-year period from FY08/21 to FY08/23. By end-FY08/21, it had already achieved the household coverage target it had set for FY08/23. In addition, the FY08/22 forecast the company announced in October 2021 calls for GMV of JPY330.0bn and operating loss of JPY50.0–55.0bn. This essentially advanced the GMV target contained in the medium-term plan by one year. The amount to be invested in FY08/22 has also grown, so operating loss is likely to exceed the projection contained in the medium-term plan. As competition intensifies, the company plans to actively move forward with investment to increase GMV. The situation when the medium-term plan was formulated in October 2020 and the situation as of October 2021 are very different.
Strengths and weaknesses
Shared Research sees the company as having three key strengths: 1) stronger capital and business alliance with LINE group that allows Demae-can to draw on its management resources as well, 2) high DAU share of domestic food delivery apps, and 3) adequate funds already raised for investment.
In terms of weaknesses, we see 1) low repeat order rate averaging less than once a month for active users overall, 2) transparency (compared to competitors) of its KPIs and strategies as a listed company essentially conducting a single business, and 3) company strengths difficult to leverage overseas.
Key financial data
Recent updates
Full-scale rollout of quick commerce for food and daily necessities
On January 26, 2022, Demae-can Co., Ltd. announced the full-scale rollout of quick delivery service for food and daily necessities "Yahoo! JAPAN Mart by ASKUL" from the same day in collaboration with Yahoo Japan Corp., a group company of Z Holdings Corp., and Askul Corp.
The Z Holdings group aims to roll out Yahoo! JAPAN Mart in several dozen locations including all 23 wards of Tokyo and some other areas by the end of fiscal 2022. It plans to consider further geographical expansion in fiscal 2023 and beyond.
Trends and outlook
Quarterly trends and results
Note: Disclosure classifications for consolidated revenue in the Demae-can business changed in cumulative Q3 FY08/20 accompanying changes in its fee structure. The above figures show only figures after the classification change.
1H FY08/22 results
Overview
Q2 FY08/22 results (December 2021–February 2022): Revenue amounted to JPY12.4bn (+99.2% YoY), while operating loss came to JPY13.5bn (versus operating loss of JPY5.3bn Q2 FY08/21), recurring loss JPY13.7bn (versus recurring loss of JPY5.3bn Q2 FY08/21), and net loss attributable to owners of the parent JPY13.9bn (versus net loss of JPY6.2bn in Q2 FY08/21). Loss expanded significant YoY primarily because the company sought to expand the market share of its Demae-can business by conducting large-scale promotions during the period spanning from November 2021 through January 2022.
Demae-can business: Key performance indicators for Q2 were gross merchandise volume (GMV) of JPY61.2bn (+51.9% YoY), order count at 24.0mn (+62.2% YoY), and active users at 8.53mn (+46.6% YoY). The number of registered delivery personnel increased by 399% YoY. The number of affiliated restaurants (including those that have introduced DeDirect) exceeded 100,000 at the end of 2021.
Impact of changes in accounting policy: Starting from FY08/22, the company changed its accounting policy such that some promotional costs targeting users (e.g., fee discounts) are subject to net processing subtracted from revenue. Compared to previous accounting policies, revenues and SG&A expenses each decreased by JPY3.4bn. If the previous accounting policy were applied, revenue would be JPY15.8bn (+254% YoY).
Extraordinary losses: In Q2, the company recorded JPY181mn in extraordinary losses consisting of expenditures (audit costs, investigation committee costs, outsourcing costs, etc.) related to the correction of FY08/21 financial results, which was conducted in December 2021.
Full-year company forecast for FY08/22: The company has made no change to its GMV forecast for FY08/22. For details, including preconditions for earnings forecasts, see “Company forecast for FY08/22” below.
Performance by segment
Demae-can segment
For the three-month period of Q2 FY08/22, the Demae-can segment reported revenue of JPY12.2bn (+101.3% YoY) and an operating loss of JPY13.5bn (versus loss of JPY5.3bn in Q2 FY08/21).
Demae-can segment revenue broke down as follows: Demae-can service fees of JPY4.1bn (+52.9% YoY), delivery commission revenue of JPY7.6bn (+148.0% YoY), and other JPY561mn (+63.6% YoY).
KPIs
Key performance indicators for Q2 were gross merchandise volume (GMV) of JPY61.2bn (+51.9% YoY), order count at 24.0mn (+62.2% YoY), and active users at 8.53mn (+46.6% YoY). The number of registered delivery personnel increased by 399% YoY. The number of affiliated restaurants (including those that have introduced DeDirect) exceeded 100,000 at the end of 2021.
Due to the effects of the campaign, the order unit price dropped to JPY2,564 from JPY2,582 in Q1, and the number of repeat uses per active user increased to 3.0 times/quarter from 2.5 times/quarter in Q1. As part of increased opportunities in the food area (lengthening of service hours), early morning business demonstrations begun in 01/2022.
From November 2021 through January 2022, the company conducted a major campaign focusing on Tokyo and three surrounding prefectures, which account for 60% of the company's GMV. As a result, the company's daily active user (DAU) share of domestic food delivery apps expanded to 48% in February 2022, up significantly from 26% in September 2021 (according to research conducted by data.ai [formerly "App Annie"]. Because this is an app, company web usage is not included). The company said that it was able to maintain its high DAU share in 03/2022, and believes that the users acquired in the large-scale campaign are sufficiently entrenched. As in Q1, during Q2 (December 2021 through February 2022), the company's app download count continued to place first in a ranking of seven companies, including six competitors (according to research conducted by data.ai).
On the other hand, the campaign period was after the state of emergency at the end of September 2021, by which time the market growth rate had begun to slow down. Although the company succeeded in expanding its market share, the GMV growth rate did not reach the level initially expected.
In accordance with projections, Q2 marketing expenses (including impact from delivery fee vouchers) were equivalent to 16% of the company's GMV. Marketing expenses stemming from coupons for existing users and free delivery fee campaigns were equivalent to 9% of GMV, while marketing expenses from coupons for targeting new user acquisition and spending on efforts related to recognition and user attraction were equal to 7% of GMV.
The company said it expects to spend less than 15% of GMV in Q3 (16% of GMV in Q2) by streamlining the campaign. The company says it plans to strengthen measures to improve user retention and repeat rates in H2.
Unit Economics (profitability per delivery unit) turned a profit in 03/2022. The increase of COVID-19 infections served to increasingly slow the market growth rate and seasonal factors led to improvements in the supply and demand of delivery personnel.
Redesign of app for riders (delivery personnel)
In March 2022, the company redesigned its app for delivery personnel. Support features were expanded, and the app now includes order acceptance and heat map features, as well as a rider feedback collection form. The redesigned app places no restrictions on the areas where delivery staff can operate, and orders are categorized and displayed based on a variety of criteria, including location information. In addition, the app now facilitates more efficient delivery by providing visually clear indicators for users (highlighting areas that have large order counts and need riders in red and areas with enough riders in green). Feedback collected through the rider feedback collection form will be used to accelerate future functional modifications and improvements to the app's user interface and the user experience it provides. The company plans to provide these new features in some select areas, and will gradually expand their availability through the summer of 2022.
The company says that redesign of the delivery app will lead to improvements in unit economics.
Retail initiatives
On April 8, 2022, the company announced that it would expand its partnership with Ministop convenience stores. As of that time, 65 stores had been introduced, with the company's goal to expand this to 1,000 by the end of 2022.
Competitor trends
On March 22, 2022, menu, Inc. reduced local area service and discontinued service in 14 out of 47 prefectures. On April 20, 2022, DiDi Food Japan Co., Ltd. (a Japanese subsidiary of DiDi (unlisted)), which handles the food delivery service for DiDi Food, announced that the DiDi Food delivery service will end on May 25, 2022 in Japan. The company believes that the withdrawal of these competitors will lead to improvements in unit economics.
Mail Order segment
For the three-month period of Q2 FY08/22, the Mail Order segment reported revenue of JPY150mn (+5.6% YoY) and operating profit of JPY27mn (+16.4% YoY).
Company forecast for FY08/22
Supplementary information at time of Q2 earnings announcement (April 14, 2022)
Demae-can left its initial full-year FY08/22 forecast unchanged.
In the full-year company forecast for FY08/22, the company announced gross merchandising volume (GMV) of JPY330.0bn (+102.8% YoY) and 1.2 million active users (+63% YoY). However, in order to achieve the full-year company forecast, the company must achieve gross merchandising volume of JPY220.0bn (+139.9% YoY, and 2x 1H results) and 3.5mn active users (+40% versus 1H). Since the lifting of the state of emergency at the end of September 2021, market growth has slowed, and the company's DAU share had already risen to 48% as of February 2022 (according to a survey by data.ai (formerly App Annie)). Given this, regarding the amount of distribution (GMV) and the number of active users, the barriers to achieving the initial forecasts must be considered significant.
The company has set the initial guidance for advertising expenses, including shipping benefits, in the mid 10% range of GMV for FY08/2022. As a result, if the growth rate of gross merchandising volume (GMV) is not as high as initially forecasted, advertising expenses on a monetary basis may be lower than initially forecasted. On the other hand, software investment, which was planned to be capitalized in the initial forecast, was expensed at JPY1.7bn as cost of revenue in 1H. Software investment is expected to be expensed in the second half as well, and about JPY4.0bn expected to be recorded as expenses for the full year.
The company has stated that spending on advertising in Q3 is expected to be less than 15% of GMV (compared to 16% of GMV in Q2). In 2H, the policy will be to strengthen measures to improve user retention and repeat use. On April 22, 2022, the company announced that it will carry out a free shipping campaign for Sharing Delivery (outsourced delivery) in Tokyo and the neighboring three prefectures during April 25 to 30 June. Regarding the acquisition of new active users, the company policy is to narrow down investments under normal circumstances, but investing when macro factors can be expected to provide either a tailwind or service enhancements.
On April 19, 2022, the company completed the payment of new shares in the form of restricted stock. The total issuance amount was JPY489mn. In connection with this, some stock options issued in the past were waved, with a gain on the reversal of stock acquisition rights of JPY588mn to be recorded as extraordinary income in Q3.
Supplementary information at time of Q1 earnings announcement (January 14, 2022)
Demae-can left its initial full-year FY08/22 forecast unchanged.
After Q1, in monthly figures for December 2021, GMV increased 53% YoY and order count increased 61% YoY. The number of active users at end-December was 8.82mn (+58% YoY), and the number of registered delivery personnel increased by 395% YoY. December trends were generally the same as in Q1.
For FY08/22, the company forecasts GMV of JPY330.0bn (+102.8% YoY) and targets 1.2mn active users (+63% YoY). In December, growth in the number of active users was in line with the rate projected in the initial forecast, but GMV growth was slower than expected. State of emergency declarations issued as the number of COVID-19 cases surged again were lifted at end-September 2021, resulting in a slowdown in growth of the delivery market as a whole during Q1 FY08/22. While making progress in expanding its market share, which was the objective of major promotional efforts it conducted, the company says order frequency did not increase as much as postulated by its initial forecast.
As in Q1, the company expects the ratio of advertising expenses to GMV to be about 15% in Q2. It believes it is in a phase where market share expansion remains important, and therefore plans to allocate half of its advertising spending to coupons issued to new users and advertising to attract users.
From Q1, the company has decided to treat software investment as SG&A expenses, although this change was not factored into the initial forecast.
Initial forecast (as of October 14, 2021)
For FY08/22, Demae-can forecasts full-year gross merchandise volume (GMV) of JPY330.0bn (+102.8% YoY) and operating loss of JPY50.0–55.0bn (versus loss of JPY19.2bn in FY08/21). The company only disclosed forecasts for GMV and an operating loss range, citing the possibility that earnings could be substantially affected by volatility in the delivery market environment. The company sees FY08/22 as a period to prioritize investment to build the foundation of its business and plans to move forward with substantial investment. Additionally, it left its dividend forecast undetermined.
The company expects the market to grow at a rate of 30–40%. At the same time, it expects the portion of GMV growth that exceeds market size growth to come from market share expansion. For this reason, the company will need to keep a close eye on competitors' actions in FY08/22.
Revenue will fluctuate depending on the ratio of GMV generated by the Sharing Delivery service. There are many factors beyond the company's control, such as whether the user chooses a menu item subject to Sharing Delivery when ordering. For this reason, the company provides initial projections for GMV, which it can manage, but not for revenue, which is difficult to manage.
In FY08/22, it will be important to secure delivery personnel to achieve strong GMV growth. Demae-can expects the delivery model to remain in the red in FY08/22.
The company projects that the ratio of advertising expenses (including the cost of free delivery campaigns, recorded as negative impact on revenue) to GMV will be about 15%. It states that the projected operating loss range is based on marketing spending (advertising expenses and promotional costs in the form of coupons) and the amount of loss linked to the number of Sharing Delivery orders. The company does not disclose information as to where it directs its marketing spending.
In the event it does not spend as much on marketing as initially projected, it is likely this will be because it does not expect the investment to be as effective (in growing GMV) as previously anticipated. For this reason, if in FY08/22 the company does not reach the planned level of marketing spending, resulting in narrower operating loss than projected, there will be concern about progress on GMV growth.
KPI projections
As KPI projections for FY08/22, the company targets 1.2mn active users (+63% YoY) and a 3.6x increase in delivery personnel numbers.
1.2mn active users corresponds to nearly 10% of Japan's total population of JPY125mn as of August 2021 (of which 111mn are aged 15 or older). The projected GMV growth rate (+103% YoY) is higher than the growth rate for the number of active users (+63% YoY), but this is mainly due to an anticipated increase in order frequency.
Taking into account the shortage of delivery personnel as of October 2021, the company expects to need a 3.6x increase if it is going to achieve the GMV target of JPY330.0bn. This is a numerical target based on registration, since delivery personnel are not necessarily all active, and even if they are, the level of activity can vary from person to person.
The company has not provided KPI projections for the number of affiliated restaurants or household coverage for Sharing Delivery. It believes the stage at which it should focus on these two KPIs has passed, and that it will instead be important to focus on the numbers of active users and delivery personnel to achieve the GMV target of JPY330.0bn proposed in its FY08/22 forecast. In FY08/22, the company will prioritize increasing the number of affiliated restaurants with a high affinity to delivery.
Business strategy
In FY08/22, the company will emphasize an area strategy and improvements in user retention and GMV per affiliated restaurant.
In regard to the area strategy, the company will implement detailed measures to enhanced brand awareness, secure delivery personnel, and promote sales, making adjustments in response to specific situations in the various areas in which it operates. Since FY08/21, it has been setting up sales offices in key markets to provide affiliated restaurants deemed to have room for GMV growth with consulting services covering such topics as optimizing delivery area, strengthening menu offerings, and conducting promotional activities. It will continue to provide such consulting in FY08/22.
In regard to improving user retention, the company will continue to implement measures such as a loyalty program providing benefits according to member rank, as determined by order frequency, along with personalized recommendations based on usage data with the goal of increasing order frequency. It will also continue to promote the expanded use of the delivery service for non-food products and the use of LINE messages.
To improve GMV per affiliated restaurant, the company provides the aforementioned consulting services, and at end-August 2021 began providing the DeDirect service, which affiliated restaurants can use to easily create dedicated delivery websites that are automatically linked to information posted by Demae-can without the burden of development and maintenance costs, allowing them to directly attract their own fans. The company plans to make remarketing possible through the official LINE accounts of affiliated restaurants. In the first month and a half after the service launched, the company received applications from about 6,000 restaurants.
Historical forecast accuracy
Medium-term business plan
On March 26, 2020, the company announced that it had signed an agreement to form a business and capital alliance with LINE Corp. (unlisted), and that it had also entered into a separate agreement under which LINE Corp. and Mirai Fund Limited Liability Partnership pledged to underwrite the company’s issuance of new shares through third-party allotment, which in turn would lead to changes in the company’s principal shareholder and controlling company. With the conclusion of these agreements, the company created a new medium-term management plan spanning the three-year period from FY08/21 to FY08/23 on October 15, 2020. Under its medium-term plan, the company aims to make food delivery an everyday occurrence.
By end-FY08/21, it had already achieved the household coverage target it had set for FY08/23. In addition, the FY08/22 forecast the company announced in October 2021 calls for GMV of JPY330.0bn and operating loss of JPY50.0–55.0bn. This essentially advanced the GMV target contained in the medium-term plan by one year. The amount to be invested in FY08/22 has also grown, so operating loss is likely to exceed the projection contained in the medium-term plan. As competition intensifies, the company plans to actively move forward with investment to increase GMV. The situation when the medium-term plan was formulated in October 2020 and the situation as of October 2021 are very different.
Outlook by business model
At its FY08/21 results briefing, the company explained that it categorizes its business into two business models: an e-commerce model and a delivery model. Since it has been supporting in-house delivery by affiliated restaurants for some time, the ratio of such in-house delivery remained high even in FY08/21. In light of this fact, the company has decided to use the same distinction between the e-commerce model and the delivery model for external explanations as it uses for internal management.
E-commerce model
The company attributes platform usage fees paid by all affiliated restaurants (regardless of whether or not they use Sharing Delivery) to the e-commerce model, along with shared costs such as marketing, systems development, and head office costs. It regards the e-commerce model as one that leverages profit through pursuit of scale and believes it will be a major source of future profit. With this model, profit is the difference between the company's take rate (for platform usage fees and other fees) and its costs. The company expects the take rate to increase gradually, since the ratio of affiliated restaurants subject to the 10% pay-as-you-go service fee is on the rise as of October 2021 (the take rate was 6.7% in Q1 FY08/21, rising to 7.0% by Q4), and since it anticipates new monetization points such as advertising business in the future.
The company expects the ratio of advertising expenses (including the cost of free delivery campaigns, recorded as negative impact on revenue) to GMV for the e-commerce model to be about 15% in FY08/22, but hopes to hold it to no more than 2% in the medium term. This is because it believes advertising expenses to attract new users will become unnecessary in the medium to long term as the number of users increases. However, what constitutes "medium term" may change, depending on the competitive environment. The company also says it will take into account trends at its competitors when deciding its marketing spending from FY08/23 onward, but plans to reduce such spending from the FY08/22 level.
Delivery model (Sharing Delivery: outsourced delivery)
The company attributes Sharing Delivery service usage fees (revenue from both affiliated restaurants and users) to the delivery model, along with delivery costs and costs related to acquiring delivery personnel. In other words, it attributes profit and loss directly related to the Sharing Delivery service to the delivery model, which it regards as a growth engine. While it does aim to break even on the service, it does not expect to generate substantial profit from delivery itself.
The company aims to break even on the delivery model in the medium term, although here the meaning of "medium term" can vary, depending on whether or not the company can secure an adequate number of delivery personnel to keep pace with GMV. If the growth rate for GMV is high and the company has trouble securing adequate delivery personnel in a timely manner, it will need to offer delivery bonuses to increase the activity of delivery personnel already registered, resulting in higher delivery costs.
After Q2 FY08/22, figures may differ from those in the income statement because numerical values are estimated based on ratio disclosures.
Expanding delivery to cover non-food retail products (e-commerce model)
The company mainly delivers food, so peak delivery times are skewed toward lunch and dinner, making it difficult to attract delivery staff because it is difficult for them to make money throughout the day. Together with its parent, Z Holdings Corporation (TSE PRM: 4689), and Z Holdings subsidiary ASKUL Corporation (TSE PRM: 2678), Demae-can has begun a proof-of-concept process for Yahoo! Mart by ASKUL rapid retail delivery service. Z Holdings provides marketing support to attract customers, while ASKUL manages and operates stores (including product pickup). Demae-can provides the system and delivery service and is considering expanding PayPay Direct by ASKUL to other regions and additional services based on its understanding of last-mile delivery needs.
Client stores can sell their products without incurring user acquisition costs by utilizing Demae-can's platform, which already has an established user base of customers who have downloaded the app.
This has proven advantageous to the company in that it is able to realize lower costs than other companies in creating delivery mechanisms from scratch in the retail field.
The size of the non-food retail market will change depending on how much the company expands the lineup of products it handles, but it believes the market could even exceed the restaurant market with the addition of cosmetics. According to the company's information, the food service industry represents a market size of JPY24.0tn, while the retail market is worth JPY41.0tn. A breakdown of the retail area shows the supermarket market at JPY22.0tn, the convenience store market at JPY11.0tn and the drug store market at JPY8.0tn. Although it is difficult to determine a time frame, the company believes that non-food products could eventually account for more of its GMV than food products, with progress on collaboration with Z Holdings group companies.
For the retail field, the profit margin for affiliated stores varies depending on the product category, so the company will consider a balance between fees collected from the affiliated stores and fees collected from users for each product category.
Expanding categories and enhancing profitability (E-commerce model)
The company plans to enhance profitability by expanding its service categories beyond food to include daily necessities and other items, and by providing affiliated stores with advertising services (making it easier to attract customers to the company's platform) and the new DeDirect service, which lets affiliated stores easily create delivery-related websites. The company expects advertising service contributions to earnings in FY08/22 to be limited.
Marginal profit outlook for outsourced delivery personnel (delivery model)
In terms of marginal profit for outsourced delivery personnel, in FY08/21, the company posted substantial loss in Q2, profit in Q3, and loss in Q4. Trends in marginal profit are affected by the balance between GMV growth and the securing of delivery personnel.
In other words, marginal profit deteriorated in Q2 due to an increase in incentives for delivery personnel because the company could not secure adequate personnel to keep pace with GMV growth. Q3 saw a balance between the two factors, so there was no need to boost incentives and the business generated a profit. In Q4, GMV growth again outpaced the securing of delivery personnel, causing marginal profit to deteriorate once more. In this way, although marginal profit can move into the black when a balance is achieved, it can deteriorate in periods of rapid GMV growth because of the need for incentives to resolve the personnel shortage.
The company believes that outsourced delivery can break even in the medium term, but "the medium term" means such a time as it can achieve a stable balance between GMV growth and the availability of delivery personnel.
Investment policy and fundraising
In September 2021, the company announced the issuance of new shares through an overseas offering, disposal of treasury shares, and issuance of new shares through third-party allotment. The company believes it is essential to take further measures to expand market share and invest in growth in order to be in a position to lead expected consolidation in the domestic food delivery industry. Of the JPY83bn in proceeds, it will allocate JPY68bn to marketing expenses, JPY10bn to system strengthening and development funds, and JPY5bn to boost the number of delivery personnel, all by end-February 2024. The company believes it has raised an adequate amount to achieve a top position in terms of GMV by end-February 2024, and as of October 2021 says it does not see the need to raise additional funds for the time being.
Strengthened capital and business alliance with LINE group
In March 2020, the company announced that it had entered into an agreement to strengthen its capital and business alliance with the LINE group. With the strengthening of the ties between the two groups, going forward Demae-can will be drawing upon the management resources of the LINE group in a number of different ways, including (1) making use of LINE’s LINE ID service, (2) procuring funding from LINE for growth-oriented investment, (2) procuring additional personnel from LINE to help with systems development work and marketing, and (4) help with the expansion of its takeout food delivery service into new territories. By combining its own ID system with LINE ID to create a new ID system known as ONE ID, Demae-can hopes to make it easy for the more than 90mn users of LINE (as of December 2021) to make use of its takeout food delivery service. Demae-can will also be able to draw upon LINE’s human resources to help with systems development and marketing. And, because LINE operates its own takeout food delivery service (under the name Pockeo), Demae-can is also expecting to generate synergies as it absorbs the operations of the delivery service operated by LINE into its own operations.
Outline of capital and business alliance between Demae-can and LINE Corp.
Details of joint businesses between the two companies
Optimizing use of database including information on users, member stores, and order histories at Demae-can
Optimize use of tracking system at Demae-can
Promoting transition to ONE ID (combining ID with LINE ID) at Demae-can
Developing Business Intelligence (BI) tools to increase the visibility of key performance indicators, such as order numbers and active users
Upgrading management tools (CMS tools) for store operators
Creating a main customer interface that can be customized by individual users
Promoting Demae-can’s Sharing Delivery service (contract delivery agent)
Promoting takeout order services
Optimizing marketing and branding strategies for websites, LINE, and apps
Putting one-to-one marketing and PDCA management into practice
Major areas of agreement in business alliance
The LINE Delima home delivery service operated by LINE Corp. will be rebranded under the Demae-can name (thereby uniting the two delivery services under the Demae-can brand name)
The Pockeo home delivery service operated by LINE Corp (one of the businesses that Demae-can will take over from LINE Corp.) will be subsequently merged with Demae-can’s home delivery service operations
Under a separate agreement between the two companies, LINE Corp. will dispatch its own IT system and marketing managers to Demae-can.
Reasoning behind capital and business alliance and stock purchase agreement with LINE Corp.
Despite the large amount of investment spending and the resulting operating losses that it incurred in FY08/19 to carry out upgrades of its applications and website (including changes in design, added functionality, and other changes making the apps and website more user-friendly), Demae-can recognized that it had still not done enough investing to mount a serious challenge to large players in the industry that had much more substantial capital resources. Further considering the current operating environment, the company recognized that if it was to continue growing steadily in the future, it must quickly establish its position as the top delivery platform in the market before larger and better-capitalized competitors gain a dominant position in the market. Accordingly, the company came to the conclusion that it needed to join forces with LINE Corp. and bring out the synergies from their combined resources in order to implement the following initiatives as soon as possible:
Measures following capital alliance with LINE
Changing method of acquiring affiliated restaurants
The company was previously very selective in acquiring affiliated restaurants. There were several reasons for this, one of which was that Demae-can's old search function, which was not particularly advanced, required such selectiveness. However, the company enhanced the search function and made it easier to select from a large number of restaurants, so the need for selectiveness has disappeared, allowing for rapid growth in the number of affiliated restaurants.
Securing delivery personnel
Adding delivery personnel can shorten the delivery time, but also reduces profitability. As KPIs, delivery time and profitability therefore have a trade-off relationship in the short term, but Demae-can has decided to accept lower profitability in order to shorten delivery time for the time being. This is because, if it prioritizes profitability, the company will be constrained when acquiring affiliated restaurants, which would eventually halt revenue growth. In addition, if the company took that route, it would be unable to improve service quality, since delivery time would remain unsatisfactory. Given these factors, Demae-can has decided to work on maximizing revenue first and then pursue profitability.
Changing marketing policy to improve brand awareness
The conversion rate for users who arrive at the website by searching for the name "Demae-can" is 10%, significantly higher than the 1% conversion rate for users who have used other keywords in their search. For this reason, the company spent a large amount on advertising in FY08/21 to increase recognition of the Demae-can brand. At the same time, it scaled back retargeting advertising, which neither leads to repeat order nor is cost-effective.
LINE group's aims and vision for the future
Establishing closer ties with Demae-can fits in with LINE’s overall strategy of building up its LINE communication app to the point that it becomes a “super-app” (a comprehensive app that can handle a wide variety of daily transactional needs) and its ongoing efforts to use its LINE communications app as a way to expand into other areas, including payments/financing, marketing, O2O commerce, and content. For an app to gain super-app status, it must be useful in everyday life, and food is an important area in this regard because there are so many contact points with customers.
More specifically, the future plans call for becoming the top player (in terms of handling volumes) in the food delivery market, not only in Japan but in Asia as well.
Over the medium to long term, the two companies are looking to build a comprehensive food marketing platform to handle not only delivery, cloud kitchen, and takeout services, but also dine-in and mobile orders.
Business
Business description
Demae-can business
The company operates the Demae-can food delivery service, which is one of the largest delivery services in Japan, allowing users in all 47 prefectures to place orders easily via the Demae-can app or website. Since Q3 FY08/20, amid a tough climate for the restaurant industry due to the COVID-19 outbreak, the company has grown revenue sharply by responding to demand for delivery from both restaurants and consumers and by investing aggressively. FY08/21 revenue was JPY29.0bn (+180.7% YoY). However, the company posted operating loss of JPY19.2bn for the year (versus loss of JPY2.7bn in FY08/20) due to marketing and other upfront spending. The Demae-can business accounted for roughly 98% of revenue in FY08/21, and the company only operates in Japan.
Outsourced delivery platform (Sharing Delivery)
The company provides the Sharing Delivery platform to restaurants that do not have their own delivery infrastructure. The company covered 56% of households in Japan as of end-FY08/21, and Sharing Delivery generated more than 50% of gross merchandise volume (GMV) in Q1 FY08/22 (with the remainder from affiliates’ own deliveries). As of Q1 FY08/22, the company outsourced delivery of more than 90% of orders placed through the Sharing Delivery platform.
Key Performance Indicators
The company discloses several key performance indicators that it watches closely: GMV (JPY162.7bn in FY08/21, +58.4% YoY), number of orders (60.3mn, +62.7% YoY), and number of active users (7.34mn, +87.2% YoY), defined as users who have made an order within the past year. Although it does not disclose specific figures, the company also closely watches the number of registered delivery personnel, allowing it to respond to growth in the number of orders. Demae-can boasted more than 100,000 affiliated restaurants as of end-2021. It expects the order unit price to gradually decline as it makes food delivery an everyday occurrence. This is because prices for frequent customers tend to decline and the company also intends to boost its efforts to tap into those living alone as well as the family demographic. It also expects the repeat order rate to increase.
Revenue structure
As of April 2022, in principle, pay-for-use charges for affiliated restaurants were 10% of order cost as Demae-can service fees (before tax, including points cost); 25% of order cost as delivery commissions (before tax; no charge when affiliated restaurants handle delivery); and maximum of 3% of order value as payment processing fees. In addition, delivery commissions include the portion shouldered by users. The main costs in delivery services include outsourcing costs (cost of revenue), a variable cost that moves in line with the number of outsourced deliveries, part-time personnel expenses incurred on a fixed hourly basis (SG&A expenses), and rent (SG&A expenses). Marketing spending is a strategic expense, used mainly to boost recognition, acquire new users, and increase the repeat order rate.
Strengthening of capital and business alliance with LINE Corp. (unlisted)
In March 2020, the company announced that it had entered into an agreement to strengthen its capital and business alliance with the LINE group. With the strengthening of the ties between the two companies, going forward, Demae-can will be drawing upon the management resources of the LINE group in a number of different ways, including (1) making use of LINE’s LINE ID service, (2) procuring funding for growth-oriented investment, (3) procuring additional personnel from LINE to help with systems development work and marketing, and (4) receiving support that enables the expansion of its takeout food delivery service into new territories. By combining its own ID system with LINE ID to create a new ID system known as “ONE ID,” Demae-can hopes to make it easy for the more than 90mn LINE users (as of December 2021) to make use of its takeout food delivery service. Demae-can will also be able to draw upon LINE’s human resources to help with systems development and marketing.
Demae-can business
Business structure
The company’s business structure consists of providing a platform that connects consumers, who wish to place food delivery orders, with restaurants providing such services and charging processing fees. Both consumers and restaurants benefit by using the company’s platform.
Consumers enjoy convenience (requires only initial registration and offers various payment methods), product selection (proportional to the number of affiliated restaurants), and discounts (reward points, coupons). Affiliated restaurants benefit from reduced promotion costs (attracting consumers who do not receive newspaper promotions), lighter burden for food delivery and sharp drop in human errors, call center support, and the company’s Sharing Delivery service for restaurants without proprietary delivery services (limited to certain areas).
Affiliated restaurants can measure cost-effectiveness as they pay order processing fees in line with sales. It also facilitates reaching younger customer segments. Using Sharing Delivery allows affiliated restaurants without their own food delivery infrastructure to access a new source of revenue.
Affiliated restaurants
The company was working aggressively to expand its affiliated restaurant network. The company’s strategy entails first growing the number of affiliated restaurants, resulting in more orders and active users, and thereby increasing density, boosting delivery efficiency. To win more repeat orders, it is also important to increase the number of affiliated restaurants with low-priced items such as coffee and cake shops. In October 2021, the company had important affiliated restaurant chains in the following categories:
Order routes
Orders come online or via the app. The company said that it developed its business before its competitors, and many of its existing customers are used to ordering online, so the share of online orders is relatively high.
The company said that the internet was more effective than apps in acquiring first-time users. Online, the company has secured a route on the top page of Yahoo! JAPAN (operated by the company’s parent company Z Holdings [TSE PRM: 4689]). Also, LINE (discussed below) refers customers to its online services (as of March 2021).
The company said that the conversion rate for app users is high, and it has measures to increase the number of repeat orders from existing users by drawing them to the app from the second order onward.
Services offered via LINE
Under the terms of the capital and business alliance between the two companies announced in March 2020, LINE Delima was rebranded under the Demae-can name and the two order systems were merged. When an order is made through LINE, Demae-can splits the commission from the affiliated restaurant with LINE (revenue sharing rate undisclosed).
The end of d-delivery
NTT Docomo, one of Japan’s three large mobile carriers and subsidiary of NTT (TSE PRM: 9432) ended its d-delivery food delivery service that used Demae-can’s platform. It stopped taking orders on May 1, 2021. NTT Docomo is reportedly focusing business resources on cashless payments in light of heavy marketing costs. The end of the service meant that the company lost one order channel. However given that delivery demand itself will not decline, the prominence of the Demae-can brand, and the ability to use the “d-barai” (cashless payment) service offered by NTT Docomo, the company plans to encourage d-delivery customers to keep using Demae-can and minimize the impact of the end of d-delivery services. Q3 usually sees a seasonal downturn in orders as temperatures rise, but GMV in Q3 FY08/21 was greater than in Q2, despite this seasonal downturn and the loss of orders via d-delivery from May.
External factors such as the day of the week and weather
Accurate analysis of the effects of external factors is difficult because there are multiple variables, many of which change based on region and time, but in general the following effects can be seen.
A trend toward more orders on weekends and holidays compared to weekdays
A trend toward more orders on cold days, hot days, and rainy days when going out is troublesome. The company’s ability to maintain delivery bases and personnel (directly managed or not) gives it an edge on this front.
A trend toward lower orders in Q3 (March–May) as the weather becomes warmer, and a trend toward more orders in July and August when school is out of session
Since demand for home delivery goes up at night, a trend toward more orders at night than during the day
Sharing Delivery (outsourced delivery platform)
Sharing Delivery enables restaurants without proprietary delivery services to outsource delivery. The company fully launched the service in FY08/17. When an affiliated restaurant uses Sharing Delivery, the company receives 25% of the product price (excluding tax) as a commission (but not in the case of an affiliated restaurant conducting in-house delivery). The delivery commission is passed on to the user depending on how much the restaurant in question adds to the menu price and delivery charge. As of end-FY08/21, it covered 56% of Japanese households, and as of June 2021, the company was operating in all of Japan’s 47 prefectures.
With the services the company offers, affiliated restaurants do not necessarily have to use Sharing Delivery (outsourced delivery platform), and can instead choose to conduct in-house delivery. Since it has been supporting this in-house delivery for some time, the ratio of such delivery remains high. As of Q1 FY08/22, Sharing Delivery services accounted for more than 50% of gross merchandise volume (GMV), while the remainder was from affiliates’ own deliveries. Also, as of Q2 FY08/22, the company outsourced delivery of more than 90% of orders placed through the Sharing Delivery platform.
Benefits for restaurants and consumers
For restaurants:
Low-risk acquisition of delivery networks: Stores can gain access to a delivery network by paying a delivery fee (passed on to the consumer in product pricing) and do not need to take on investment risk, e.g., delivery vehicles, personnel. Acquisition of new customer segments: In addition to securing food delivery demand, stores can access new customer segments that are reluctant to enter physical stores. The company has observed this effect at certain major chain restaurants. High average spending per customer: Stores enjoy growth in orders from Demae-can users, whose average spending is high (just under JPY3,000). Improved operational efficiency and lower costs: Utilizing the company’s platform leads to reduced promotional and operational costs, such as order-related costs.
For consumers:
Expanded product selection: Users can order from major chains or local restaurants that previously did not offer delivery services. Enhanced convenience: Users can order from stores they previously found difficult to enter.
Expanded lineup of handled products
Together with its parent, Z Holdings Corporation (TSE PRM: 4689), and Z Holdings subsidiary ASKUL Corporation (TSE PRM: 2678), Demae-can has begun a proof-of-concept process for Yahoo! Mart by ASKUL rapid delivery service. Z Holdings provides marketing support to attract customers, while ASKUL manages and operates stores (including product pickup). Demae-can provides its system and delivery service and is considering expanding PayPay Direct by ASKUL to other regions and additional services based on its understanding of last-mile delivery needs.
As of April 2022, the company has started partnering with high-end supermarket Seijo Ishii and Kakuyasu, which offers delivery of alcoholic beverages, as well as convenience stores Lawson and Ministop.
Client stores can sell their products without incurring user acquisition costs by utilizing the Demae-can platform, which already has an established user base of customers who have downloaded the app. This has proven to be advantageous to the company by allowing it to achieve lower costs than other companies that build delivery mechanisms from scratch in the retail field.
Delivery efficiency
As of FY08/20, delivery efficiency (average number of deliveries per hour) was about 1.5. The frequency needed for delivery bases (Sharing Delivery bases) to be profitable varies due to varying rents and personnel expenses. The company said it is easier to generate profits in regional areas where rents are low than in urban areas where rents are high. Further, delivery efficiency starts off low in new areas, so during an aggressive rollout phase, it is hard to boost companywide delivery efficiency. The company said that some 20–30% of the bases in its network were in the black in FY08/20. It said it was targeting somewhat over two deliveries per hour as a benchmark for profitability, and that it would improve delivery efficiency by increasing density of affiliated restaurants and making improvements to its delivery system (such as pickups from several affiliated restaurants in the same direction).
Impact of time to delivery on close ratio
Time to delivery plays a crucial role in increasing the close ratio. According to company data, if time to delivery goes over 60 minutes, the close ratio drops to below 10% of what it would have been for time to delivery of 30 minutes or less.
Delivery quality
As of Q2 FY08/22, the company outsourced delivery of over 90% of orders placed through the Sharing Delivery platform. Because delivery quality is an important determinant of whether or not users place repeat orders, the company has established its own training center for delivery drivers and otherwise puts a lot of effort into improving delivery quality metrics through a range of other measures, including creating manuals and specialized training materials, standardizing procedures at delivery bases, employing trained specialists to conduct periodic inspections of delivery bases, and conducting sanitation checks of delivery bags. The company says it ensures quality on the delivery front by conducting online interviews and having workers participate in online information sessions.
Developments in in-house delivery (delivery carried out by restaurants)
Demae-can thinks that the ratio of restaurants outsourcing delivery will increase overall due to the difficultly small and medium-sized chains and independent restaurants have in handling delivery in-house. On the other hand, demand due for delivery has risen owing to the COVID-19 pandemic, prompting some major chains to arrange their own delivery personnel. The general benefits of using food delivery are that it meshes well with Japanese food preparation culture, which emphasizes hygiene and quality, and that restaurant staff can use the idle time when deliveries are being made to prepare for orders. As of January 2021, the company says it cannot determine whether the trend will be for restaurants to use in-house delivery once they become more experienced in food delivery, or whether it will be more common for them to outsource the task. The company’s policy is to increase the number of affiliated restaurants that use Sharing Delivery (the company’s delivery platform) and those that do not.
Earnings structure
Basic revenue breakdown
As of April 2022, pay-for-use charges for affiliated restaurants were as shown below, in principle. Pay-for-use charges differ according to order size. There is no base (fixed) charge for initial set-up or monthly operating expenses.
A) Demae-can service fees: 10% of order cost (before tax, including points cost)
B) Delivery commissions (no charge when affiliated restaurant handles delivery): 25% of order cost (before tax; 23% until December 31, 2020)
C) Payment processing fees: Maximum of 3% of order value (before tax; for cashless payments, fees paid to credit card company)
Other than the above, delivery charges shouldered by the user are included in delivery commissions.
From Q3 FY08/20, the company has been disclosing revenue for three classifications: Demae-can service fees (mainly A above), delivery commissions (mainly B above plus delivery fees shouldered by the user), and Other (C above, advertising business, and container and ingredient procurement services). Note: The company said that revenue from payment processing fees is equivalent to cost of revenue, so does not contribute to gross profit.
Basic cost structure
The main costs in delivery services include outsourcing costs (cost of revenue), a variable cost that moves in line with the number of outsourced deliveries, part-time personnel expenses incurred on a fixed hourly basis (SG&A expenses), and rent (SG&A expenses). Marketing spending is a strategic expense, used mainly to boost recognition, acquire new users, and increase the repeat order rate. The details of various cost categories are as shown below:
Cost of revenue: Outsourcing costs (outsourced delivery personnel), systems operation costs, payment processing fees
Personnel expenses (SG&A expenses): Insourced part-time delivery personnel expenses, head office personnel expenses, stock-based compensation
Advertising expenses (SG&A expenses): Ad listing expenses, sales promotion expenses
Other SG&A expenses (SG&A expenses): Outsourcing expenses (outsourcing sales), consumables, leasing, fees, other rent
From FY08/21, the company is promoting outsourced delivery, so delivery costs are shifting from SG&A expenses to cost of revenue, and the gross profit margin is declining.
Basic structure by business model
At its FY08/21 results briefing, the company explained that it categorizes its business into two business models: an e-commerce model and a delivery model. Since it has been supporting in-house delivery by affiliated restaurants for some time, the ratio of such in-house delivery remained high even in FY08/21. In light of this fact, the company has decided to use the same distinction between the e-commerce model and the delivery model for external explanations as it uses for internal management.
E-commerce model
The company attributes platform usage fees paid by all affiliated restaurants (regardless of whether or not they use Sharing Delivery) to the e-commerce model, along with shared costs such as marketing, systems development, and head office costs. It regards the e-commerce model as one that leverages profit through pursuit of scale and believes it will be a major source of future profit. With this model, profit is the difference between the company's take rate (for platform usage fees and other fees) and its costs. The company expects the take rate to increase gradually, since the ratio of affiliated restaurants subject to the 10% pay-as-you-go service fee is on the rise as of October 2021 (the take rate was 6.7% in Q1 FY08/21, rising to 7.0% by Q4), and since it anticipates new monetization points such as advertising business in the future.
The company expects the ratio of advertising expenses to GMV for the e-commerce model to be about 15% in FY08/22, but hopes to hold it to no more than 2% in the medium term. However, what constitutes "medium term" may change, depending on the competitive environment. The company also says it will take into account trends at its competitors when deciding its marketing spending from FY08/23 onward, but plans to reduce such spending from the FY03/22 level.
Delivery model (Sharing Delivery: outsourced delivery)
The company attributes Sharing Delivery service usage fees (revenue from both affiliated restaurants and users) to the delivery model, along with delivery costs and costs related to acquiring delivery personnel. In other words, it attributes profit and loss directly related to the Sharing Delivery service to the delivery model, which it regards as a growth engine. While it does aim to break even on the service, it does not expect to generate substantial profit from delivery itself.
The company aims to break even on the delivery model in the medium term, although here the meaning of "medium term" can vary, depending on whether or not the company can secure an adequate number of delivery personnel to keep pace with GMV. If the growth rate for GMV is high and the company has trouble securing adequate delivery personnel in a timely manner, it will need to offer delivery bonuses to increase the activity of delivery personnel already registered, resulting in higher delivery costs.
Key performance indicators
The company discloses several key performance indicators that it watches closely: GMV (JPY162.7bn in FY08/21, +58.4% YoY), number of orders (60.3mn, +62.7% YoY), and number of active users (7.34mn, +87.2% YoY), defined as users who have made an order within the past year. Although it does not disclose actual figures, the company also closely watches the number of registered delivery personnel, allowing it to respond to growth in the number of orders. The company boasted more than 100,000 affiliated restaurants at end-2021. It expects that the order unit price will gradually decline as it makes food delivery an everyday occurrence. This is because prices for frequent customers tend to decline and the company also intends to boost its efforts to tap into those living alone as well as the family demographic. It also expects the repeat order rate to increase. Note: Shared Research has estimated the following KPIs.
Demae-can service fee rate: Demae-can service fees ÷ GMV. Fee rate changes reflect the Demae-can service fee rates in the mix for a particular quarter.
GMV per active user: GMV ÷ average of beginning and ending number of active users per quarter. This breaks down into order unit price and number of repeat orders. The company expects order unit price to fall and number of repeat orders to rise over long term.
GMV per order: GMV ÷ number of orders. Shows GMV per order.
Number of repeat orders: Number of orders ÷ average of beginning and ending number of active users per quarter. Estimates number of repeat orders per quarter assuming uniform usage by all active users. However, Demae-can’s definition of active users is users who placed more than one order within the last twelve months, and as this includes users who did not necessarily utilize the service each quarter, the figure for repeat orders may not be entirely reliable.
GMV per affiliated store: GMV ÷ average of beginning and ending number of affiliated restaurants per quarter. Reflects benefits to affiliated restaurants.