Key strengths and competitive advantages

Structural online channel shift expected to more than double the market in a few years
Pierce is active in the European market for equipment, accessories, parts and streetwear (GAP) for motorcycles (offroad and onroad). Pierce’s total addressable European market is large, resilient and non-cyclical. The total market is primarily driven by the underlying motorcycle base and is less sensitive to macroeconomic conditions compared to the market for new sales of motorcycles. The total addressable market was estimated at SEK 101 billion in 2021 and is expected to increase (CAGR) by 4 percent between 2021 and 2026. The online part of the market has been estimated at SEK 20 billion for 2021, which corresponds to an online penetration of the market of approximately 19 percent. The online market is expected to grow by 11 percent (CAGR) between 2021 and 2026.

A European online retailer for motorcycle enthusiasts with a track-record of outgrowing the fragmented market
The total addressable market is very fragmented, with the nine largest players accounting for about 13 percent of the total market (including marketplaces such as Amazon). Pierce is the largest onroad and offroad-focused online player with an online market share of about 8 percent (equivalent to a total market share of about 2 percent) and the fastest growing player among both offline and online competitors. Furthermore, Pierce has strong market positions in both the offroad and onroad segments. The company considers itself to be the online market leader in the offroad segment with an estimated European online market share of approximately 28 percent by 2020. The company is a challenger in onroad in the European online market with an estimated online market share of approximately 3 percent in 2019. Pierce believes that its long-standing relationships directly with various external brands, its range of own brands, combined with its well-invested and existing European platform, are important competitive advantages that enable Pierce to maintain and strengthen its current market position. Pierce believes that the company’s position in the market, in combination with the company’s competitive advantages, means that it has good opportunities for long-term and profitable growth.

A competitive customer offering with must-have external brands and private brands generating high gross margins
Pierce has a competitive customer offering consisting of a wide and relevant range of own/private brands and popular external brands, competitive prices, advantageous promotions and a locally adapted user experience. Pierce has so far been successful in developing its private brands that have improved the company’s product range without restricting the positioning of external brands. Pierce works focused to be at the forefront of development to differentiate itself from competitors and create conditions for long-term and profitable growth. Private brands are especially important for the company because they drive loyalty, protect against price competition and ensure good margins. Sales from private brands amounted to approximately SEK 609 M (41 percent of net sales from private brands and external brands) for 2021, when 10 out of 10 and 39 out of 50 best-selling products were own brand products. The company believes that their private brands are important competitive advantages.

Scalable operations set-up supported by a well invested technology platform
Pierce has invested significant resources in creating a truly scalable European business. The Company has, among other things, invested in scalable and efficient fulfilment and logistics operations in Poland, and a technology platform with best-in-class IT system solutions. The company has also invested in business intelligence and implemented a data warehouse solution to enable informed decision making through dashboards, operations monitoring and predictive analytics.

Sophisticated return on investment (“ROI”) driven marketing and a growing loyal customer base
Pierce has been able to balance its rapid growth with profitability, enabled inter alia by a sophisticated ROI driven marketing approach. Pierce is actively working on optimizing both paid and free marketing channels. The company applies a data-driven allocation of paid marketing to invest in paid marketing channels with the highest ROI. Investments are balanced continuously to adapt to changes in the expected ROI.

Strong financial track-record historicaly driven by revenue growth, stable gross margins and scalability
From the start in 2008 until the first quarter of 2021, growth amounted to double-digit percentages every year in combination with a positive operating profit since 2019. Pierce’s net revenue growth has been driven by a growing underlying number of customers, an increasing number of orders and a growing average order value. The growth is a consequence of the underlying market growth online in combination with Pierce’s ability to take market shares due to its attractive customer offering – consisting of a large and relevant range, attractive prices and promotions, as well as its local and engaging customer experience. The company has increased its net sales (CAGR) by 13 percent between 2019 and 2021 and has experienced high net revenue growth in all segments. Net sales for the offroad segment, the onroad segment and the rest of the segment have grown (CAGR) by 15 percent, 10 percent and 12 percent, respectively, between 2019 and 2021.

Pierce has managed to combine its high growth with profitability. Pierce is profitable, after variable costs, on the first order for new customers as a result of attractive unit economy consisting of high gross margins, stable customer acquisition costs, efficient operation and low return rate. Pierce uses an effective data-driven and ROI-focused marketing approach to scale growth to a stable customer acquisition cost.