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business plan
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Babybabu.com
Ajit Agarwal 4B, Atul Saxena 15B
September , 2014
e-Commerce Business Plan on Online Baby Shop
Prepared by: EPGDIB (2013-15) Batch, Section B, Group -3
2
Agenda
Agenda 1: Our Purpose
Agenda 2: Consumers’ plight
Agenda 3: Our Position
Agenda 4 : Products
Agenda 5 : Product Spend per Customer
Agenda 6 : Baby Care Market
Agenda 7 : Why Now
Agenda 8 : Babybabu’s Market Size
Agenda 9 : Customer Acquisition Model
Agenda 10 : Our Competition
Agenda 11: Operation Overview
Agenda 12 : Financial Projections
Agenda 13 : Various Appendices
April 19, 2023
Our Purpose
Babybabu’s purpose is to make premium-brand baby gear
and toys accessible to consumers seeking high quality
3April 19, 2023
Consumers’ Plight
4April 19, 2023
• Unavailability of premium foreign-brand baby gear and
toys in India
o Parents have to request visiting friends and family members
• Quality, safety and hygienic issues of non-standard brands
o Pay premium prices at malls or other high class stores still
buying re-labeled products
• In-store sales executives have limited knowledge of
products and existing online portals have insufficient
descriptions
o Parents seek recommendations /advices of friends and family
members
Our Position
5
• Offer baby gear and toys of only premium-brands
• Maintain high quality of products and services at every touch points with consumers
• Provide online demonstrations of products’ functions
Cost
Quality
Babybabu
Malls
Other e-commerce portalsLocal Shops
Products
6April 19, 2023
• Categorieso Baby gear (Prams, car seats, swings, strollers)o Toys (First toys, baby gyms, bath toys)o Baby furniture (high chair, playards, cots)o Accessories (travel kits)
• Brandso Lego, Woolworths, LeapFrog, Fisher-Price, Graco, Chicco
• Roadmapo Extend product categories and premium brandso Expand geographical reach to tier II and tier III citieso Tie ups for offline product demonstrations
Product Spend per Customer per year
7April 19, 2023
Products Average Spend (INR)
Baby car seat 7000
Baby gym 3000
Pram 15000
High chair 6000
Stroller 5000
Toddler car seat 9000
Toys 20000
Cot and crib 15000
Baby carrier 2500
Playards 5000
Walker 4000
TOTAL 93,500Compiled from various sources
Baby Care Market
8April 19, 2023
• Highly fragmented with few organised players in the fray• India home to around 50 million babies in the 0 -
2 years age group and • 304.8 million children in the 0 -12 years group • Baby-care segment sees higher number of repeat purchases unlike
other categories in etail space. o Over 50 % repeat purchaseso 60% of overall purchases happen in this niche through women.
• The average ticket size of a purchase is around INR 1000-1500 in
this niche o 60% orders originating from Metro and tier 1 cities, rest from tier 2 & 3
cities.
• Gross Margin:o etailers usually make 20-30 percent in diapers, skin care and toiletries
but o In toys, trolleys and other gears it varies from 25 to 45 percent. o Apparels seem to earn maximum margin as it fetches 32-55 percent
margin.
• Considering that even 10 percent of babies are born to parents
who would spend annually a conservative figure of INR. 5000 on
baby products (diapers, lotions, strollers, toys, gears etc), the
potential is huge.
Why Now?
9April 19, 2023
• Growing nuclear families,
awareness, globalization and
incomeo Parents now pay significant
attention to quality of products
for their kidso Price of premium-brand
products becomes relatively
less significant that promises
high quality, safety and better
features
• Growing market size of baby
products in Indiao Annual growth in demand of
toys is between 20% and 30%*o Indian manufactures fulfill
about 50% of domestic demand
of toys*
#Baby care market Analysis (http://www.informationbible.com/article-aarkstore-enterprise-baby-care-market-india-market-research-report-79823.html)
* Toy association of India (http://www.tai-india.org)
2012 2014 2018 (P)0
20
40
60
80
28 35
67
Baby Care Market in India
Year
Sale
s (I
NR
Bilio
n)
CAGR=17%
Babybabu’s Market Size
10April 19, 2023
Year 2014 (Dec) Year 2015
Total Population# 1.27 billion 1.35 billion
Kids Population (0-3 years)^ 128 million (10.1%) 130 million (9.7%)
Urban Kids Population # 38.4 million (30%) 39 million (30%)
Target Population* 768 thousand (2%) 1170 thousand (3%)
Average Spend per kid/year on toys and baby gear@
500 USD 600 USD
Total Spend per year on toys and baby gear (SAM)
384 million USD 702 billion USD
Expected Revenue of Babybabu (SOM)
USD 57,600 (0.1% target population * 15% average spend)
USD 4,21,200(0.2% target population* 30% average spend)#Demographics of India (http://en.wikipedia.org/wiki/Demographics_of_India)
^National Population Policy (http://populationcommission.nic.in/npp_app3.htm)*Chapter 3, The ‘Bird of Gold’: The rise of India’s Consumer Market, McKinsey Global Institute@Assumption based on customer survey
Customer Acquisition Model
11April 19, 2023
• Residential Events: 4 events a month for one year in premium
societies
• Telemarketing: Customer data from residential events and other
sources
• Referral program: Credit to referrer and discount to referral on
first purchase
• SEO: Blogs, videos, white papers
• SEM: Various keywords
• Chemist shops: Supply branded carry bags
• Hospitals
• Play/Pre Schools
Estimated Customers (Year 1) = 768 Average CAC/Customer (Year 1) = 1,800 INR (30 USD)
Our Competition
12April 19, 2023
Local Shops Malls e-Com sites Babybabu
Example Jhandewalan Market, New Delhi
LiliputRitu WearsMom & MeShopper Stop
FirstCryBabyOyeBabyIndiaHushBabies
Babybabu (Import/ Procurement from multiple premium brand manufacturers)
Quality Low quality Mix of quality Mix of quality Only high quality
Brands Unbranded Fewer brands Mix of brands Only Premium brands
Warranty No warranty Manufacturer warranty
Manufacturer warranty
Extended warranty
Customers Low-mid income group
Mid-high income group
Mid-high income group
High-income group (Top 2%)
Service No service Standard service
Standard service Calendar driven
personalized servicesCompiled from various sources
Operation Overview
13April 19, 2023
• Starto Tie up with Brands such as: Brevi from Italy, Combi from
Japan, Bubba Blue from Australia, Tiny Love from Israel, Grup
Baby from Turkey, US Baby from China, Kiddy Gmbh from
Germany, Tolly Joy from Singapore and Farlin from Taiwan o Procurement/Import from the above manufacturers to our
warehouseo Courier pickup from the office/warehouseo Distribution only in NCR
• On volumes - 2 options being consideredo Packaging at the source and ensuring courier picks from
there(TV-18 does that)o Own warehouseo Distribution to Tier 1 cities
• Logistic Partner (Blue Dart and First Flight)o Unit costs about Rs. 480
Cost of Project & Means of Finance
14April 19, 2023
S.No. Particulars 1st Year 2nd Year 3rd Year 4th Year
A COST OF PROJECT (in USD)
1 Computers & peripherals 3,000 2000 2000 4,000
2 Website & Payment Gateway 1,000 1000 2000 2000
3 Furniture 3,000 5,000 5000 5,000
4 Prel. Expenses 1,000
5 Working Capital 10,000 10,000 5000 5,000
TOTAL 18,000 8,000 14,000 11,000
B MEANS OF FINANCE (in USD)
1 Share Capital 10,000
2 Bank Loans 8,000 3 Internal Accruals 8,000 14,000 11,000
TOTAL 18,000 8,000 14,000 11,000
Financial Projections (in USD)
15April 19, 2023
S.No. Particulars 1st Year 2nd Year 3rd Year 4th YearA Total Revenues1 Target Customer 768 2,340 5,000 8,0002 Average Spend/ Customer (USD) 75 180 250 3003 Revenue from Operations (USD) 57600 421200 1250000 2400000
4Revenue from advertisements (USD)
500 1,000 5,000 10,000
TOTAL REVENUE (USD) 58,100 4,22,200 12,55,000 24,10,000B Cost of Operations
1Customer Acquisition Cost (CAC) per customer (USD)
30 75 120 150
2 CAC annually (USD) 23,040 1,75,500 6,00,000 12,00,0003 Logistic Cost (USD) 8,000 16,000 40,000 80,0004 Office/ Warehouse Rent (USD) 4,000 8,000 10,000 12,0005 Technology cost(USD) 3,000 6,000 8,000 10,0006 Marketing(USD) 4,000 8,000 8,000 12,0007 Finance Cost/ Salaries (USD) 8,000 12,000 20,000 40,0008 Prel. Expenses(USD) 500 1000 1000 2000
TOTAL COST OF OPERATIONS 50,540 2,26,500 6,87,000 13,56,000
Profit before Tax (USD) 7,560 1,95,700 5,68,000 10,54,000
Tax on profit @33% (USD) 2494.8 64581 187440 347820C Net Profit / ( Loss) after Tax 5,065 1,31,119 3,80,560 7,06,180
Thankyou
Prepared by: EPGDIB (2013-15) Batch, Section B, Group -3
Ajit Agarwal (4B)
Atul Saxena (12B)
Neeraj Nathani (34B)
Pooja Daga (37B)
Rahul Sharma (39B)
Date: 31st January 2015
16
Appendix A: Competitor Analysis-Survey & Primary Research (1/2)
17April 19, 2023
Survey was carried out among 10 people to rate the site’s with respect to the mentioned parameters for analysis for the site, on a scale of 1-5 .Where 5 represents best and 1 represents worst.
The survey participants were asked to shop for a feeding bottle and record their experience
Appendix A: Competitor Analysis-Survey & Primary Research (2/2)
18April 19, 2023
We see here, the FirstCry has achieved the maximum ratings, followed by MotherCare site which is a UK based site which is almost of similar ratings.
BabyOye has received the lowest ratings compared to other sites when it came to FAQ’s, Advertisements, Product experience and Content Design.
Survey Results
Appendix B: Logistics
19April 19, 2023
• Courier companies operate on “Volumetric Weight”
• Current general market rates are Rs 80 per VW Kg.*
• Our average size is around 6 Units and that will be about
Rs. 480.
• The CoD charges are between 3-7 % of the total
transaction.
• As per courier companies marketing overview*o Blue Dart operated in 2000-2500 Pin codes in India for CODo For General it’s about 4000 pin codeso Since Blue Dart has it’s own air fleet the package handling
and delivery times are better.o For NCR only First Flight is cheaper with CoD.
Appendix C: Logistic Ecosystem
20
Airports: Inadequate
capacity, runways, aircraft
handling capacity
Highways:66590 Km of NH (2% of network, 40% of Traffic)
Railways: Old technology, saturated
routes, slow average speeds
Transportation
Warehousing & Packaging
Inventory
Order Processing & Admin
0% 10% 20% 30% 40% 50%
40%
26%
24%
10%Logistic
Contribution
Challenges from E-commerce Stand Point:• High cost structure takes a
toll on the profitability
• Difficult to meet delivery commitments
• Absence of Goods & Services Taxo Complicated tax
implications for shipping and delivering from various locations
• Indian Postal Service (Largest coverage) is inflexible and mired in government procedures
• Large section of vendors/courier partners are SME’s without end to end IT connectivity
Infrastructure Inadequacy
Appendix D: Logistic Ecosystem – Emerging Trends
21April 19, 2023
Vendors
• Shift from Aggregators to OEMs
• Service provider to partner
Warehousing
• Own inventory and manage warehousing
• Large size to manage bulk and opportunity buy
Delivery
• Full control on last mile delivery: Own courier
• Next day delivery in top 8 cities
Taking end to end control on the movement of
goods/shipments
Creating “wow experience” for the
customer
Direct competition with “High street
retail”
Appendix E: Customer Acquisition Model
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