Ebusiness Retail

7/29/2019 Ebusiness Retail

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Online Retail:

Comparison of 3 Major Players


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Presentation Template

Introduction

History and background

Classification of Ecommerce

Ecommerce Strategy

Market

Business Model

Competition

Advantages and Limitations

Applications

Security

Legal and Ethical implications

Future Roadmap


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Introduction Barter System was known as the first form of retail

As the time passed currency was exchanged with goods andservices

The Indian retail industry is the fifth largest industry in theworld

With growing market demand, the industry is expected togrow @25-30% annually

Retail has mainly two forms: organized and unorganized

Reason for the success of global retail format

Better Consumer Demand

Better Consumer Confidence

Computer Operated Depots

Better Logistical System


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Types of retail sectors

Unorganized retailing Kirana Stores

Weekly markets

Organized retailing

Departmental stores Factory outlets

Supermarkets

Wholesalers market

Franchisee showroom


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Worlds largest private industry

Above US $ 8 trillion sales worldwide annually

Accounts for almost 10% of GDP in most countries

Major employer in most economies

16% in US

15% in Brazil

12% in Poland

7% in China

Generates competition which results in

reduction of prices

product and service innovation

enhanced customer experience

Major driver for real estate and urban development

Global Retailing Facts
http://en.wikipedia.org/wiki/Image:Tescologo.svghttp://en.wikipedia.org/wiki/Image:Kroger.jpghttp://en.wikipedia.org/wiki/Image:TheHomeDepot.pnghttp://en.wikipedia.org/wiki/Image:WalmartPNGlogo.PNG


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In 2011 E-Retailing industry was Rs 3600 crore .

The number of transaction presently in India is 10 million,which is expected to increase by 38 million by 2015.

Currently the Estimated number of internet user in India is376 million by 2015.

In 2011 Ecommerce Ventures Raised Around -1622.6 crore of private

Retailer giant Macys and some other began shipping to India.

In 2012 Amazon entered into India with Junglee.com.

In 2011 growth in online sale of Tesco recorded was 15.2% .

Retail in India is tiny in comparison to $550 billion market which isunorganized.

No. of employee in FLIPKART is 3500, this number is 800 in snapdeal.com

Share of E-commerce industry wise Travel- 51%

E-Retailing-40% Clothiers-09%

E-commerce Statistics in India 2012


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Amazon

To be earths most customer centric company; to build a place where people cancome to find and discover anything they might want to buy online.

Vision:

Not to discount a small number of products for a limited period of time, but to offerlow prices everyday and apply them broadly across our entire product range.

Objective:

Price

Convenience Selection

Core Value Proposition:

Get Big Fast by investing aggressively in new product categories and newbusinesses, by spending money on brand awareness and getting new customers.

Strategy:


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Timeline

1994 Amazon.com established by Bezos

1995 Amazon sells first book

1997 IPO announced

1999 Amazon granted 1-click patent making the transactions user friendly

2000

Dot-com crisis (fired workers and reported huge loss)

2003

Became successful in partnership and cross selling in very high way that theystart running other retailers web-sites

2007 Kindle was introduced which became an instant success


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Business Model- 6Cs

ContentAmazon.com is one of the best content friendly websites on the webRegular updatesRelevant matter only


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CommunityAmazon Communities have evolved just as the business has, Amazon offers

several thousand communitiesOwnership & BloggingCo-creation & Recognition


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Customization

One-Click they have developed specialized approaches that enables them tomake a more personalized approach CRM Personalistion


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ConvenienceOffer their customers almost every product at their fingertips and also the

payment options are making the entire process hassle free Easy navigation Variety Speed & Delivery


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ChoiceCustomers are offered a huge assortment of goods and in order to make thedecision making process easier they offer reviews and product trials


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Cost ReductionAmazon offers the best daily deals and offer the products at the cheapest ratepossible


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Revenue Model and Streams

Amazon invests heavily on key partners in order to reduce costs

Investment:

Cloud program for online storage

Amazon Web Services:

Memberships for discounts and trials

Amazon Prime:

On demand publishing

Amazon Publishing:

Subscriptions for discounts on daily deals

Subscribe & Save:

Product development (CDs, Cables, Software)

Amazon Basics:

CPM, CPC, Sponsorship, Affiliate program, transaction feerevenue

Email marketing


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Indian Online Retail Competitive Space

Online UserGrowth

Flipkart leads the wayamong the onlineretailers in India with 7.4million unique visitors amonth, growing at 431%annually.

Online Reach

Amazon and Flipkart are

the most visited sitesaccounting 15.4% and11.5% of visitorsrespectively.

AverageTransaction Size

Flipkart leads withaverage transaction sizeof $35 followed by Myntraat $24 and Yebhi at $27

C i i S i l M di


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Competition on Social Media

32%

7%39%

21%

1%

Xylys: Most Favorable Attribute

Price

Design

Quality

Brand

Other

The number of fans that a brand has can give an idea of

how popular it is

Flipkart is leading the field with the most fans but Junglee

stands out has having nearly as many fans as Myntra

despite being only 1/10th the age.

Junglees growth has been quite stellar in comparison to the

other brands who all registered mid-low single digit growth

rates.

Its not like Junglees growth has been sporadic either, it has

been consistent week by week since it launched.


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Is Amazon Junglee enough for India?

Junglee is not selling anything in the real sense. Its just a price comparison and anadvertisement site. As of now, its free to list products on junglee.com.

Amazon is seriously hoping that it is enticing enough that people visiting thewebsite would actually buy products from the listed retailers.

Amazon believes these retailers would be so dependent on the clicks and salesthat junglee.com provides them that they would be willing to pay for this service.

Though Amazon has listed a number of different vendors, the big ones, likeFlipkart and Infibeam are missing.

Flipkart understands the Indian market better than Amazon and thus it enjoys theconfidence of the consumers.

Flipkarts impeccable delivery system, along with the option of cash-on-deliveryhas led to large Flipkart loyalists.

With buying of Letsbuy.com, Flipkart shows it is serious about the competitionand is aware of the repercussions of a company like Amazon entering the India


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Limitations for Indian Online Retail

Logistics

While major multi-nationals like DHL and Fed-Ex

operate in India, goods are normally shipped

through smaller and much cheaper third party

carriers.

For orders sourced outside the major cities,

individual couriers often have to be hired to make

last mile deliveries from drop-off points by bicycle.

The difficulties and unreliability of the carriers

has forced some of the largest and best funded

players, like Flipkart, to develop their own

logistics arms to deliver their packages.

Cash on Delivery

COD system creates a delay in payment. Courier

companies generally hold the money for two

weeks, which means that the e-commerce company

has to restock inventory before the cash from its

last sale has arrived.

COD is also expensive, some couriers charging

upwards of 3 percent for the service.

The biggest problem is higher return rate of up to

ten percent. These goods cycle back into inventory

after weeks and carry a high cost of restocking and

re-listing


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The Future Roadmap Online Retail

Mergers & Acquisitions

Flipkart buying out Letsbuy; Myntra acquiringExclusively.in & its private label business SherSingh and Snapdeal acquiring a relativelysmaller outfit called eSportsBuy

A common factor in all these deals was eitherthe target firms had run out of money or hadnot been able to raise the next round of funding

Mergers happen because the category is takingtime to scale up, thus forcing the companies tomerge

Merger also makes sense when the category in

itself is great but the market leader has createda huge gap for the newer player to bridge

Another reason is the drought of biggercheques in e-commerce and lack of funds

Flipkart-Myntra

(Common investors: Accel Partners & Tiger

Global)

Snapdeal-Yebhi

(Common investor: Nexus Venture Partners)

Myntra-Zansaar

(Common investors: Accel Partners and

Tiger Global)


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Beginning of

Myntra was established by Mukesh Bansal, Ashutosh Lawania and Vineet

Saxena in February 2007. Myntras headquarter is in Bangalore, with

regional offices in New Delhi, Mumbai and Chennai.

It began its operations in the B2B (business to business) segment with thepersonalization of gifts, which included :-

T-shirts,

mugs

and caps

In 2010, the company shifted its strategy to becoming a B2C (business tocustomer) oriented firm, expanding its catalogue to fashion and lifestyle

products.

Myntra.com is ranked among the top 10 e-commerce companies in India . In

the last 3 years, Myntra has become the most popular destination for

personalized products in the country.


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Industry/Service

Myntra.com is into the e-commerce (online shopping) business. It is anonline retailer of fashion and lifestyle products in India.

Products :-

From 2007 to December 2010, Myntra.com was in the business of

online demand personalization. The products ranged from

T-shirts,

mugs,

greeting cards,

calendars,

key chains, diaries, coasters and many such products with

photographs.

Myntra pioneered the personalization of sports jerseys and offered

sports jerseys of several cricket and football teams such as Team India,

IPL & FIFA . These jerseys could be personalized with a name and

number of the customers choice.


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PRODUCTS

Myntra has tied up with top fashion and lifestyle brands in

India, such as Nike, Reebok, Puma, Adidas, Asics, Lee, Lotto,

Decathlon, FIFA, John Miller, Indigo Nation etc.

To offer a wide range of current season merchandise fromthese brands. Myntra currently offers products from more

than 200 Indian and international brands. These include

shoes for running, tennis, football, basketball and fitness,

along with casual footwear from world-renowned industry

leaders like

There are also casual and dressy footwear for women from

Catwalk, Carlton London and Red Tape to name a few.


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Capabilities

Order Processing and Delivery:

Myntra attempts to order and ship every order within 7 days. It

offers free shipping* within India on all products. It can ship

internationally to all major countries.

Technological:Myntra maintains its website which provides the only means by

which a customer can make a purchase.

To maintain, upgrade and improve the website and the userexperience, Myntra employees many computer science engineers

and experienced professionals.


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Marketing

Myntra has successfully used social networking

websites Facebook and Twitter to expand its

customer base.

Myntra positions itself as a fashionable new agebrand. It launches major marketing campaigns every

year. In February 2012, Myntra rolled out an OOH

(out of home) campaign across 2 cities to build brand

awareness and promote online shopping.

Myntra has used mostly viral marketing and internet

for its popularity coupled with occasional discounts

and referral discounts.


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Revenue Model

Myntra.com is an aggregator of many brands. Its

business model is based on procuring current season

merchandise from various brands and making them

available on the portal at the same time as in

respective retail brand outlets. All these products are

offered to customers on MRP. It is a Business to

Customer (B to C) revenue model.


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Order cycle


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Competitive Advantage

Competitive advantage in any e-commerce business canbe due to a cost leadership or product differentiation orboth.

In the case of Myntra the competitive advantage ismostly due to cost leadership

In special cases it also enjoys competitive advantage

due to product differentiation. In case of IPL t- shirtsthe buyer can get his/her name imprinted on it. AlsoMyntras business model up till 2009 was ofcustomized t-shirts and mugs etc which allowed it tohave product differentiation.


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Vision

Business Idea

to create a better everyday life for the many people

offering a wide range of well-designed, functional home furnishing products atprices so low that as many people as possible will be able to afford them

Wide in Function Wide in Style Coordination between functionand style

Product Range Low Prices

Cornerstone of business idea Efficient units make low pricespossible Lower prices ensure affordability

Worlds largestretailer of home furnishing products


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History

Founded in 1943 in Sweden by Ingvar Kamprad

Initially into the sales of pens, wallets, watches etc.

Furniture was introduced in 1948

First store was opened in 1958

First IKEA restaurant opened in 1960

Spread across Europe in 1970s

Entered US in 1985, China in 1998

Online shopping started in 2000

Currently has presence in 44 countries with 1,39,000employees

Next country on the cards is India


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E commerce Model

Customerselects product

from a widerange ofofferings

Views theshopping cart

Provides billingand shippinginformation

Makes thepayment

Receipt isgenerated

Invoice sent tothe nearest

store

Productshipped to thebilling address


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E Commerce Strategy

IKEA catalogue and availability indicator

2.9 mn website visits everyday

1.1 bn website viewers in 2012

Online offering and doorstep delivery in10 out of 40 countries

All markets to be covered by 2022

Encryption of card numbers, address

and other information using SSLtechnology

IKEA in UK

Experiment for

aggressive ecommerce

operations

Added 1500 more

products for customers

to buy online

Sales grew by morethan 25%


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E Commerce Strategy


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Challenges

High logistics cost

Linking E commerce to store distribution

Cultural concern, shopping experience, maze-likefloor, restaurant, childrens playroom

Difficult to replicate online

Impulse purchases take a hit

Traditional view, controlled by the founder Ingvar

Kamprad


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Future of E-Commerce

Mobiles and Smartphones

Shoppers will start to visit ecommerce websites via theirmobiles and purchase, check for promotion offers, readproduct descriptions and reviews etc.

Try on Software

Will be available to users accessing from their laptops/ PCs

They could see how the dress would look on them

Shopping goes Social With the integration of social media and ecommerce websites,

soon it shall be possible for customers to share their choiceswith their friends, ask for their opinion and feedback etc.


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Analytics will be the defining driver on E-Commerce in Retail

Will affect position of items on website, focused ontargeting and driving sales

Brick-and-Mortar stores and ecommerce canwork together

Cross channels will be developed to link online andoffline shopping experience

New era of personalized Customer RelationshipManagement (CRM)

Endless information regarding customers shopping aids inproviding support and targeted sales


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61% want online stores to track theirpurchases for customization

80% respondents in developing countries

state Internet as preferred way ofshopping

Shoppers appreciate the simplicity, easy

access, search-ability and personalization

Thus, the future of E-Commerce gets a

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