Non Store Retailing

Comparative strategies of Indian and International online retailers Books and stationaries

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Presented By:Divya Deo (11/pmb/015)Puneet Singh (11/pmb/032)

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introduction

• The bookstores business has been recently characterized by major consolidation trends and increasing internet sales.

• Independent bookstores continue to struggle for market share, sustain brick and mortar stores and implement new technology.

• While reacting to economic forces and competing recreational diversions, the industry continues to reinvent itself to attract and retain customers.

• Booksellers struggled in the first years of the 21st century as did the rest of the economy. • Although profits have recovered each year from 2002 to 2005,the bookstore industry still

faces real challenges.• The overall size of the retail industry in India is estimated at $ 470 billion. This industry is

characterized by a low organized retail penetration of 6% as multiple intermediaries, including 12 million kiranas, dominate this industry. Overall retail sales are expected to grow to approximately $ 675 billion by 2016 from the current $ 470 billion, offering immense opportunities for expansion of organised retail.

• The Indian market for books, music and stationery industry was estimated to be more than Rs 25,000 crore in 2011.

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Monthly Sales at Bookstores (in Millions in 2006)

January 2,143February 1,052

March 1,041April 940May 1,118June 1,176July 1,077

August 2,031September 1,483

October 1,003November 1,066December 2,989

Total 16,119

Source: Census Bureau

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Bookstores Industry Overview• Traditional bookstores in the past were far different than the modern bookstore of

today. Simple in design and layout, traditional bookstores had only one mission – to sell books. Now, the changing marketplace is exerting great pressure on chain and independent stores, alike. Consumers shop at superstores which conveniently carry books and other entertainment merchandise while small-scale bookstores (even those owned by the large chains) have closed because of low customer traffic.

• Many independent booksellers continue to exist in spite of big chain bookstores and online services while other independents are turning to the Internet for increased their bookstore sales. Smaller bookstores, especially those serving niche markets, closed their brick and mortar stores and opened websites on the Internet for greater exposure. However, some people still enjoy the browsing experience gained solely from visiting stores. Currently, the retail book industry approaches 10,000 independent bookstores.

• The current size of the online book market is estimated to be about Rs 70 crore in annual sales and it is increasing at the rate of 50 per cent year on year.

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Contd…

• The online book market is steadily growing. The industry is expected to grow at around 15-20 per cent annually, with online sales doing better than physical transactions.

• The increasing internet penetration, consumer confidence in online retail as a format is driving this growth. The convenience of shopping online and the wide choice and attractive prices available online are also growth drivers.

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Online Bookstores

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Why Shop at Online Bookstores?

• Shopping for books online helps you find the best possible price for just about any book you want. If you’re in the market for rare, collectible or autographed books, it’s much cheaper and faster to search online than it would be to call up local used and independent bookstores that carry these types of items.

• The features available on many online bookstores also allow you to compare similar titles with the click of a mouse and read reviews from professionals and customers. You can also resell your used books to get more cash in your pocket and to clear out your cluttered bookshelf. It’s never been easier to ensure you never get stuck with a crummy title again.

• The convenience of selection in the comfort of a reader's home attractive prices, easily available updates on best sellers, new arrivals also make this it a very convenient platform for customers

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What to Look for in an Online Bookstore?

• If you’ve decided to start buying books online, it’s important to recognize what features make one store better than another.

• Even if you find a book you want for a great price on one site, it may still be better to pay a little extra to purchase it from a more reputable source.

• A quality online bookstore will have a good product selection, an easy-to-use -yet comprehensive- website, a variety of shipping options, a number of payment options, excellent customer support and a strong return policy.

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What to Look for in an Online Bookstore?

1. Product Selection2. Website3. Shipping4. Payment Options5. Customer Support6. Return Policy

Source: http://online-bookstores-review.toptenreviews.com/

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Top players in online bookstore

1. Amazon.com2. Barnes & Noble3. Powell’s Books4. Books-A-Million5. Alibris6. Abebooks7. Biblio.com8. Tattered Cover Book Store9. ValoreBooksSource: http://online-bookstores-review.toptenreviews.com/

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Top players in online bookstore in india

1. Flipkart - www.flipkart.com 2. uRead - http://www.uread.com/ 3. BookAdda - http://www.bookadda.com/ 4. Oxford BookStore - http://www.oxfordbookstore.com5. Landmark - http://www.landmarkonthenet.com/ 6. Crossword - http://www.crossword.in/ 7. Rediff Books - http://books.rediff.com/ 8. Indiatimes Books

- http://shopping.indiatimes.com/books/ Source : http://india-it-pulse.blogspot.in/2012/05/top-8-indian-online-book-stores.html

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E-tailers selected

1. Indian Online Bookstores1. Flipkart2. Homeshop 18

2. Foreign Online Bookstores1. Barnes and Noble2. Amazon

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Flipkart-Company’s Profile• Flipkart is an Indian e-commerce company headquartered

in Bangalore, Karnataka. • It was founded by Sachin Bansal and Binny Bansal (both alumni of IIT

Delhi) in 2007. • They worked for Amazon.com before quitting and founding their own

company. Initially they used word of mouth marketing to popularise their company.

• In its initial years, Flipkart focused on online sales of books, but it later expanded to electronic goods and a variety of other products.

• Flipkart offers multiple payment methods like credit card, debit card, net banking, e-gift voucher, and the major of all Cash on Delivery.

• The cash-on-delivery model adopted by Flipkart has proven to be of great significance since credit card and net banking penetration is very low in India.

• A few months later, the company sold its first book on flipkart.com—John Woods‘ “Leaving Microsoft to Change the World”.

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Flipkart (contd….)

• Today, as per Alexa rankings, Flipkart is among the top 20 Indian Web sites and has been credited with being India's largest online bookseller with over 11 million titles on offer.

• Flipkart claims to have had at least 100% growth every quarter since its founding.• The store started with selling books and in 2010 branched out to selling CDs, DVDs,

mobile phones and accessories, cameras, computers, computer accessories and peripherals, and in 2011, pens & stationery, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products etc.

• Further in 2012, Flipkart added A.C, air coolers, school supplies, office supplies, art supplies & life style products to its product portfolio. As of today, Flipkart employs more than 4500 people.

• Business Results – Flipkart's reported sales were 4 Crore in FY 2008-2009, 20 Crore in FY 2009-2010 and

75 Crore for FY 2010-2011. In FY 2011-2012, Flipkart is set to cross the 500 Crore (US$ 100 million) mark as Internet usage in the country increases and people get accustomed to making purchases online. On average, Flipkart sells nearly 20 products per minute and is aiming at generating a revenue of 5000 Crore (US$ 1 billion) by 2015.

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7 P’s of marketing • Product :

– Appearance – the ease in the website interface even for the first visitor

– Quality – checking of the product before packing (visual test) Packing – different packing(eg. Bubble pack for electronic items)

Brands – all brands integrated in one website Warranty – one year warranty from the manufacturer’s side – Service & support – guarantee delivery of undamaged product or else

replacement in 30 days.

• Positioning: – Customers feel Flipkart is cheap, on time delivery, replacement; the

online myth is gradually eradicated – Competitors see Flipkart as the market leader, with the acquisition of

letsbuy.com – General public want to try it once for its creative TVC is making people

curious to experience flipkart.

• People: – Service people, Sales Clerks, Delivery drivers, Managers, Complaints

department, Accounting, Warranty people, Technical people, all work for the customer ease, customer satisfaction and customer delight.

• Price: – Special discount – As shipping is within India the shipping cost reduces – Seasonal discounts – Free shipping – For expensive products transit cost is borne by company

• Place: – Tie ups with local vendors and courier firms

(thereby avoiding octroi charges) – Company owned warehouse in major cities near

airport – Trying to achieve minimum returns – If the courier can’t delivery to the location the

product is shipped through government post

• Promotion: – SEO and SEM – Word of mouth marketing – TVC lately to encourage non-online shoppers – More online marketing like FB, Twitter, linkedin – Hiring people with high sense of ownership,

generalist with more attitude to learn

• Packaging: – Different packaging for different product to

ensure safe delivery – Flipkart the name goes with the online cart – Design and packaging is common so customers

can relate it to the company

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Business Model• Business philosophy-

– Flipkart is built by a group of passionate, innovative, relentless individuals, who are constantly striving to provide a wholesome online shopping experience to the customer.

– Focus is to use technology to its fullest so that the customer satisfaction we offer is consistently considered the best.

• Product and assortment- Academics and professional, autobiographies, business and management, coffee table, college text and references, comics novels, computers and internet, entrance exam prep, literature and fiction, science and technology , school books, teens, travel , religion and spirituality, history , music , philosophy, etc., in Indian languages like hindi, bengali, marathi, gujrati, tamil, telugu, kannad, malayalam, punjabi, urdu ,sanskrit

• On an average 10,000-12,000 people shop for books everyday. Most are men within age-group of 25-35. Almost 50 per cent of the orders come from the top eight cities and the remaining come from B & C class towns

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Homeshop18-Company’s Profile• HomeShop18 is the online & on-air retail wholesale and distribution venture of Network 18

Group that was launched as India’s first 24 hour Home Shopping TV channel on 9 April 2008.• The television network can be seen on cable, satellite, and some terrestrial channels in India.

HomeShop18 acquired CoinJoos.com, an online books, movies and music retailer in August, 2011 for an undisclosed amount.

• HomeShop18 has partnered with major brand owners such as Reebok, Nokia, LG, Motorola, Philips, Kaya, and Godrej. G S Home Shopping of Korea, the third largest home shopping company in the world, has a 15% stake in the company. Network 18 has the controlling stake of 51%.

• eCommerce firm HomeShop18 and Delhi International Airport have introduced a ‘Virtual Shopping Wall’ at the domestic terminal T3. Named ‘Scan N Shop’, the wall offers premium merchandise to consumers. Around 45,000 passengers use T3 for departures and each passenger has an average of 60 minutes in hand before boarding a flight.

• The shopping wall will provide “innovative shopping experience” as passengers will be able to view products such as consumer electronics, mobiles, tablets, clothing, accessories, fashion jewelry, perfumes, among others.

• Won many industry awards and accolades (eg. 2012-eRetailer of the Year at Indian eRetail Awards Innovation in Delivery Award at Indian eRetail Awards)

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Business Model

• Business philosophy– HomeShop18 extends its “More for Consumer” strategy, Launches the

Monsoon Sale – Discounts Ki Baarish!!• The target customer is the middle class of any age group.• Image-positioning

– To be the market leader through unique Television-Cum-Online approach so as to grab a large amount of customer data.

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Amazon-Company’s Profile

• Amazon.com, Inc. is an American multinational electronic commerce company with headquarters in Seattle, Washington, United States. It is the world's largest online retailer

• Jeff Bezos incorporated the company (as Cadabra) in July 1994, and the site went online as Amazon.com in 1995. The company was renamed after the Amazon River, one of the largest rivers in the world, which in turn was named after the Amazons, the legendary nation of female warriors in Greek mythology.

• Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs,MP3 downloads, software, video games, electronics, apparel, furniture, food, toys, and jewelry.

• The domain amazon.com attracted at least 615 million visitors annually by 2008

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Business Model

• low cost customer-centric model • Business philosophy

– Amazon is obsessed with making its customers happy.– Unlike many other companies, Amazon will instantly trade off short-term profits for the chance to engender long-term

customer loyalty.• Market Segment and targeting

– Amazon's initial targeting was to create an online bookstore that offered over 1.1 million titles to choose from. They segment geographical by domestic (North America) and international sales.

• Image Positioning– The Company prides itself on being the largest bookstore on the earth. It differentiates itself by saying "no matter how

obscure you can find it here".– "Search Inside the Book" is a feature which allows customers to search for keywords in the full text of many books in the

catalog. The feature started with 120,000 titles (or 33 million pages of text) on October 23, 2003. There are currently about 300,000 books in the program.

• Amazon technology– Customer Relationship Management (CRM) and Information Management (IM) support Amazon’s business strategy– Amazon had the world’s three largest Linux databases, with capacities of 7.8 TB, 18.5 TB, and 24.7 TB.– Amazon employs Netscape Secure Commerce Server using the Secure Socket Layer protocol which stores all credit card

details in a separate database.– records data on customer buyer behavior

• Multi-level e-commerce strategy– Fistly B2C, B2B, and now C2B, C2C also

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Barnes & noble – Company’s Profile

• Barnes & Noble, Inc. is a book retailer in the United States, operating mainly through its Barnes & Noble Booksellers chain of bookstores headquartered at 122 Fifth Avenue in the Flatiron District in Manhattan in New York City.

• In 1917, first bookstore opened in NewYork city, US.• The core of Barnes & Noble is its brick-and-mortar retail stores. This channel is declining

within the retail bookselling industry due to the increasing popularity of online purchasing and new digital technologies.

• The company is known for large, upscale retail outlets, many of which contain a café serving Starbucks Coffee, and for competitive discounting of bestsellers.

• Most stores also sell magazines, newspapers, DVDs, graphic novels, gifts, games, and music. Video games and related items were sold in the company's GameStop retail outlets until October 2004, when the division was spun off into an independent company.

• Barnes & Noble is also known for selling the Barnes & Noble Nook, as well as various incarnations of its mascot, a teddy bear named "Barnsie".

• The company operates 689 stores (as of July 28, 2012) in all 50 U.S. states in addition to 667 college bookstores that serve more than 4.6 million students and faculty members across the country.

• It first began selling books online in the late 1980s, but the company’s website was not launched until May 1997. According to the site, it now carries over 2 million titles.

Business Model• Business philosophy

– leverages the power of the Barnes & Noble brand to offer online customers the Web's premier destination products and services.

• More than half (55.7%) of all revenue earned in 2011 was from consumers 55 years or older.• Customer segment

– ages 45 to 64– high incomes– married without children– married with school-aged or older children– reside in western USA– college graduates

• Targets– Customers with a college degree spend twice as much on books than other customers and make up

57% of the book buying market. – Consumers between the ages of 45 and 64 spend 28%-33% more on books. – Many in this category are empty-nesters who can dedicate more time to reading. – Married couples without children at home spend 24% and couples with school-aged children spend

34 to 42% more on books.– Adults between the ages of 18 to 24 and senior citizens 65 and older spend the least amount on book

purchases.• Image-positioning

– Industry Leader in Book Retailing– Maintain “Community Store” concept

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7P’s for online bookstores

Place- Internet, Price- All ranges available, Promotion- ads, offers, free gifts, TVC People- Everyone, Process –order online, on phone, 30 days replacement, free home delivery, value added service, Physical Environment- 24x7, Hassle free shopping, wide range Product- books, stationery, and others

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Comparative analysis

Amazon BN.com Flipkart Homeshop18

88,400

30,000

4,800 3,500

Number of Employees

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Amazon BN.com Flipkart Homeshop18

61

7

0 0

Revenue in FY 2012(in US$Billions)

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Comparative analysisFlipkart Homeshop 18 Bn Amazon

Launched 2007; 6 yrs April 9, 2008; 4 years ago

1886 1995

Alexa rank 216; India: 13 (February

2013)

1,178 (Aug 2012)

660 8 (February 2013)

Current status Online Online / Offline Online / Offline Online

Revenue Rs 5 billion (US$91 million)

(FY 2011–12

7.5 billion Rs ($142.13 million)

US$7.129 Billion (FY

2012)

US$ 61.09 billion (2

012)Available

language(s)English Multilingual English Multilingual

Registration Optional Required Optional Required

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Conclusion

Amazon has low-cost operations with its “sell all, carry few” business model and has become more than just the world’s

largest bookseller.

– It has strong online presence, customer convenience and low cost operations.

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Conclusion• The shopping experience needs to keep up with

new Technologies & Trends.

• In website design a first concern is not being cool, but fulfillment of its purpose, which is… maximum sales.

• The quality of the operations and logistics high standards are within the level of the online user experience makes the brand stronger.

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Other outcomes

• Having access to online shopping has truly revolutionized and influenced our society as a whole.

• This use of technology has opened new doors and opportunities that enable for a more convenient lifestyle today.

• Variety, quick service and reduced prices were three significant ways in which online shopping influenced people from all over the world.

• However, this concept of online shopping led to the possibilities of fraud and privacy conflicts.

• Unfortunately, it has shown that it is possible for criminals to manipulate the system and access personal information.

• Today with the latest technology, measures are being taken in order to stop hackers and criminals from inappropriately accessing private databases.

• Through privacy and security policies, website designers are doing their best to put an end to this unethical practice.

• By doing so, society will continue to depend upon online shopping, which will allow it to remain a tremendous success in the future.

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References

• www.Wikipedia.com• www.BN.com• www.Amazon.com• www.Flipkart.com• www.Homeshop18.com