Babykart - Business plan

BabyKart.com Business Plan Sunstone Business School Abhishek Nimonkar Aditya Chaturvedi Gagan Bajpai Krishna Singh Pankaj Garg

Our Purpose BabyKart ’s purpose is to make premium-brand baby gear and toys accessible to consumers seeking high quality

Consumers ’ Plight
Unavailability of premium foreign-brand baby gear and toys in India
Parents have to request visiting friends and family members
Quality, safety and hygienic issues of non-standard brands
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
Parents seek recommendations /advices of friends and family members

Our Position
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 BabyKart Malls Other e-commerce portals Local Shops

Products
Categories
Baby gear (Prams, car seats, swings, strollers)
Toys (First toys, baby gyms, bath toys)
Baby furniture (high chair, playards, cots)
Accessories (travel kits)
Brands
Lego, Woolworths, LeapFrog, Fisher-Price, Graco, Chicco
Roadmap
Extend product categories and premium brands
Expand geographical reach to tier II and tier III cities
Tie ups for offline product demonstrations

Product spend per customer Products Average Spend 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 93,500

Why Now
Growing nuclear families, awareness, globalization and income
Parents now pay significant attention to quality of products for their kids
Price of premium-brand products becomes relatively less significant that promises high quality, safety and better features
Growing market size of baby products in India
Annual growth in demand of toys is between 20% and 30% *
Indian manufactures fulfill about 50% of domestic demand of toys *
CAGR 17%
28 billion 15 billion
# 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 )

BabyKart ’s Market Size Year 2012 Year 2015 Total Population # 1.2 billion 1.35 billion Kids Population (0-3 years) ^ 121 million (10.1%) 130 million (9.7%) Urban Kids Population # 36.3 million (30%) 39 million (30%) Target Population * 726 thousand (2%) 1170 thousand (3%) Average Spend per kid/year on toys and baby gear @ 30000 INR 35000 INR Total Spend per year on toys and baby gear (SAM) 21.8 billion INR 41 billion INR Expected Revenue of BabyKart (SOM) 3.63 million INR (0.1% target population * 15% average spend) 264 million INR (0.75% target population * 80% 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
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) = 727
Average CAC/Customer (Year 1) = 3,600 INR

5-year projections Year 1 Year 2 Year 3 Year 4 Year 5 Customers 727 5,000 10,000 22,000 50,000 Average Spend/ Customer 5,000 7,000 9,000 12,000 15,000 Revenue 36.3 lac 3.50 Cr 9.00 Cr 26.40 Cr 75.00 Cr CAC/ Customer 3,600 2,500 2,000 1,800 1,500 CAC # 26.19 lac 1.25 Cr 1.80 Cr 3.42 Cr 6.51 Cr Logistics Costs ^ 3.63 lac 20.00 lac 38.50 lac 92.40 lac 2.10 Cr Technology Costs @ 6.50 lac 65.50 lac 78.00 lac 91.00 lac 1.06 Cr Infra & People Costs @ 8.00 lac 15.00 lac 18.50 lac 19.00 lac 20.73 lac Warehouse/Inventory 0 2.87 lac 13.56 lac 60.75 lac 2.46 Cr Total Costs 44.33 lac 2.28 Cr 3.28 Cr 6.05 Cr 12.33 Cr Margin * 3.63 lac 42.00 lac 1.35 Cr 5.28 Cr 15.00 Cr Profit -40.69 lac -1.86 Cr -1.93 Cr -77.15 lac 2.66 Cr

Our Competition Local Shops Malls e-Com sites BabyKart Example Jhandewalan Market Liliput Ritu Wears Mom & Me Shopper Stop FirstCry BabyOye BabyIndia HushBabies BabyKart 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 services

Operation-Overview
Start
Procurement from Jhandewalan
Local fetch of products to our office, packaging in our office
Courier pickup from the office
Distribution only in NCR
On volumes - 2 options being considered
Packaging at the source and ensuring courier picks from there(TV-18 does that)
Own warehouse
Distribution to Tier 1 cities
Logistic Partner (Blue Dart and First Flight)
Unit costs about Rs. 480

Appendix

Appendix – Supplier Survey
Average operating margin of 20% on MRP is available for branded products from suppliers.
Around 50% of the products are shipped to Tier 2 and 3 cities from the whole sale market.
Branded products cant be imported directly. Some local distributors have exclusivity clause with manufacturers.
Lead time for bulk order is 1 month.
* Supplier survey carried out in Jhandewalan extension wholesale market

Appendix - Logistics
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*
Blue Dart operated in 2000-2500 Pin codes in India for COD
For General it ’s about 4000 pin codes
Since Blue Dart has it ’s own air fleet the package handling and delivery times are better.
For NCR only First Flight is cheaper with CoD.

Appendix -Logistic Ecosystem
Challenges from E-commerce Stand Point:
High cost structure takes a toll on the profitability
Difficult to meet delivery commitments
Absence of Goods & Services Tax
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

Appendix -Logistic Ecosystem: Emerging Trends

Appendix-Customer Acquisition Model

Babykart - Business plan

by Aditya Chaturvedi on Nov 24, 2011

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