Babykart - Business plan


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The eCommerce Business plan for premium baby products. I presented to Sequoia at Sunstone Business School.

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  • ^ Average Logistics Cost of 500 INR # Churn rate of 90% # Margin of 15% @ Increase by 20% per year ^ Average Logistics Cost of 500 INR # Churn rate of 90% # Margin of 15% @ Increase by 20% per year ** Assumed 5% on revenue, for sales and services.
  • More than 5 orders a day
  • More than 5 orders a day
  • * Talked to executives from First Flight and BlueDart
  • Greater Reach (limited stores in Tier 1 and Tier 2 cities) Pricing (competitive pricing as these stores are in high end malls where retail space is costly. Have to make it competitive) Is pricing a competitive advntage even when compared to a site like, which is our closest competitor
  • Babykart - Business plan

    1. 1. Business Plan Sunstone Business School Abhishek Nimonkar Aditya Chaturvedi Gagan Bajpai Krishna Singh Pankaj Garg
    2. 2. Our Purpose BabyKart ’s purpose is to make premium-brand baby gear and toys accessible to consumers seeking high quality
    3. 3. Consumers ’ Plight <ul><ul><li>Unavailability of premium foreign-brand baby gear and toys in India </li></ul></ul><ul><ul><ul><li>Parents have to request visiting friends and family members </li></ul></ul></ul><ul><ul><li>Quality, safety and hygienic issues of non-standard brands </li></ul></ul><ul><ul><ul><li>Pay premium prices at malls or other high class stores still buying re-labeled products </li></ul></ul></ul><ul><ul><li>In-store sales executives have limited knowledge of products and existing online portals have insufficient descriptions </li></ul></ul><ul><ul><ul><li>Parents seek recommendations /advices of friends and family members </li></ul></ul></ul>
    4. 4. Our Position <ul><ul><li>Offer baby gear and toys of only premium-brands </li></ul></ul><ul><ul><li>Maintain high quality of products and services at every touch points with consumers </li></ul></ul><ul><ul><li>Provide online demonstrations of products ’ functions </li></ul></ul>Cost Quality BabyKart Malls Other e-commerce portals Local Shops
    5. 5. Products <ul><ul><li>Categories </li></ul></ul><ul><ul><ul><li>Baby gear (Prams, car seats, swings, strollers) </li></ul></ul></ul><ul><ul><ul><li>Toys (First toys, baby gyms, bath toys) </li></ul></ul></ul><ul><ul><ul><li>Baby furniture (high chair, playards, cots) </li></ul></ul></ul><ul><ul><ul><li>Accessories (travel kits) </li></ul></ul></ul><ul><ul><li>Brands </li></ul></ul><ul><ul><ul><li>Lego, Woolworths, LeapFrog, Fisher-Price, Graco, Chicco </li></ul></ul></ul><ul><ul><li>Roadmap </li></ul></ul><ul><ul><ul><li>Extend product categories and premium brands </li></ul></ul></ul><ul><ul><ul><li>Expand geographical reach to tier II and tier III cities </li></ul></ul></ul><ul><ul><ul><li>Tie ups for offline product demonstrations </li></ul></ul></ul>
    6. 6. 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
    7. 7. Why Now <ul><ul><li>Growing nuclear families, awareness, globalization and income </li></ul></ul><ul><ul><ul><li>Parents now pay significant attention to quality of products for their kids </li></ul></ul></ul><ul><ul><ul><li>Price of premium-brand products becomes relatively less significant that promises high quality, safety and better features </li></ul></ul></ul><ul><ul><li>Growing market size of baby products in India </li></ul></ul><ul><ul><ul><li>Annual growth in demand of toys is between 20% and 30% * </li></ul></ul></ul><ul><ul><ul><li>Indian manufactures fulfill about 50% of domestic demand of toys * </li></ul></ul></ul><ul><ul><li>CAGR 17% </li></ul></ul>28 billion 15 billion <ul><ul><li># Baby care market Analysis ( ) </li></ul></ul><ul><ul><li>* Toy association of India ( ) </li></ul></ul>
    8. 8. 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 ( ) ^ National Population Policy ( ) * Chapter 3, The ‘Bird of Gold’: The rise of India’s Consumer Market, McKinsey Global Institute @ Assumption based on customer survey
    9. 9. Customer Acquisition Model <ul><ul><li>Residential Events </li></ul></ul><ul><ul><ul><li>4 events a month for one year in premium societies </li></ul></ul></ul><ul><ul><li>Telemarketing </li></ul></ul><ul><ul><ul><li>Customer data from residential events and other sources </li></ul></ul></ul><ul><ul><li>Referral program </li></ul></ul><ul><ul><ul><li>Credit to referrer and discount to referral on first purchase </li></ul></ul></ul><ul><ul><li>SEO </li></ul></ul><ul><ul><ul><li>Blogs, videos, white papers </li></ul></ul></ul><ul><ul><li>SEM </li></ul></ul><ul><ul><ul><li>Various keywords </li></ul></ul></ul><ul><ul><li>Chemist shops </li></ul></ul><ul><ul><ul><li>Supply branded carry bags </li></ul></ul></ul><ul><ul><li>Hospitals </li></ul></ul><ul><ul><li>Play/Pre Schools </li></ul></ul><ul><li>Estimated Customers (Year 1) = 727 </li></ul><ul><li>Average CAC/Customer (Year 1) = 3,600 INR </li></ul>
    10. 10. 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
    11. 11. 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
    12. 12. Operation-Overview <ul><ul><li>Start </li></ul></ul><ul><ul><ul><li>Procurement from Jhandewalan </li></ul></ul></ul><ul><ul><ul><li>Local fetch of products to our office, packaging in our office </li></ul></ul></ul><ul><ul><ul><li>Courier pickup from the office </li></ul></ul></ul><ul><ul><ul><li>Distribution only in NCR </li></ul></ul></ul><ul><ul><li>On volumes - 2 options being considered </li></ul></ul><ul><ul><ul><li>Packaging at the source and ensuring courier picks from there(TV-18 does that) </li></ul></ul></ul><ul><ul><ul><li>Own warehouse </li></ul></ul></ul><ul><ul><ul><li>Distribution to Tier 1 cities </li></ul></ul></ul><ul><ul><li>Logistic Partner (Blue Dart and First Flight) </li></ul></ul><ul><ul><ul><li>Unit costs about Rs. 480 </li></ul></ul></ul>
    13. 13. Appendix
    14. 14. Appendix – Supplier Survey <ul><ul><li>Average operating margin of 20% on MRP is available for branded products from suppliers. </li></ul></ul><ul><ul><li>Around 50% of the products are shipped to Tier 2 and 3 cities from the whole sale market.  </li></ul></ul><ul><ul><li>Branded products cant be imported directly. Some local distributors have exclusivity clause with manufacturers.  </li></ul></ul><ul><ul><li>Lead time for bulk order is 1 month.  </li></ul></ul><ul><li>* Supplier survey carried out in Jhandewalan extension wholesale market </li></ul>
    15. 15. Appendix - Logistics <ul><ul><li>Courier companies operate on “Volumetric Weight” </li></ul></ul><ul><ul><li>Current general market rates are Rs 80 per VW Kg.* </li></ul></ul><ul><ul><li>Our average size is around 6 Units and that will be about Rs. 480. </li></ul></ul><ul><ul><li>The CoD charges are between 3-7 % of the total transaction. </li></ul></ul><ul><ul><li>As per courier companies marketing overview* </li></ul></ul><ul><ul><ul><li>Blue Dart operated in 2000-2500 Pin codes in India for COD </li></ul></ul></ul><ul><ul><ul><li>For General it ’s about 4000 pin codes </li></ul></ul></ul><ul><ul><ul><li>Since Blue Dart has it ’s own air fleet the package handling and delivery times are better. </li></ul></ul></ul><ul><ul><ul><li>For NCR only First Flight is cheaper with CoD. </li></ul></ul></ul>
    16. 16. Appendix -Logistic Ecosystem <ul><li>Challenges from E-commerce Stand Point: </li></ul><ul><ul><li>High cost structure takes a toll on the profitability </li></ul></ul><ul><ul><li>Difficult to meet delivery commitments </li></ul></ul><ul><ul><li>Absence of Goods & Services Tax </li></ul></ul><ul><ul><ul><li>Complicated tax implications for shipping and delivering from various locations </li></ul></ul></ul><ul><ul><li>Indian Postal Service (Largest coverage) is inflexible and mired in government procedures </li></ul></ul><ul><ul><li>Large section of vendors/courier partners are SME ’s without end to end IT connectivity </li></ul></ul>
    17. 17. Appendix -Logistic Ecosystem: Emerging Trends
    18. 18. Appendix-Customer Acquisition Model