Creating an online business require strategies and business model. This presentation focus on the strategies required for the an organization to move online and also it deals with the options available for the companies as a business model. The presentation also includes the case study or successful and failed online business to enhance the understanding of the students.
2. redBus – India’s number 1 bus ticketing platform, was
founded in 2005 and is a part of ibiboGroup. We take
pride in providing bus ticket fare with zero booking
charges. You can now choose from 1500+ bus operators
and 80,000 routes in India
redBus.in was founded by three engineers -Phanindra
Sama, Charan Padmaraju and Sudhakar Pasupunuri
All the founders used to work in Bangalore at the time
(sometime in 2005) - all with top IT MNCs - IBM, Texas
Instruments and Honeywell. They were friends from BITS
Pilani, one of India's finest engineering colleges.
3. They started writing the code for the software that would
be required to run the operations. Once this was ready,
they put together a business plan and presented it to TiE,
Bangalore Chapter.
Being run by a team of young people, the culture is
informal and everyone is ambitious and charged to make
it larger than imagined. What started as a team of three
grew into a team of 650 in 8 years.
4. Internet Relationships
Private Business (B)
Public Administration (PA)
Customers and Citizens (C)
B2B
B2C
B2PA – Tenders and documents. Passport service.
PA2PA
PA2C
C2C – Olx, Ebay and etc
5. Problems in Dot Com
Story of Boo.com
Boo.com was a European company founded in 1998
and operating out of a London head office, which
was founded by three Swedish entrepreneurs, Ernst
Malmsten, Kajsa Leander and Patrik Hedelin.
Malmsten and Leander had previous business
experience in publishing where they created a
specialist publisher and had also created an online
bookstore, bokus.com.
6. The vision for Boo.com was for it to become the
worlds first online global sports retail site.
At launch it would open its virtual doors in both
Europe and America with a view to "amazoning the
sector“ ( around 36 countries).
According to Malmsten (2001), the boo brand name
originated from filmstar "Bo Derek", best known for
her role in the movie 10". The domain name
"bo.com" was unavailable, but adding an "o", they
managed to procure the domain for $2,500 from a
domain name dealer
7. They listed brands such as Polo Ralph Lauren, Tommy
Hilfiger, Nike, Fila, Lacoste and Adidas.
When selecting products, users could drag them on to
models, zoom in and rotate them in 3D to visualize them
from different angles. The technology to achieve this was
built from scratch along with the stock control and
distribution software.
For 2000, about $6million was spent on content about
spring/summer fashion ware. It cost $200 to photograph
each product, representing a monthly cost of more than
$500,000.
8. The success of this PR initiative can be judged by
the 350,000 e-mail pre-registrations who wanted to
be notified of launch. For the launch Malmsten
(2001) explains that "€œwith a marketing and PR
spend of only $22.4 million we had managed to
create a worldwide brand“.
Boo possessed classic channel conflicts. Initially, it
was difficult getting fashion and sports brands to
offer their products through boo.com.
10. "How many visitors are you aiming for?
What kind of conversion rate are you aiming for?
How much does each customer have to spend?
What's your customer acquisition cost.
And what's your payback time on customer
acquisition cost?".
11. When the site launched on 3rd November 1999,
around 50,000 unique visitors were achieved on the
first day, but there were only 4 in 1000 placed orders
(a 0.25% conversion rate).
"Eighty-one minutes to pay too much money for a
pair of shoes that I still going to have to wait a week
to get?" •These rates did improve as problems were
ironed out “ by the of the week 228,848 visits had
resulted in 609 orders with a value of $64,000.
12. In the 6 weeks from launch, sales of $353,000 were
made and conversion rates had more than doubled
to 0.98% before Christmas. However a relaunch was
required within 6 months to cut download times by 6
months and to introduce a "low-bandwidth version"
for users using dial-up connections. This led to
conversion rates of nearly 3% on sales promotion.
18th May 2000 the company was liquidated.
13. Overestimating demand
Underestimating promotional cost needed for brand
building
Over reliance on few revenue streams
Poor business plans with no clear strategic vision
Target markets not adequately defined
Failure to respond to queries via email
Poor fulfilment strategies and implemetation
Short term objectives to meet demands of the VC’s
Setting up at several countries at once
14. Failing to reassure customers regarding security and
trust
Poor customer service, especially online
Implementation of technology and website design
lacking customer focus.
15. Strategy
Market penetration – Eg) By superior online
customer service
Product Development – Eg) New trading exchanges
to existing markets
Market Development – Eg) Reaching new markets
by online selling
Diversification – Eg) Customisation of industry
specific products
16. How to grow
Chaffey et al 2000
Level 0 – No website or presence on the web
Level 1 – Web presence is minimal, listing domain
name
Level 2 – First level basic web site emerges
Level 3 – Interaction exist and email enquiries
Level 4 – Site development to handle sales
transactions
Level 5 – Site fully developed with all stages of the
buying process
17. First Consulting Group
Publish – Creating web awareness with customers and
employees
Interact – Engage the community
Transact – Deploy robust self service capability and
online transaction
Integrate – Automation of numerous transactions
Transform – End to end web interactions with customers
and business partners
19. How e-business models get revenue?
Advertising – Banner advertising, Interstitials(pop
ups) and superstitials(activated by an user action)
Query based paid placements and content targeted ads
Sales – B2B sector accounts for 80% transaction
India has 20% internet penetration and out of that 10%
use online purchasing option.
Sales Model has two main categories
Manufacturing model – Dell – Uses cost plus pricing method
Subscription model – HBS, Wall street journal, Vikatan.com
20. Referral Model ( Affiliate Marketing)
Revenue generated by promoting and linking one site to
another.
Pay per click ( Google ads)
Pay per sales ( Amazon Affiliate Program)
Pay per lead ( Facebook Ads)
Intermediation Model
Online brokers – 99acres.com
Buyer aggregators – alibaba.com
Exchange/auction hosts – ebay.com, olx.in
Virtual malls – virtualeshopping.com
21. Business Categories in the modern economy
Bricks and mortar
Clicks and mortar
Pure players
Clicks and contents
22. Strategic Options for Retailers
Information only
Export
Subsume into existing business – adding IT in
current biz
Treat as another channel – www.tesco.com
Setup as separate business
Pursue in all fronts – using multiple services(online)
Mixed systems – Offline and online
Switch fully – Only online
Best of both – Giving the best in online and offline
Revitalise and buck the trend – Developing new
trends
23. Physical and Virtual Worlds
Location and hosting
Marketing and presentation
Payment
Security
Fulfilment