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Successful online selling - Strategies for Offline Brands and Retailers


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This is a guide to setting up successful eCommerce businesses and to successful online retailing in India by offline brands and retailers. It covers the business case elements, omnichannel design, online retail model options, capabilities and elements of financial model.

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Successful online selling - Strategies for Offline Brands and Retailers

  1. 1. Selling Online:Strategies for OfflineBrands and Retailers Rajiv Prakash May 2012
  2. 2. Digital/ e- Start-ups / Enterprise Digital Commerce Entrepreneurship Transformation• Assistance to offline • Scaling up: • Discovery Workshops – businesses going online: • Business mentoring identifying digital • Online Strategy & Model • Strategy and business plan transformation opportunities Design review cross-function, pan-enterprise • Opportunity Discovery and • Performance management • Design and program Planning Workshops • Organisation strengthening management of digital • Execution Mentoring • Business development and opportunities - commerce, • Partner Selection alliances customer service, marketing, • Loyalty, customer service • Distribution and sales supply chain, etc. & digital marketing channel development integration • Exit advisory • Early stage start-up clinic and executive support
  3. 3. Introduction –Rajiv PrakashRajiv is the founder of Next In Advisory Partners, a boutique consultancy thathelps retailers and brands design and execute successful digital commercestrategies. Next In also actively mentors select start-ups on growth-relatedmatters.Rajiv was earlier the CEO at Future Ecommerce where he led Future Group’secommerce business portfolio comprising and the onlinechannels for Big Bazaar, Ezone and Pantaloons. During his tenure, he turnedaround and grew its sales by 9x. Prior to this, heestablished Cisco’s strategy consulting unit, Internet Business Solutions groupfor enterprise markets in India and helped several of India’s top 100 firmsdiscover online opportunities. He has over 12 years of business consultingexperience at Andersen, Cisco and KPMG in India and APAC. He is also aventure partner to a portfolio of online and consumer ventures. Rajiv is apost-graduate from the Indian Institute of Management, Ahmedabad. 3
  4. 4. Discussion areas1. The Business Case: Why should you care about digital commerce/ retail?2. Competitive Position: Can Offline Players succeed Online?3. Roadmap to digital retail/commerce 4
  5. 5. Baselining key termsDigital Commerce:• Commerce through any digital medium including human-assisted digital interactions.eCommerce• Commerce initiated by the consumer accessing a website on any digital deviceOffline players• Brands ie consumer goods companies and RetailersOnline players• Pureplay online retailers and brands including home-shopping and phone based commerce players 5 1-800-
  6. 6. Disruptive Consumption –3 facets of the consumer in India’s digital decade 6
  7. 7. i. the digital consumer 7
  8. 8. Indian consumers increasingly live digitally mediated lives Banking Investing Movie tickets Bill payment Rail , air tickets MatrimonialHotels Bus tickets Books Renting Emergency A house Services Music Darshans Friendships School Passport Jobs homework Many of us spend over 10% of our time on digital media. 8
  9. 9. Digital Commerce channel selection and placementASPIRATION PERSPIRATION TRANSACTION COLLECTION CONSUMPTION A consumer’s shopping journey. Channel omnivore. 9
  10. 10. The digital consumer is an omnichannel consumerNeeta’s interactions to buy a birthday gift for her mom In-store Social Web Omni-channel Phone commerceNewsppr TV Home ASPIRATION PERSPIRATION TRANSACTION COLLECTION CONSUMPTION Are you present and relevant at the touchpoints? Small can look big and big can look small on the internet
  11. 11. More time online = More consumption onlineAverage time spent online per person/-day (Hrs) No. of users transacting online (in million) India In 2010• 376 million online users by 2015• The time spent online will grow by 27% per user - driving advertising and commerce• Number of transacting users to grow from 11 million in 2011 to 38 million in 2015• Digital divide reducing with penetration increasing fast across tier II/III cities and towns This excludes non-internet based digital time Source: “India Goes Digital”, Avendus Research 11
  12. 12. The Digital Consumer – Access and connectivity TodayUnique Internet users in India to reach 376 million by 2015, close to 5 times the current number• 80 million Internet users• 10 million 3G connections within 6 months of launch, almost equal to the base of wireline broadband connections• The 2nd largest user base for Google+ and Orkut in the world• 28% of travel gets booked online; 117 million transactions on IRCTC alone• 47% of the classifieds business is online• 7% of bank users in India access their accounts online• 25% of IT returns were filed online in 2010-11• Close to 50% of music revenues in India comes from mobile downloads Source: “India Goes Digital”, Avendus Research 12
  13. 13. ii. the demanding customer 13
  14. 14. Consumers are more informed, sure and demanding i want • Products: choice, new, international and new categories • Product information, expertise and advice • Personalised Service – during, post purchase • Rewards and recognition • Convenience • The best deal I am what I consume Digital commerce and marketing help serve the demanding customer effectively at scale 14
  15. 15. iii. the aspiring consumer 15
  16. 16. The demand side projection for India’s consumption economy is attractive ... Preparing for a $2.2 TN consumption economy by 2025 17
  17. 17. ... supply issues, namely, channel reach and capacity constraints can spoil the show Modern retail – capacity / Consumption – business economics Categories, Markets challenged Top 3 big box retailers From $850B (FY11) to 20m sq ft, $3.5Bsales, $2200B (FY25) $170 – annual sale/sq ft, low profitability Consumption growth needs alternative market Consumers are more infrastructure Brand, SME Retailer, New connected and Entrepreneur aspirations upgrading Organised + Unorganised Web, TV, Mobile, retail - 5m retailers, 90% < Phone - Social, 500 sq ft, 95% + market News, Business, share, 35m workers Shopping Demand side Supply side 18
  18. 18. Sizing the prize 19
  19. 19. China’s ecommerce experience Secondary source: Taobao 2011 20
  20. 20. China eCommerce - Top Categories Sold Online Secondary source: Taobao 2011 21
  21. 21. Brands with own ecommerce stores on Taobao Mall Source: Taobao 2011 22
  22. 22. US Top 80 e-Commerce retailers –80% are offline retailers and consumer brands Source: Internet Retailer
  23. 23. What’s selling online And top players today 24 Source: Research by in
  24. 24. Indian eCommerce market still under-exploited Share of online travel and e-tailing (%) - India• The industry is largely services driven (87% share) with product sales (e- tailing & home shopping) accounting for the rest of the market• Overall travel market size, in 2010, was $19 billion and retail was $430 billion however the e-tailing market Indian e-tailing market size projections (INR Crore) has lagged online travel so far Source: “India Goes Digital”, Avendus Research Private & Confidential 25
  25. 25. Online retail market today – taking stockShort term: 2011-13 Long term: 2014/15+₊ Customer behavior changing • Established consumer proposition₊ Ecosystem evolving, categories getting beyond wild discounts digistised • Not one winner, but limited large,₊ Bottlenecks easing well-capitalised players – not many₊ Model experimentation from current lot₊ Can be a channel maker • Economics better established- Consumer behaviour more anecdotal • Stronger infrastructure especially payments and able to cover non-- Low entry barriers English India- Poor differentiation- High burn model, high customer acquisition cost- Poor unit economics - no clear path to profitability- Poor customer stickiness 26
  26. 26. Offline brands and retailers who are online Store Name Main Focus Store Name Main FocusAcme Fitness Fitness equipment BigC MobilesArchies Gifts & Accessories Croma Retail ElectronicsBata ShoesCarlton London Crossword Books ShoesCasio India Electronics EDIGIworld ElectronicsDC Books Books Ezone ElectronicsDell Computers & Peripherals Fab India FashionFastrack Fashion Accessories Fablinks Cotton FabricGitanjaliGifts Jewellery & Accessories Futurebazaar GeneralHCL Store Electronics Game4u Games & ConsolesHidesign Leather Accessories Globus FashionMebaz Fashion indiaemporium FashionMitashi Electronics JJ Mehta CamerasMoserbaer Movies Landmark GeneralNeerus Fashion Next ElectronicsPrestige Smart Kitchen Kitchenware Pearson BooksPuma Fashion Sangeetha mobiles Mobiles & AccessoriesReebok FashionSahiba fabrics Shoppers Stop Fashion FashionShopatDisney Baby Products SMC International ElectronicsShubham Jewellery & Accessories Tata McGraw Hills BooksSia ART Jewellery Jewellery & Accessories The Mobile Store MobileStudds Accessories Motorcycle Travel Gear Univercell Mobiles & AccessoriesVillcart Handicrafts & Artwork Vijay Sales ElectronicsVIP Luggage Westside Fashion Source: Research by in 27
  27. 27. Offline vs Online Mere paas 1000 dukaan hai,10000 log hai, 50 million customer hai, brand hai. Tumare pass kya hai? Mere pass Start-Up hai!
  28. 28. Offline vs Online Players – Brands and RetailersOffline Players Online Start-upsStrengths: Strengths:•Brand recognition and trust •No legacy•Customer base and analytics •Flexibility , agility and risk taking•Financial resources and pricing power •Incentivised founders•Physical presence – stores •Venture Capital funding•Product knowledge •Technology / online expertise•Supplier relationships, supply chainWeaknesses: Weakness:•Silos and fragmented online mandate •Zero base – customers, brand awareness•Not a core business, too small, too risky •Limited organisation resources•Run as a department •Supplier relationships•Can’t attract quality talent Mindset: Mindset: •Too small today •Very big tomorrow •Don’t make mistakes •Fail to succeed, trial and error. •Don’t understand technology •Embrace technology, tech company •Customer service department •We are a customer service company 29
  29. 29. Brands and retailers need a unified digital mindset like an online start-up CRM loyalty ecommerce Digital marketing 30
  30. 30. Getting started in ecommerce 31
  31. 31. Conceive/ Plan : Why digital commerce? Be where your Lifecycle mgmt – Increase store traffic customer is preorder, liquidation Stay relevant to Attract new trade Stay connected to consumers partners innovationReach more markets Richer customer Develop new types of in India analytics merchandise Take full assortment Export markets Yourstory… to market 32
  32. 32. Your digital commerce model depends on your goals Commerce Capability Commerce capability components Examples Level1 Get discovered online, Rich product information, store locator, SEO and Furniture and other available and transact online marketing categories not offline represented online well2 Discovery online, + Unit to deal with online/ digital retailers such as -Most apparel and availability online but Flipkart, HS18 electronics brands - HP, transact offline Park Avenue3 Own digital commerce + eCommerce department, commerce platform, Croma, Globus, Vijay department - Online b2c supply chain, payments, customer service, Sales, More, discovery and marketing & promotions, inventory Crossword,, Odyssey, JJ transactions Mehta, Gitanjali4 Pure-play digital Completely independent business with its own Dell, Futurebazaar,, commerce business business model, entrepreneurial/VC funded, Fopping, start-up mindset. Options include standalone full-assortment, marketplace, deals, online brand5 Hybrid commerce Complete consumer-driven seamless integration awaited of store and digital commerce and customer knowledge 33
  33. 33. Design - Execution model options for offline players Start-up / incubator In House Outsource model• Designed, built, run • Outsource online channel • Incubate business(es) with inhouse as a department building, management one or more start-up with select services and operations - share entrepreneurs partners in technology, your brand, customers • Build-operate-transfer content, marketing, and inventory – Full model logistics Outsourcing • Structure business as a• Technology platform: • Outsource technology and start-up owned / SaaS/ package all site management • Eg. Futurebazaar, Walmart• Eg. Chroma, Gitanjali processes (US), • Participate in a fully-, , serviced marketplace • Joint venture model with an established player • Eg. GSI Commerce (eBay),eDigiworld, Next, Being Human (India) 34
  34. 34. Design - Other key considerationseCommerce format Consumer Markets Product Sourcing Warehousing and Fulfilment incl reverse Payments Packaging logisitics eCommerce Tech Customer Service Marketing plan and Platform Model partnersIntegration to parent Other service Other digital channels organisation providers – phone, TV 35
  35. 35. Minimum online selling capability for a brand or retailer• Website• Product content – Good quality, well-structured and latest product information available online• Marketing – Search marketing, publish website in all advertisements• Commerce – Become available for purchase online through arrangements with online retailers including home shopping• Customer service – track and resolve online complaints• Loyalty – have a loyalty program atleast to make your customers addressable, understand behaviour and reduce cost of customer acquisition 36
  36. 36. Chalo Online! Supply or Demand view? Happy Journey! 37
  37. 37. Selling Online:Strategies for OfflineBrands and Retailers Rajiv Prakash May 23, 2012