Online Furniture market is burgeoning given it lends itself very well to e-tailing space. This is a business plan for a furniture company operating in a brick and mortar model but now wants to explore the online space to gain additional sales and improve profitability.

1. tropicfurniture.com
A BUSINESS PLAN
Presented by:
Group - 10

2. AGENDA
Market
Scanning
SWOT Roadmap Strategies Conclusions

3. •Increased internet
penetration1
•Growth in smart phone
usage2
•Growing number of urban
households3
•Willingness to indulge in
home improvements (38%)4
What will drive such growth?
53%27%
20%
Market Share (in %)
Pepperfry
FabFurnish
Urban
Ladder
Furniture Market and Growth Rates
Competition
Indian Furniture
Market = Rs. 1400
billion
Plastic Molded
Furniture=Rs. 240
billion
Online Market = Rs.
750 crore
•Growing @ 12-13 % on
an average
•Expected to be worth
Rs. 150 billion in the
next three years
Supply Chain and Inventory
Management
Demand Forecasting
Consumers still refrain from buying
furniture online as they want to
have a touch and feel factor
Challenges Scope
Profitable category in
eCommerce market
Average ticket size is
larger (margins upto
30-40%)
Leverage the reach
component.

4. AGENDA
Market
Scanning
SWOT Roadmap Strategies Conclusions

5. STRENGTHS
• Brand image and market presence
• Strong distribution and retail network
• Low cost of customer acquisition
• Good quality of employees
WEAKNESSES
• Dipping margins
• Inventory management
OPPORTUNITIES
• Increase presence in tier II and III cities
• Plugged in customers
• Nascent segment
• High growth, lower reach (98% and 2%
respectively)
THREATS
• Intensifying Competition
• Substitute products
• Channel conflicts

6. AGENDA
Market
Scanning
SWOT Roadmap Strategies Conclusions

7. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
General Assumptions:
Discount Rate (WACC) = 12%
Tax Rate = 35%
Customers in Year 0 = 1700
Transactions in Year 1 = 140,000
Average order size = Rs. 20,000 (Urban Ladder
data)
COGS as a % of sale = 70%
Average order size growth rate = 20% (Urban
Ladder data)
Base Case (No web Portal)
Number of transactions annual growth rate = 3%
Average processing cost per order = Rs. 140
….Contd

8. ROADMAP
With the Web Portal
Initial Implementation Cost
 TCO
 Hardware, software
 License Fees
 Hosting Fees
 Project Management Rs. 4,00,00,000
 Maintenance and Marketing
 Ongoing Maintenance
 Advertising
 Sales Team
 After Sales (Call centers, etc) Rs. 1,00,00,000
 Jump in total transactions = 20,000
 Number of transaction growth rate 10%
 Average Processing Cost of a web
Transaction Rs. 150
 Average processing cost per order Rs. 60
 % of total transaction through web
Portal 50%
• Financials
• Technological
• Marketing
• Partner
Relationship
Management

9. ROADMAP
Year 0 Year 1 Year 2 Year 3
Customers 1700 1751 1804 1858
Number of
transactions 1,40,000 144200 148526
Average order size 20,000 24000 28800
Baseline Revenue (in
Rs. Lacs) 28,000.00 34,608.00 42,775.49
COGS 19,600.00 24,225.60 29,942.84
Order Processing Cost 196 201.88 207.9364
Net Income 8,204.00 10,180.52 12,624.71
NI (after tax) 5,332.60 6,617.34 8,206.06
Base Case Scenario (No Web Portal)
• Financials
• Technological
• Marketing
• Partner
Relationship
Management

10. ROADMAP
Year 0 Year 1 Year 2 Year 3
Customers 1700 2081 2289.1 2518.01
Number of transactions 161000 177100 194810
Average order size 20000 24000 28800
Baseline Revenue (in Rs.
Lacs) 32200 42504 56105.28
COGS (70%) 22540 29752.8 39273.696
Order Processing Cost 60.375 66.4125 73.05375
Gross Profit 9599.625 12684.788 16758.53025
Costs of Web Portal
Initiative
Upfront Cost 400
Ongoing Maintenance &
Marketing 100 100 100
Net Income -400 9499.625 12584.788 16658.53025
NI (after tax) 6174.75625 8180.1119 10828.04466
Incremental Cash
Flows
Year 0 Year 1 Year 2 Year 3
Net Incremental
Cash Flows -500 842.16 1,562.772,621.98
NPV 3,364.03
With Web Portal
• Financials
• Technological
• Marketing
• Partner
Relationship
Management

11. ROADMAP
Payback Period
Calculation
Year 0 Year 1 Year 2 Year 3
Net Incremental
Cash Flows -500.00 818.61 1536.873 2593.4922
Cumulative Cash
Flows 318.61 2355.483 3892.356
Payback Period
2 years 1.21
months
ANALYSIS :
• Positive NPV
• Payback period = 2 years 1.21
months (25 months)
• Financials
• Technological
• Marketing
• Partner
Relationship
Management

12. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
• Introduction of integrated
Inventory management
systems.(Salesforce.com)
• Including every partner in to the
system from suppliers to retailers .
• Providing them with applications
which support most platforms.
• Synchronization of GIS with
inventory and order processing
systems for faster processing

13. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
• Hire Amazon Web Services for
server hosting
• Google inc. for back up on
cloud, in addition to cloud space
provided by Salesforce.com
• Zepo.com can be hire for
hosting website payment
terminal.

14. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
While marketing our products online,
we would like to address a few
issues, the Marketing Objectives:
1. Trust and Safety
2. Demystifying Products
3. Value Proposition
4. Added Convenience

15. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
• Introduce Design Your Own Design (DYOD)
DYOD benefits:
1. Increases number of conversions
2. Engage with more number of people
3. Compliment our offline channel
4. It creates a buzz around the brand which is
required to make people familiar
to our online channel
5. Leverage Market intelligence

16. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
• Engage with customers through social
media
• Locate the nearest store online to
compensate
for the “Touch ‘n Feel” aspect
• Provide coupons and gift vouchers for
online
channel against offline sales.
• Plan to go mobile to tap m-commerce
market

17. ROADMAP
• Financials
• Technological
• Marketing
• Partner
Relationship
Management
To do away with Channel Conflict
• Increase Margin of our offline
retailers
• Keep a minimum level of margin
beyond which we would refrain
from providing discounts on our
online channel

18. AGENDA
Market
Scanning
SWOT Roadmap Strategies Conclusions

19. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain Strategy
• Payment Strategy
• Social Media Strategy
•Gamization is one of the “must do”
trends in internet & apps market – add a
“social gaming UI” to entice users to use
your app, entertain them as you address
them.
•This would help us to get data about the
people who could be our new customers.
From this data we could give send
personalized mails to people who have
never bought anything from our website
offering them discount coupons.

20. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain Strategy
• Payment Strategy
• Social Media Strategy
• Discount coupons offered would
be on the product which that
customer might have searched
on our website but didn’t make a
purchase so that our discount
coupons are relevant to that
customer.
• We would try and keep few
exclusive products which are not
available on any of our other
competitor .This would help to
attract new customers.

21. STRATEGIES
• New Customer
Acquisition Strategy
• Customer
Retention Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
• We will be using a Sales Force Automation(SFA)
CRM so as to move closer to our customers. This
CRM would help us to analyze the buying
behavior of our customer and based on which
we could formulate strategies to build even a
stronger bond with our customers.
• Based on the products bought recently by our
customers we would be sending them mail and
offering complimentary products
• Besides this we can have a loyalty system
where a customer gets a point based on the
purchase he made and the customer can
redeem those points and discount on his next
purchase.

22. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
• We will use a Mobile CRM as it is an
integral part of a well-thought out
ecommerce customer relationship
management system.
• For android and other operating
system we would develop an
application which would be same as
our website .Many companies
create their application which are
somewhat different in user
interface and thus confuses the
customers

23. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
• Maximum Security to be deployed in the
first and second year.
• Secure form of http i.e. https used for
the website.
• Firewalls and anti-virus to be installed.
• The mobile app to be developed for
different platforms and payment gateway
for direct purchases.
• Different levels of data view for different
levels of employee.
• 128 bits of encryption for payment
gateway.
• An SMS sent to the registered mobile
number whenever a login is made at the
client side.

24. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
• Build-to-Stock (Push) and
Build-to-Order (Pull).
• Just in Time to maintain
minimum inventory.
• Demand Forecasting .
• Package tracking for
regular update on the
location of the item.
• Use of 3PL for downstream
supply chain.

25. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
Supplier
Supplier
Supplier
Our Comapny
Customer

26. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
• Flexibility of payment:
 Cash on Delivery
 Net banking
 Credit Card
• Creation of a free business Paypal account
for payments as it ensures security against
fraud.
• An optional minimum payment of 10%
through online coins to ensure long term
association. Special discounts on the same.

27. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
Association with e-
newspapers
Pay-per-click
(PPC)
Banners on
related
ecommerce
websites and
blogs
Social networking
websites like
Facebook, twitter
etc.
Almost 90% of our sales
come through Facebook:
Urban Ladder’s COO
Rajiv Srivatsa

28. STRATEGIES
• New Customer
Acquisition Strategy
• Customer Retention
Strategy
• Mobile Strategy
• Security Strategy
• Supply Chain
Strategy
• Payment Strategy
• Social Media
Strategy
Facebook business
page to accept
orders.
URLs on existing
business cards and
pamphlets.
Information to
existing customers
through emails,
messages etc.
Addition of website
to Google places
and other online
directories.
Availability through
search engine
optimization

29. AGENDA
Market
Scanning
SWOT Roadmap Strategies Conclusions

30. CONCLUSIONS
• Online furniture is a niche segment characterized
by high growth.
– Profitable to enter the market and get additional
sales.
• Channel conflicts to be handled by maintaining
the discounts offered to offline and online
partners and cross channel collaboration.
• High reliance on social media to tap the full
potential of the market.

31. THANK YOU