Future prospect of Etailing in india. Valuation of zovi.com

2. Market Analysis
15.5 23.72
38.42
64.54
100.04
160.56
FY -09 FY -10 FY -11 FY -12 FY -13 FY -14
E-Tailing (INR b)
Books, 5.0% Jewellery,
3.8%
Cameras,
13.2%
Home
furnishing,
3.5%
Apparels,
21.6%
Consumer
Durable,
8.1%
Mobile
Phone, 18.1%
Laptop/Table
ts, 25.6%
Others, 1.1%
E-tailing Market Segmentation
FY-14
• Online shopping of physical goods alone in India is estimated to reach
USD4b in 2014, and multiply by over 11x to USD45b by 2020 – that is CAGR
of 50%.
• Indian Retail is ~USD600b, of which only 0.3% was online sales in 2013. Even
as a % of Organized Retail, online sales are <4%.
• Market has been accumulated by 3-4 horizontal multi-category players
like Flipkart, Amazon India, Snapdeal. Still there is enough room for niche
players
• The wave of online shopping will also drive other industries like logistics,
warehousing, coupons and payment gateways. Among other winners, we
see following players with strong edge – Snapdeal.com, Jabong.com,
Mydala.com, Zovi.com
• Market place model strategy emerge as winner in the horizontal multi
category.
13
260
295
INDIA US CHINA
E-commerce
market competition
(USD b)
Travel,
73.0%
E-Tailing,
13.5%
Financial
Services,
5.6%
Classified,
5.1%
Others,
2.8%
1
Segmentation of E-
Commerce market in India
as on 2014
Source: IAMAISource: Industry Sources Source: IAMAI

3. Future Growth Prospects
Drivers of Growth:
• Increase in the number of internet users (5m being added every
month to the base of 213m in 2013),
• Increase in the proportion of online shoppers within those users,
• Growth in the per-shopper transaction value, and
• Continued flow of capital by willing investors, arming firms with
ammunition to woo consumers online.
• Chasing Sales exclusivity in selected brands i.e. Flipkart-Xiaomi
• Offline retailing: Indian prices but European costs, significant barriers
in establish the physical shop
38 59.6 92
246
99
130
165
154
JUN '12 JUN '13 JUN '14 JUN '16 (EST)
Internet Users In India
(million)
Rural Urban
Source: Accel Estimates
13
20
26
40
0
5
10
15
20
25
30
35
40
45
JUN '12 JUN '13 JUN '14 JUN '16 (EST)
Number of online Indian
shoppers (million)
Source: Industry Estimates
278 559
1032
2811
JUN '12 JUN '13 JUN '14 JUN '16 (EST)
Fashion Category GMV
(USD million)
Source: Industry Estimates
Aggressive investment spree, as war for share gain heats
up:
• Deep discounts for customers and big incentives for
merchants who sell on their marketplace are driving
investments for all the online biggies.
• Other than these, spends are directed at:
[1] capacity enhancement by building warehouses,
[2] hiring in large numbers,
[3] strategic acquisitions, and
[4] exclusive tie-ups with select brands.

4. Risk Analysis
Constant Funding:
• E-Commerce Business is not just about creating a website.
• It is a business model which needs heavy funding on a regular
basis to just survive
• Logistics , fulfilment centres, technology, marketing etc will need
heavy commitment from investment perspective
• War for talented employees
Limited brand recognition:
• Very little brand recognition, barring select leading names, this
implies heavy cost of customer acquisition.
-24%
-13%
-8%
BOOKS MOBILES APPAREL
Gross Margin due to aggressive
pricing
Source: News Article and Sequoia Capital
All About Share Gains:
• Competitive intensity is running high in the Indian e-commerce
industry. In their quest to gain market share, all the big players
are investing aggressively.
• Flipkart’s acquisition of Myntra and Zovi’s acquisition of Inkfruit
are just two examples of recent acquisitions in the industry.
• Also, most of the amount of money raised by Flipkart, lately
Snapdeal, and that committed by Amazon is yet to be invested,
indicating that we may not be anywhere near the end of round-
the-clock discount seasons at online stores.
Too much money too early:
• This is going to make investors go after metrics that will not be
profitable in the long run.
High Returns rate:
• Return goods cycle back into inventory after weeks, and carry a high
cost of re-stocking and re-listing, and sometimes have to be written off
Porter’s five forces
model:
• Competitive
forces : “Red
Ocean” at large
• Profitability is few
years away
Government Policy:
• 100% FDI not yet
allowed in multi
brand retail

5. Competitor Analysis
Companies/Para
meters Logo
Business
Segment Business Model Investors
Series of
Funding Funding Till Yet ($ mn) Alexa Rank USP
Fashionara.co
m
High End,
Multiband
Inventory &
delivery
Helion Venture Partners
and Lightspeed Venture
Partners
A,B 15 371
• Online Video
Previews
• Look Book
Mechanism
FashionAndYo
u.com
High End,
Multiband
Inventory &
delivery
Sequoia Capital, Norwest
Venture Partners, Nokia
Growth Partners and Intel
Capital
A,B,C,
D
105 251
• Delivery to
10000 pin
codes
• Leading Flash
Sale
Company
LimeRoad.co
m
Affordable
Retailer
Market Place
Model
Sequoia Capital, Norwest
Venture Partners, Nokia
Growth Partners and Intel
Capital
A,B,C 50 456
• User
Generated
Content
• Unique
Vendor List
Zovi.com
Affordable
Retailer,
Private
Lable
Manufacture
, Inventory &
delivery
SAIF Partners and Tiger
Global
A,B 25 201
• Home based
Designer
Team
• Presence in
global
Market
• Lucrative
Private Label
business
increase the
margin
Alexa Rank: Website Rank In India

6. Competitor Analysis
Factors/Company
Name
Fashionara.co
m
FashionAndYou.c
om
LimeRoad.co
m
Zovi.co
m
Cost Of Acquiring
Customer
1 2 3 4
Conversion Rate 2 1 3 4
Shopping Cart
Abandonment
3 3 1 4
Average Order Value 1 2 4 3
Churn 1 2 4 3
Cost Per Impression 1 3 2 4
Cost Per Click 3 1 4 2
Cost Per Acquisition 2 1 3 4
Revenue Per Click 1 4 2 3
Cost Of Sales 4 1 3 2
Customer Lifetime Value 1 2 4 3
Total Score 20 22 33 36
Ecommerce Metrics: Google Trends:
• Based on 11 Ecommerce Metrics for the best companies ,
Zovi.com got score highest followed by the LimeRoad.com.
• Other two companies Fashionara.com and
FashionAndYou.com are lagging far behind on this metrics
• Google trends shows that Zovi.com is the highest searched
name on google compared with other three companies,
which is very important sign for ecommerce company.
• There is Close competition between LimeRoad.com and
FashionAndYou.com
Source: GoogleTrends.com

7. Competitor Analysis (Contd…)
Companies/Social Media Score Strength Sentiment Passion Reach
Fashionara.com 1% 08:00 47% 7%
FashionAndYou.com 0 28:00 60% 6%
LimeRoad.com 0% 14:00 66% 6%
Zovi.com 1% 18:00 67% 6%
Social Media Score:
Source: Socialsource.com
where,
• Strength: Brand discussed among social media
• Sentiment: Ratio of positive mentions to negative
mentions
• Passion: Individual talking about brand repeatedly
• Reach: Unique user referencing your brand
• Based on Social Media Score, we can infer that
Zovi.com has take lead on all 4 parameters.
• Zovi.com is followed by LImeRoad.com,
FashionAndYou.com and Fashionara.com
Logistics & Warehousing:
• For every INR100 spent on e-commerce, it is estimated
that ~INR35 is spent on supporting services like
Warehousing & Logistics
• Fashionara.com uses third party logistics and they have
25000-sft central warehousing facility in Bangalore
• FashionAndYou.com uses third party logistic as well as
they have their own logistic system in place
• FashionAndYou.com are able to deliver to the 10,000
pin codes
• LimeRoad.com has unique market place model with
third party logistics to cover last mile delivery
• Zovi.com has own logistics in 10 cities and in rest of the
part they use third party logistics.
2.1
5.5
1.3
7.8
Registered User Base (million)
Source: Newspapers

8. Valuation Of the Zovi.com
Year Funding ($)
Historical Exchange
Rate Funding (INR) Assumptuion
Enterprise Value Approx.
(INR)
2012 100,00,000 1 $= 60 INR 60,00,00,000
20% for global average
Ecommerce series B funding 300,00,00,000
Year
Average order
Ticket Size
Average transactions
on a day
Gross Merchandise
value/Month Gross Merchandise value/Year
INR INR INR
2012 900 1400 3,78,00,000 45,36,00,000
Gross Merchandise Value(GMV) /Year Enterprise Value Approx. Valuation in Multiple of GMV
INR INR
45,36,00,000 300,00,00,000 6.61X
Valuation as on 2012:
Source: Last Funding by Tiger Global and SAIF Partners in 2012
Last Funding in 2012:

9. Valuation Of the Zovi.com Contd…
Assumptions:
• Gross Merchandise Value
(GMV) in e-commerce means
total sales value of the
merchandise sold through the
marketplace in a period.
• Most e-commerce companies
refrain from sharing their
revenues, owing to which the
GMV run rate is often used to
gauge their financial health.
• Revenues are a small
proportion of GMV.
• In India Ecommerce
companies are experiencing
hyper growth.
• That’s why we had assume
enterprise value as 6.61x GMV
multiple
• In the world, Enterprise value as
2-3x of GMV Multiple
Year
Average order Ticket
Size
Average transactions on a
day
Gross Merchandise
value/Month
INR INR
2015 1200 1700
6,12,00,000
Gross Merchandise value/Year
Valuation in Multiple of
GMV
Enterprise Value
Approx.
INR
(Average of
Ecommerce
companies in India) INR
73,44,00,000
6.61X
485,43,84,000 *
Valuation as on 2015:
* Valuation before further funding

10. Conclusion
• Among 4 options we are recommending to choose Zovi.com, LimeRoad.com,
FashionAndYou.com and Fashionara.com in this order for investment purpose.
• We had given more consideration based on business model which one is operating in
Niche market and whose business model is not easy to replicate, in the presence of big
ecommerce giants of India i.e. Flipkart, Amazon India and Snapdeal
• Next E-Tailing fashion business will see growth through M-Commerce and Zovi.com is
well positioned with android, windows and IOS App, which is clearly lagging factor for
other three players
• By considering hyper growth of ecommerce sector in India we had taken GMV multiple
of 6.61x to find enterprise value.
• We had valued Zovi.com as INR 485 crore.