Online Retail: Comparison of 3 Major Players

Presentation Template

Introduction History and background Classification of Ecommerce Ecommerce Strategy Market Business Model Competition Advantages and Limitations Applications Security Legal and Ethical implications Future Roadmap

Introduction

Barter System was known as the first form of retail As the time passed currency was exchanged with goods and services The Indian retail industry is the fifth largest industry in the world With growing market demand, the industry is expected to grow @25-30% annually Retail has mainly two forms: organized and unorganized Reason for the success of global retail format
Better Consumer Demand Better Consumer Confidence Computer Operated Depots Better Logistical System

Types of retail sectors

Unorganized retailing Kirana Stores Weekly markets Organized retailing

Departmental stores Factory outlets Supermarkets Wholesalers market Franchisee showroom

Global Retailing Facts

Worlds largest private industry Above US $ 8 trillion sales worldwide annually Accounts for almost 10% of GDP in most countries Major employer in most economies 16% in US 15% in Brazil 12% in Poland 7% in China Generates competition which results in reduction of prices product and service innovation enhanced customer experience Major driver for real estate and urban development

E-commerce Statistics in India 2012

In 2011 E-Retailing industry was Rs 3600 crore . The number of transaction presently in India is 10 million, which is expected to increase by 38 million by 2015. Currently the Estimated number of internet user in India is 376 million by 2015.

In 2011 Ecommerce Ventures Raised Around -1622.6 crore of private Retailer giant Macys and some other began shipping to India. In 2012 Amazon entered into India with Junglee.com. In 2011 growth in online sale of Tesco recorded was 15.2% . Retail in India is tiny in comparison to $550 billion market which is unorganized. No. of employee in FLIPKART is 3500, this number is 800 in snapdeal.com

Share of E-commerce industry wise

Travel- 51% E-Retailing-40% Clothiers-09%

Amazon
Vision: To be earths most customer centric company; to build a place where people can come to find and discover anything they might want to buy online. Objective: Not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range. Core Value Proposition: Price Convenience Selection Strategy: Get Big Fast by investing aggressively in new product categories and new businesses, by spending money on brand awareness and getting new customers.

Timeline
1994 1995

Amazon.com established by Bezos Amazon sells first book IPO announced Amazon granted 1-click patent making the transactions user friendly Dot-com crisis (fired workers and reported huge loss)

1997
1999 2000

Became successful in partnership and cross selling in very high way that they start running other retailers web-sites 2003
2007

Kindle was introduced which became an instant success

Business Model- 6Cs

Content
Amazon.com is one of the best content friendly websites on the web Regular updates Relevant matter only

Community
Amazon Communities have evolved just as the business has, Amazon offers several thousand communities Ownership & Blogging Co-creation & Recognition

Customization
One-Click they have developed specialized approaches that enables them to make a more personalized approach CRM Personalistion

Convenience
Offer their customers almost every product at their fingertips and also the payment options are making the entire process hassle free Easy navigation Variety Speed & Delivery

Choice
Customers are offered a huge assortment of goods and in order to make the decision making process easier they offer reviews and product trials

Cost Reduction
Amazon offers the best daily deals and offer the products at the cheapest rate possible

Revenue Model and Streams

Investment: Amazon invests heavily on key partners in order to reduce costs Amazon Web Services: Cloud program for online storage Amazon Prime: Memberships for discounts and trials Amazon Publishing: On demand publishing Subscribe & Save: Subscriptions for discounts on daily deals Amazon Basics: Product development (CDs, Cables, Software)

CPM, CPC, Sponsorship, Affiliate program, transaction fee revenue

Email marketing

Indian Online Retail Competitive Space

Online User Growth

Flipkart leads the way among the online retailers in India with 7.4 million unique visitors a month, growing at 431% annually.

Online Reach
Amazon and Flipkart are the most visited sites accounting 15.4% and 11.5% of visitors respectively.

Average Transaction Size

Flipkart leads with average transaction size of $35 followed by Myntra at $24 and Yebhi at $27

Competition on Social Media

Xylys: Most Favorable Attribute
1% Price 32% Design Quality Brand 39% 7% Other 21%

The number of fans that a brand has can give an idea of how popular it is Flipkart is leading the field with the most fans but Junglee stands out has having nearly as many fans as Myntra despite being only 1/10th the age.

Junglees growth has been quite stellar in comparison to the other brands who all registered mid-low single digit growth rates. Its not like Junglees growth has been sporadic either, it has been consistent week by week since it launched.

Is Amazon Junglee enough for India?

Junglee is not selling anything in the real sense. Its just a price comparison and an advertisement site. As of now, its free to list products on junglee.com.
Amazon is seriously hoping that it is enticing enough that people visiting the website would actually buy products from the listed retailers. Amazon believes these retailers would be so dependent on the clicks and sales that junglee.com provides them that they would be willing to pay for this service.

Though Amazon has listed a number of different vendors, the big ones, like Flipkart and Infibeam are missing.
Flipkart understands the Indian market better than Amazon and thus it enjoys the confidence of the consumers. Flipkarts impeccable delivery system, along with the option of cash-on-delivery has led to large Flipkart loyalists. With buying of Letsbuy.com, Flipkart shows it is serious about the competition and is aware of the repercussions of a company like Amazon entering the India

Limitations for Indian Online Retail

Logistics Cash on Delivery

While major multi-nationals like DHL and Fed-Ex COD system creates a delay in payment. Courier operate in India, goods are normally shipped companies generally hold the money for two through smaller and much cheaper third party weeks, which means that the e-commerce company carriers. has to restock inventory before the cash from its last sale has arrived. For orders sourced outside the major cities, individual couriers often have to be hired to make COD is also expensive, some couriers charging last mile deliveries from drop-off points by bicycle. upwards of 3 percent for the service. The difficulties and unreliability of the carriers has forced some of the largest and best funded players, like Flipkart, to develop their own logistics arms to deliver their packages. The biggest problem is higher return rate of up to ten percent. These goods cycle back into inventory after weeks and carry a high cost of restocking and re-listing

The Future Roadmap Online Retail

Mergers & Acquisitions
Flipkart buying out Letsbuy; Myntra acquiring Exclusively.in & its private label business Sher Singh and Snapdeal acquiring a relatively smaller outfit called eSportsBuy

A common factor in all these deals was either the target firms had run out of money or had not been able to raise the next round of funding

Mergers happen because the category is taking time to scale up, thus forcing the companies to merge

Flipkart-Myntra (Common investors: Accel Partners & Tiger Global)

Snapdeal-Yebhi (Common investor: Nexus Venture Partners)

Merger also makes sense when the category in itself is great but the market leader has created a huge gap for the newer player to bridge

Myntra-Zansaar (Common investors: Accel Partners and Tiger Global)

Another reason is the drought of bigger cheques in e-commerce and lack of funds

Beginning of

Myntra was established by Mukesh Bansal, Ashutosh Lawania and Vineet Saxena in February 2007. Myntras headquarter is in Bangalore, with regional offices in New Delhi, Mumbai and Chennai. It began its operations in the B2B (business to business) segment with the personalization of gifts, which included : T-shirts, mugs and caps

In 2010, the company shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its catalogue to fashion and lifestyle products.
Myntra.com is ranked among the top 10 e-commerce companies in India . In the last 3 years, Myntra has become the most popular destination for personalized products in the country.

Industry/Service

Myntra.com is into the e-commerce (online shopping) business. It is an online retailer of fashion and lifestyle products in India. Products :From 2007 to December 2010, Myntra.com was in the business of online demand personalization. The products ranged from
T-shirts, mugs, greeting cards, calendars,

key chains, diaries, coasters and many such products with photographs.

Myntra pioneered the personalization of sports jerseys and offered sports jerseys of several cricket and football teams such as Team India, IPL & FIFA . These jerseys could be personalized with a name and number of the customers choice.

PRODUCTS

Myntra has tied up with top fashion and lifestyle brands in India, such as Nike, Reebok, Puma, Adidas, Asics, Lee, Lotto, Decathlon, FIFA, John Miller, Indigo Nation etc. To offer a wide range of current season merchandise from these brands. Myntra currently offers products from more than 200 Indian and international brands. These include shoes for running, tennis, football, basketball and fitness, along with casual footwear from world-renowned industry leaders like There are also casual and dressy footwear for women from Catwalk, Carlton London and Red Tape to name a few.

Capabilities

Order Processing and Delivery:

Myntra attempts to order and ship every order within 7 days. It offers free shipping* within India on all products. It can ship internationally to all major countries.

Technological:
Myntra maintains its website which provides the only means by which a customer can make a purchase.

To maintain, upgrade and improve the website and the user experience, Myntra employees many computer science engineers and experienced professionals.

Marketing

Myntra has successfully used social networking websites Facebook and Twitter to expand its customer base. Myntra positions itself as a fashionable new age brand. It launches major marketing campaigns every year. In February 2012, Myntra rolled out an OOH (out of home) campaign across 2 cities to build brand awareness and promote online shopping. Myntra has used mostly viral marketing and internet for its popularity coupled with occasional discounts and referral discounts.

Revenue Model

Myntra.com is an aggregator of many brands. Its business model is based on procuring current season merchandise from various brands and making them available on the portal at the same time as in respective retail brand outlets. All these products are offered to customers on MRP. It is a Business to Customer (B to C) revenue model.

Order cycle

Competitive Advantage

Competitive advantage in any e-commerce business can be due to a cost leadership or product differentiation or both. In the case of Myntra the competitive advantage is mostly due to cost leadership In special cases it also enjoys competitive advantage due to product differentiation. In case of IPL t- shirts the buyer can get his/her name imprinted on it. Also Myntras business model up till 2009 was of customized t-shirts and mugs etc which allowed it to have product differentiation.

Worlds largest retailer of home furnishing products

Vision
to create a better everyday life for the many people

Business Idea
offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them

Product Range
Wide in Function Wide in Style Coordination between function and style

Low Prices
Cornerstone of business idea Efficient units make low prices possible Lower prices ensure affordability

History

Founded in 1943 in Sweden by Ingvar Kamprad Initially into the sales of pens, wallets, watches etc. Furniture was introduced in 1948 First store was opened in 1958 First IKEA restaurant opened in 1960 Spread across Europe in 1970s Entered US in 1985, China in 1998 Online shopping started in 2000 Currently has presence in 44 countries with 1,39,000 employees Next country on the cards is India

E commerce Model
Customer selects product from a wide range of offerings Views the shopping cart Provides billing and shipping information

Invoice sent to the nearest store

Receipt is generated

Makes the payment

Product shipped to the billing address

E Commerce Strategy
IKEA catalogue and availability indicator 2.9 mn website visits everyday IKEA in UK 1.1 bn website viewers in 2012 Online offering and doorstep delivery in Experiment for aggressive ecommerce 10 out of 40 countries operations All markets to be covered by 2022 Added 1500 more products for customers Encryption of card numbers, address to buy online and other information using SSL Sales grew by more technology than 25%

E Commerce Strategy

Challenges
High logistics cost Linking E commerce to store distribution Cultural concern, shopping experience, maze-like floor, restaurant, childrens playroom Difficult to replicate online Impulse purchases take a hit Traditional view, controlled by the founder Ingvar Kamprad

Future of E-Commerce
Mobiles and Smartphones
Shoppers will start to visit ecommerce websites via their mobiles and purchase, check for promotion offers, read product descriptions and reviews etc.

Try on Software
Will be available to users accessing from their laptops/ PCs They could see how the dress would look on them

Shopping goes Social

With the integration of social media and ecommerce websites, soon it shall be possible for customers to share their choices with their friends, ask for their opinion and feedback etc.

Future of E-Commerce
Analytics will be the defining driver on ECommerce in Retail
Will affect position of items on website, focused on targeting and driving sales

Brick-and-Mortar stores and ecommerce can work together

Cross channels will be developed to link online and offline shopping experience

New era of personalized Customer Relationship Management (CRM)

Endless information regarding customers shopping aids in providing support and targeted sales

Future of E-Commerce
61% want online stores to track their purchases for customization 80% respondents in developing countries state Internet as preferred way of shopping Shoppers appreciate the simplicity, easy access, search-ability and personalization

Thus, the future of E-Commerce gets a

http://www.payelp.com/work/future-of-retail/

Source: Research Report by Column Five Media