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.
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. Introduction –
Rajiv Prakash
Rajiv is the founder of Next In Advisory Partners, a boutique consultancy that
helps retailers and brands design and execute successful digital commerce
strategies. Next In also actively mentors select start-ups on growth-related
matters.
Rajiv was earlier the CEO at Future Ecommerce where he led Future Group’s
ecommerce business portfolio comprising futurebazaar.com and the online
channels for Big Bazaar, Ezone and Pantaloons. During his tenure, he turned
around futurebazaar.com and grew its sales by 9x. Prior to this, he
established Cisco’s strategy consulting unit, Internet Business Solutions group
for enterprise markets in India and helped several of India’s top 100 firms
discover online opportunities. He has over 12 years of business consulting
experience at Andersen, Cisco and KPMG in India and APAC. He is also a
venture partner to a portfolio of online and consumer ventures. Rajiv is a
post-graduate from the Indian Institute of Management, Ahmedabad.
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4. Discussion areas
1. 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. Baselining key terms
Digital Commerce:
• Commerce through any digital medium including human-assisted digital interactions.
eCommerce
• Commerce initiated by the consumer accessing a website on any digital device
Offline players
• Brands ie consumer goods companies and Retailers
Online players
• Pureplay online retailers and brands including home-shopping and phone based
commerce players
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1-800-
8. Indian consumers increasingly live digitally mediated lives
Banking
Investing
Movie tickets
Bill
payment
Rail , air
tickets Matrimonial
Hotels 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. Digital Commerce channel selection and placement
ASPIRATION PERSPIRATION TRANSACTION COLLECTION CONSUMPTION
A consumer’s shopping journey.
Channel omnivore.
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10. The digital consumer is an omnichannel consumer
Neeta’s interactions to buy a birthday gift for her mom
In-store
Social
Web
Omni-channel
Phone commerce
Newsppr
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. More time online = More consumption online
Average 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. The Digital Consumer – Access and connectivity Today
Unique 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
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
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20. China eCommerce - Top Categories Sold Online
Secondary source: Taobao 2011 21
21. Brands with own ecommerce stores on Taobao Mall
Source: Taobao 2011 22
22. US Top 80 e-Commerce retailers –
80% are offline retailers and consumer brands
Source: Internet Retailer
23. What’s selling online
And top players today
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Source: Research by mysmartprice.com in Pluggd.in
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. Online retail market today –
taking stock
Short 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
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26. Offline brands and retailers who are online
Store Name Main Focus Store Name Main Focus
Acme Fitness Fitness equipment BigC Mobiles
Archies Gifts & Accessories
Croma Retail Electronics
Bata Shoes
Carlton London Crossword Books
Shoes
Casio India Electronics EDIGIworld Electronics
DC Books Books Ezone Electronics
Dell Computers & Peripherals Fab India Fashion
Fastrack Fashion Accessories Fablinks Cotton Fabric
GitanjaliGifts Jewellery & Accessories Futurebazaar General
HCL Store Electronics Game4u Games & Consoles
Hidesign Leather Accessories Globus Fashion
Mebaz Fashion indiaemporium Fashion
Mitashi Electronics JJ Mehta Cameras
Moserbaer Movies Landmark General
Neerus Fashion Next Electronics
Prestige Smart Kitchen Kitchenware Pearson Books
Puma Fashion
Sangeetha mobiles Mobiles & Accessories
Reebok Fashion
Sahiba fabrics Shoppers Stop Fashion
Fashion
ShopatDisney Baby Products SMC International Electronics
Shubham Jewellery & Accessories Tata McGraw Hills Books
Sia ART Jewellery Jewellery & Accessories The Mobile Store Mobile
Studds Accessories Motorcycle Travel Gear Univercell Mobiles & Accessories
Villcart Handicrafts & Artwork Vijay Sales Electronics
VIP Luggage Westside Fashion
Source: Research by mysmartprice.com in Pluggd.in 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. Offline vs Online Players – Brands and Retailers
Offline Players Online Start-ups
Strengths: 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 chain
Weaknesses: 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
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29. Brands and retailers need a unified digital mindset like
an online start-up
CRM loyalty ecommerce Digital
marketing
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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 innovation
Reach more markets Richer customer Develop new types of
in India analytics merchandise
Take full assortment
Export markets Yourstory…
to market
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32. Your digital commerce model depends on your goals
Commerce Capability Commerce capability components Examples
Level
1 Get discovered online, Rich product information, store locator, SEO and Furniture and other
available and transact online marketing categories not
offline represented online
well
2 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 Avenue
3 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, Gitanjali
4 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 brand
5 Hybrid commerce Complete consumer-driven seamless integration awaited
of store and digital commerce and customer
knowledge
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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- fopping.com/Brandooz, ,
serviced marketplace
• Joint venture model with
an established player
• Eg. GSI Commerce
(eBay),eDigiworld, Next,
Being Human (India)
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34. Design - Other key considerations
eCommerce format Consumer Markets Product Sourcing
Warehousing and Fulfilment incl reverse
Payments
Packaging logisitics
eCommerce Tech Customer Service Marketing plan and
Platform Model partners
Integration to parent Other service Other digital channels
organisation providers – phone, TV
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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
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For offline brands, the minimum is to get online marketing and branding right. Online commerce can be achieved through pure-plays.For offline retailers, hygiene is to get online commerce and marketing right. No choice but to aim for highest capability levels especially in vulnerable categories