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Making e-commerce asustainable business    proposition
The Opportunity…    Internet Users in India (Million)                                           Ecommerce TV ($ Billion)1 ...
The problem…
The Real Problem……Unit Economics Average Order Value   : INR 1000 Gross Margin (20%)    :     200 Coupons (10%)        ...
……there’s more Marketing                         INR 500-700 (Customer Acquisition Costs)(Don’t forget reverse logistics, ...
So what does this mean?       Ecommerce is easy to get in to, but difficult to scale
Levers to building a sustainable business  Increase customer lifetime value (LTV)     Average Order Value     Contribut...
Key Ingredients for Sustainability  A product that customers LOVE  Unit / customer economics that work Ability to execu...
SCALE SOMETHING THAT IS  WORKING, NOT BROKEN
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Making e-commerce a sustainable business proposition in India

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This presentation on e-commerce in India proposes a greater focus on lifetime value and customer acquisition costs to drive sustainable growth. The author is Lightspeed India's MD Bejul Somaia (http://www.twitter.com/bsomaia). This presentation was given on April 25, 2012 at IAMAI's Digital Commerce event.

Publié dans : Business, Technologie
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Making e-commerce a sustainable business proposition in India

  1. 1. Making e-commerce asustainable business proposition
  2. 2. The Opportunity… Internet Users in India (Million) Ecommerce TV ($ Billion)1 CAGR: 41% 32% CAGR: 26% 83% ~300 6.7 100 0.6 70 50 0.4 36 0.3 0.3Note: (1) Non-travel ecommerceSource: Indian Internet & Mobile Association, Edelweiss India Internet Report
  3. 3. The problem…
  4. 4. The Real Problem……Unit Economics Average Order Value : INR 1000 Gross Margin (20%) : 200 Coupons (10%) : (100) Shipping/packing : (100) COD/Payment Gateway : (30) Contribution Margin (30)
  5. 5. ……there’s more Marketing INR 500-700 (Customer Acquisition Costs)(Don’t forget reverse logistics, inventory write-downs, customerservice, content cost etc.) Volume does NOT fix the problem !
  6. 6. So what does this mean? Ecommerce is easy to get in to, but difficult to scale
  7. 7. Levers to building a sustainable business  Increase customer lifetime value (LTV)  Average Order Value  Contribution Margin  Retention /Repeat  Reduce customer acquisition costs (CAC)  Build a great product => virality  Think ‘social’  Scrappy online marketing => free traffic  Rule of Thumb : LTV > 3* CAC
  8. 8. Key Ingredients for Sustainability  A product that customers LOVE  Unit / customer economics that work Ability to execute  $$$$$  Passion and perseverence
  9. 9. SCALE SOMETHING THAT IS WORKING, NOT BROKEN

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