Babybabu.com

Ajit Agarwal 4B, Atul Saxena 15B

September , 2014

e-Commerce Business Plan on Online Baby Shop

Prepared by: EPGDIB (2013-15) Batch, Section B, Group -3

2

Agenda

Agenda 1: Our Purpose

Agenda 2: Consumers’ plight

Agenda 3: Our Position

Agenda 4 : Products

Agenda 5 : Product Spend per Customer

Agenda 6 : Baby Care Market

Agenda 7 : Why Now

Agenda 8 : Babybabu’s Market Size

Agenda 9 : Customer Acquisition Model

Agenda 10 : Our Competition

Agenda 11: Operation Overview

Agenda 12 : Financial Projections

Agenda 13 : Various Appendices

April 19, 2023

Our Purpose

Babybabu’s purpose is to make premium-brand baby gear

and toys accessible to consumers seeking high quality

3April 19, 2023

Consumers’ Plight

4April 19, 2023

• Unavailability of premium foreign-brand baby gear and

toys in India

o Parents have to request visiting friends and family members

• Quality, safety and hygienic issues of non-standard brands

o Pay premium prices at malls or other high class stores still

buying re-labeled products

• In-store sales executives have limited knowledge of

products and existing online portals have insufficient

descriptions

o Parents seek recommendations /advices of friends and family

members

Our Position

5

• Offer baby gear and toys of only premium-brands

• Maintain high quality of products and services at every touch points with consumers

• Provide online demonstrations of products’ functions

Cost

Quality

Babybabu

Malls

Other e-commerce portalsLocal Shops

Products

6April 19, 2023

• Categorieso Baby gear (Prams, car seats, swings, strollers)o Toys (First toys, baby gyms, bath toys)o Baby furniture (high chair, playards, cots)o Accessories (travel kits)

• Brandso Lego, Woolworths, LeapFrog, Fisher-Price, Graco, Chicco

• Roadmapo Extend product categories and premium brandso Expand geographical reach to tier II and tier III citieso Tie ups for offline product demonstrations

Product Spend per Customer per year

7April 19, 2023

Products Average Spend (INR)

Baby car seat 7000

Baby gym 3000

Pram 15000

High chair 6000

Stroller 5000

Toddler car seat 9000

Toys 20000

Cot and crib 15000

Baby carrier 2500

Playards 5000

Walker 4000

TOTAL 93,500Compiled from various sources

Baby Care Market

8April 19, 2023

• Highly fragmented with few organised players in the fray• India home to around 50 million babies in the 0 -

2 years age group and • 304.8 million children in the 0 -12 years group • Baby-care segment sees higher number of repeat purchases unlike

other categories in etail space. o Over 50 % repeat purchaseso 60% of overall purchases happen in this niche through women.

• The average ticket size of a purchase is around INR 1000-1500 in

this niche o 60% orders originating from Metro and tier 1 cities, rest from tier 2 & 3

cities.

• Gross Margin:o etailers usually make 20-30 percent in diapers, skin care and toiletries

but o In toys, trolleys and other gears it varies from 25 to 45 percent. o Apparels seem to earn maximum margin as it fetches 32-55 percent

margin.

• Considering that even 10 percent of babies are born to parents

who would spend annually a conservative figure of INR. 5000 on

baby products (diapers, lotions, strollers, toys, gears etc), the

potential is huge.

Why Now?

9April 19, 2023

• Growing nuclear families,

awareness, globalization and

incomeo Parents now pay significant

attention to quality of products

for their kidso Price of premium-brand

products becomes relatively

less significant that promises

high quality, safety and better

features

• Growing market size of baby

products in Indiao Annual growth in demand of

toys is between 20% and 30%*o Indian manufactures fulfill

about 50% of domestic demand

of toys*

#Baby care market Analysis (http://www.informationbible.com/article-aarkstore-enterprise-baby-care-market-india-market-research-report-79823.html)

* Toy association of India (http://www.tai-india.org)

2012 2014 2018 (P)0

20

40

60

80

28 35

67

Baby Care Market in India

Year

Sale

s (I

NR

Bilio

n)

CAGR=17%

Babybabu’s Market Size

10April 19, 2023

Year 2014 (Dec) Year 2015

Total Population# 1.27 billion 1.35 billion

Kids Population (0-3 years)^ 128 million (10.1%) 130 million (9.7%)

Urban Kids Population # 38.4 million (30%) 39 million (30%)

Target Population* 768 thousand (2%) 1170 thousand (3%)

Average Spend per kid/year on toys and baby gear@

500 USD 600 USD

Total Spend per year on toys and baby gear (SAM)

384 million USD 702 billion USD

Expected Revenue of Babybabu (SOM)

USD 57,600 (0.1% target population * 15% average spend)

USD 4,21,200(0.2% target population* 30% average spend)#Demographics of India (http://en.wikipedia.org/wiki/Demographics_of_India)

^National Population Policy (http://populationcommission.nic.in/npp_app3.htm)*Chapter 3, The ‘Bird of Gold’: The rise of India’s Consumer Market, McKinsey Global Institute@Assumption based on customer survey

Customer Acquisition Model

11April 19, 2023

• Residential Events: 4 events a month for one year in premium

societies

• Telemarketing: Customer data from residential events and other

sources

• Referral program: Credit to referrer and discount to referral on

first purchase

• SEO: Blogs, videos, white papers

• SEM: Various keywords

• Chemist shops: Supply branded carry bags

• Hospitals

• Play/Pre Schools

Estimated Customers (Year 1) = 768 Average CAC/Customer (Year 1) = 1,800 INR (30 USD)

Our Competition

12April 19, 2023

Local Shops Malls e-Com sites Babybabu

Example Jhandewalan Market, New Delhi

LiliputRitu WearsMom & MeShopper Stop

FirstCryBabyOyeBabyIndiaHushBabies

Babybabu (Import/ Procurement from multiple premium brand manufacturers)

Quality Low quality Mix of quality Mix of quality Only high quality

Brands Unbranded Fewer brands Mix of brands Only Premium brands

Warranty No warranty Manufacturer warranty

Manufacturer warranty

Extended warranty

Customers Low-mid income group

Mid-high income group

Mid-high income group

High-income group (Top 2%)

Service No service Standard service

Standard service Calendar driven

personalized servicesCompiled from various sources

Operation Overview

13April 19, 2023

• Starto Tie up with Brands such as: Brevi from Italy, Combi from

Japan, Bubba Blue from Australia, Tiny Love from Israel, Grup

Baby from Turkey, US Baby from China, Kiddy Gmbh from

Germany, Tolly Joy from Singapore and Farlin from Taiwan o Procurement/Import from the above manufacturers to our

warehouseo Courier pickup from the office/warehouseo Distribution only in NCR

• On volumes - 2 options being consideredo Packaging at the source and ensuring courier picks from

there(TV-18 does that)o Own warehouseo Distribution to Tier 1 cities

• Logistic Partner (Blue Dart and First Flight)o Unit costs about Rs. 480

Cost of Project & Means of Finance

14April 19, 2023

S.No. Particulars 1st Year 2nd Year 3rd Year 4th Year

A COST OF PROJECT (in USD)        

1 Computers & peripherals 3,000 2000 2000 4,000

2 Website & Payment Gateway 1,000 1000 2000 2000

3 Furniture 3,000 5,000 5000 5,000

4 Prel. Expenses 1,000      

5 Working Capital 10,000  10,000 5000  5,000

  TOTAL 18,000 8,000 14,000 11,000

B MEANS OF FINANCE (in USD)        

1 Share Capital 10,000      

2 Bank Loans 8,000     3 Internal Accruals   8,000 14,000 11,000

           

  TOTAL 18,000 8,000 14,000 11,000

Financial Projections (in USD)

15April 19, 2023

S.No. Particulars 1st Year 2nd Year 3rd Year 4th YearA Total Revenues1 Target Customer 768 2,340 5,000 8,0002 Average Spend/ Customer (USD) 75 180 250 3003 Revenue from Operations (USD) 57600 421200 1250000 2400000

4Revenue from advertisements (USD)

500 1,000 5,000 10,000

  TOTAL REVENUE (USD) 58,100 4,22,200 12,55,000 24,10,000B Cost of Operations        

 1Customer Acquisition Cost (CAC) per customer (USD)

30 75 120 150

2 CAC annually (USD) 23,040 1,75,500 6,00,000 12,00,0003 Logistic Cost (USD) 8,000 16,000 40,000 80,0004 Office/ Warehouse Rent (USD) 4,000 8,000 10,000 12,0005 Technology cost(USD) 3,000 6,000 8,000 10,0006 Marketing(USD) 4,000 8,000 8,000 12,0007 Finance Cost/ Salaries (USD) 8,000 12,000 20,000 40,0008 Prel. Expenses(USD) 500 1000 1000 2000

  TOTAL COST OF OPERATIONS 50,540 2,26,500 6,87,000 13,56,000

  Profit before Tax (USD) 7,560 1,95,700 5,68,000 10,54,000

  Tax on profit @33% (USD) 2494.8 64581 187440 347820C Net Profit / ( Loss) after Tax 5,065 1,31,119 3,80,560 7,06,180

Thankyou

Prepared by: EPGDIB (2013-15) Batch, Section B, Group -3

Ajit Agarwal (4B)

Atul Saxena (12B)

Neeraj Nathani (34B)

Pooja Daga (37B)

Rahul Sharma (39B)

Date: 31st January 2015

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Appendix A: Competitor Analysis-Survey & Primary Research (1/2)

17April 19, 2023

Survey was carried out among 10 people to rate the site’s with respect to the mentioned parameters for analysis for the site, on a scale of 1-5 .Where 5 represents best and 1 represents worst.

The survey participants were asked to shop for a feeding bottle and record their experience

Appendix A: Competitor Analysis-Survey & Primary Research (2/2)

18April 19, 2023

We see here, the FirstCry has achieved the maximum ratings, followed by MotherCare site which is a UK based site which is almost of similar ratings.

BabyOye has received the lowest ratings compared to other sites when it came to FAQ’s, Advertisements, Product experience and Content Design.

Survey Results

Appendix B: Logistics

19April 19, 2023

• Courier companies operate on “Volumetric Weight”

• Current general market rates are Rs 80 per VW Kg.*

• Our average size is around 6 Units and that will be about

Rs. 480.

• The CoD charges are between 3-7 % of the total

transaction.

• As per courier companies marketing overview*o Blue Dart operated in 2000-2500 Pin codes in India for CODo For General it’s about 4000 pin codeso Since Blue Dart has it’s own air fleet the package handling

and delivery times are better.o For NCR only First Flight is cheaper with CoD.

Appendix C: Logistic Ecosystem

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Airports: Inadequate

capacity, runways, aircraft

handling capacity

Highways:66590 Km of NH (2% of network, 40% of Traffic)

Railways: Old technology, saturated

routes, slow average speeds

Transportation

Warehousing & Packaging

Inventory

Order Processing & Admin

0% 10% 20% 30% 40% 50%

40%

26%

24%

10%Logistic

Contribution

Challenges from E-commerce Stand Point:• High cost structure takes a

toll on the profitability

• Difficult to meet delivery commitments

• Absence of Goods & Services Taxo Complicated tax

implications for shipping and delivering from various locations

• Indian Postal Service (Largest coverage) is inflexible and mired in government procedures

• Large section of vendors/courier partners are SME’s without end to end IT connectivity

Infrastructure Inadequacy

Appendix D: Logistic Ecosystem – Emerging Trends

21April 19, 2023

Vendors

• Shift from Aggregators to OEMs

• Service provider to partner

Warehousing

• Own inventory and manage warehousing

• Large size to manage bulk and opportunity buy

Delivery

• Full control on last mile delivery: Own courier

• Next day delivery in top 8 cities

Taking end to end control on the movement of

goods/shipments

Creating “wow experience” for the

customer

Direct competition with “High street

retail”

Appendix E: Customer Acquisition Model