BabyKart.comBusiness Plan

S u n s t o n eB u s in e s s S c h o o l

Abhishek Nimonkar

Aditya Chaturvedi

Gagan Bajpai

Krishna Singh

Pankaj Garg

Our Purpose

BabyKart’s purpose is to make premium-brand baby gear and toys accessible to consumers seeking high quality

Consumers’ Plight

• Unavailability of premium foreign-brand baby gear and toys in Indiao Parents have to request visiting friends and family members

• Quality, safety and hygienic issues of non-standard brandso 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 descriptionso Parents seek recommendations /advices of friends and family

members

Our Position

• 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

BabyKart

Malls

Other e-commerce portalsLocal Shops

Products

• 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

Products Average Spend

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 93,500

Why Now

• 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*

CAGR 17% 28 billion

15 billion

#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)

BabyKart’s Market Size

Year 2012 Year 2015

Total Population# 1.2 billion 1.35 billion

Kids Population (0-3 years)^ 121 million (10.1%) 130 million (9.7%)

Urban Kids Population # 36.3 million (30%) 39 million (30%)

Target Population* 726 thousand (2%) 1170 thousand (3%)

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

30000 INR 35000 INR

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

21.8 billion INR 41 billion INR

Expected Revenue of BabyKart (SOM)

3.63 million INR (0.1% target population * 15% average spend)

264 million INR(0.75% target population* 80% 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

• Residential Eventso 4 events a month for one year in premium societies

• Telemarketingo Customer data from residential events and other sources

• Referral programo Credit to referrer and discount to referral on first purchase

• SEOo Blogs, videos, white papers

• SEMo Various keywords

• Chemist shopso Supply branded carry bags

• Hospitals

• Play/Pre Schools

Estimated Customers (Year 1) = 727Average CAC/Customer (Year 1) = 3,600 INR

5-year projections

Year 1 Year 2 Year 3 Year 4 Year 5

Customers 727 5,000 10,000 22,000 50,000Average Spend/ Customer 5,000 7,000 9,000 12,000 15,000Revenue 36.3 lac 3.50 Cr 9.00 Cr 26.40 Cr 75.00 Cr

CAC/ Customer 3,600 2,500 2,000 1,800 1,500CAC# 26.19 lac 1.25 Cr 1.80 Cr 3.42 Cr 6.51 CrLogistics Costs^ 3.63 lac 20.00 lac 38.50 lac 92.40 lac 2.10 CrTechnology Costs@ 6.50 lac 65.50 lac 78.00 lac 91.00 lac 1.06 CrInfra & People Costs@ 8.00 lac 15.00 lac 18.50 lac 19.00 lac 20.73 lacWarehouse/Inventory 0 2.87 lac 13.56 lac 60.75 lac 2.46 CrTotal Costs 44.33 lac 2.28 Cr 3.28 Cr 6.05 Cr 12.33 Cr

Margin* 3.63 lac 42.00 lac 1.35 Cr 5.28 Cr 15.00 CrProfit -40.69 lac -1.86 Cr -1.93 Cr -77.15 lac 2.66 Cr

Our Competition

Local Shops Malls e-Com sites BabyKart

Example Jhandewalan Market

LiliputRitu WearsMom & MeShopper Stop

FirstCryBabyOyeBabyIndiaHushBabies

BabyKart

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 services

Operation-Overview

• Starto Procurement from Jhandewalano Local fetch of products to our office, packaging in our office o Courier pickup from the officeo 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

Appendix

Appendix – Supplier Survey

• Average operating margin of 20% on MRP is available for branded products from suppliers.

• Around 50% of the products are shipped to Tier 2 and 3 cities from the whole sale market.

• Branded products cant be imported directly. Some local distributors have exclusivity clause with manufacturers.

• Lead time for bulk order is 1 month.

* Supplier survey carried out in Jhandewalan extension wholesale market

Appendix - Logistics

• 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 -Logistic Ecosystem

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

Appendix -Logistic Ecosystem: Emerging Trends

Appendix-Customer Acquisition Model