tropicfurniture.

com

A BUSINESS PLAN

Presented by:
Group - 10
 AGENDA

Market
SWOT Roadmap Strategies Conclusions
Scanning
Furniture Market and Growth Rates What will drive such growth?
Indian Furniture • Increased internet
Market = Rs. 1400 1 penetration
billion
Plastic Molded • Growth in smart phone
Furniture=Rs. 240
• Growing @ 12-13 % on 2 usage
an average
billion
• Growing number of urban
Online Market = Rs. • Expected to be worth 3 households
Rs. 150 billion in the
750 crore next three years
• Willingness to indulge in
4 home improvements (38%)

Competition Challenges Scope

Market Share (in %) Profitable category in

Supply Chain and Inventory
Management eCommerce market
Pepperfry
20%
Average ticket size is
FabFurnish Demand Forecasting larger (margins upto
27% 53% 30-40%)
Urban
Consumers still refrain from buying
Ladder Leverage the reach
furniture online as they want to
have a touch and feel factor component.
 AGENDA

Market
SWOT Roadmap Strategies Conclusions
Scanning
STRENGTHS WEAKNESSES

• Brand image and market presence • Dipping margins

• Strong distribution and retail network • Inventory management
• Low cost of customer acquisition
• Good quality of employees

OPPORTUNITIES THREATS

• Increase presence in tier II and III cities • Intensifying Competition

• Plugged in customers • Substitute products
• Nascent segment • Channel conflicts
• High growth, lower reach (98% and 2%
respectively)
 AGENDA

Market
SWOT Roadmap Strategies Conclusions
Scanning
 ROADMAP

• Financials General Assumptions:

Discount Rate (WACC) = 12%

• Technological Tax Rate = 35%

Customers in Year 0 = 1700
• Marketing Transactions in Year 1 = 140,000
Average order size = Rs. 20,000 (Urban Ladder
• Partner data)
COGS as a % of sale = 70%
Relationship Average order size growth rate = 20% (Urban
Ladder data)
Management
Base Case (No web Portal)
Number of transactions annual growth rate = 3%
Average processing cost per order = Rs. 140

….Contd
 ROADMAP
With the Web Portal
Initial Implementation Cost
• Financials  TCO
 Hardware, software
• Technological  License Fees
 Hosting Fees

• Marketing  Project Management

 Maintenance and Marketing
Rs. 4,00,00,000

• Partner  Ongoing Maintenance

 Advertising
 Sales Team
Relationship  After Sales (Call centers, etc) Rs. 1,00,00,000

Management  Jump in total transactions = 20,000

 Number of transaction growth rate 10%
 Average Processing Cost of a web
Transaction Rs. 150
 Average processing cost per order Rs. 60
 % of total transaction through web
Portal 50%
 ROADMAP
Base Case Scenario (No Web Portal)

• Financials Customers
Year 0
1700
Year 1
1751
Year 2
1804
Year 3
1858

• Technological Number of
transactions 1,40,000 144200 148526

• Marketing
Average order size 20,000 24000 28800
Baseline Revenue (in
Rs. Lacs) 28,000.00 34,608.00 42,775.49
• Partner COGS 19,600.00 24,225.60 29,942.84
Relationship Order Processing Cost 196 201.88 207.9364

Management Net Income 8,204.00 10,180.52 12,624.71

NI (after tax) 5,332.60 6,617.34 8,206.06

 ROADMAP
With Web Portal

• Financials
Year 0 Year 1 Year 2 Year 3
Customers 1700 2081 2289.1 2518.01
Number of transactions 161000 177100 194810

• Technological
Average order size 20000 24000 28800
Baseline Revenue (in Rs.
Lacs) 32200 42504 56105.28

• Marketing COGS (70%)

Order Processing Cost
Gross Profit
22540
60.375
9599.625
29752.8
66.4125
12684.788
39273.696
73.05375
16758.53025
• Partner Costs of Web Portal
Initiative
Upfront Cost 400
Relationship Ongoing Maintenance &
Marketing 100 100 100

Management Net Income

NI (after tax)
-400 9499.625
6174.75625
12584.788 16658.53025
8180.1119 10828.04466

Incremental Cash
Flows
Year 0 Year 1 Year 2 Year 3
Net Incremental
Cash Flows -500 842.16 1,562.77 2,621.98

NPV 3,364.03
 ROADMAP
Payback Period

• Financials Calculation
Year 0 Year 1 Year 2 Year 3
Net Incremental
• Technological Cash Flows
Cumulative Cash
-500.00 818.61 1536.873 2593.4922

• Marketing Flows 318.61 2355.483 3892.356

2 years 1.21
• Partner Payback Period months

Relationship ANALYSIS :
Management
• Positive NPV
• Payback period = 2 years 1.21
months (25 months)
 ROADMAP

• Financials • Introduction of integrated

• Technological Inventory management
systems.(Salesforce.com)
• Marketing • Including every partner in to the
• Partner system from suppliers to retailers .
Relationship • Providing them with applications
Management which support most platforms.
• Synchronization of GIS with
inventory and order processing
systems for faster processing
 ROADMAP

• Financials • Hire Amazon Web Services for

• Technological server hosting
• Marketing • Google inc. for back up on
cloud, in addition to cloud space
• Partner
provided by Salesforce.com
Relationship • Zepo.com can be hire for
Management hosting website payment
terminal.
 ROADMAP

• Financials While marketing our products online,

• Technological we would like to address a few
issues, the Marketing Objectives:
• Marketing
• Partner 1. Trust and Safety
Relationship
2. Demystifying Products
Management
3. Value Proposition

4. Added Convenience
 ROADMAP

• Financials • Introduce Design Your Own Design (DYOD)

• Technological DYOD benefits:

• Marketing 1. Increases number of conversions

• Partner 2. Engage with more number of people

Relationship 3. Compliment our offline channel
Management
4. It creates a buzz around the brand which is
required to make people familiar
to our online channel

5. Leverage Market intelligence

 ROADMAP

• Financials • Engage with customers through social

media
• Technological
• Marketing • Locate the nearest store online to
compensate
• Partner for the “Touch ‘n Feel” aspect
Relationship
Management • Provide coupons and gift vouchers for
online
channel against offline sales.

• Plan to go mobile to tap m-commerce

market
 ROADMAP

• Financials
To do away with Channel Conflict
• Technological
• Marketing • Increase Margin of our offline
retailers
• Partner
• Keep a minimum level of margin
Relationship beyond which we would refrain
Management from providing discounts on our
online channel
 AGENDA

Market
SWOT Roadmap Strategies Conclusions
Scanning
 STRATEGIES
• New Customer •Gamization is one of the “must do”
trends in internet & apps market – add a
Acquisition Strategy “social gaming UI” to entice users to use
• Customer Retention your app, entertain them as you address
Strategy them.
• Mobile Strategy
• Security Strategy •This would help us to get data about the
people who could be our new customers.
• Supply Chain Strategy From this data we could give send
• Payment Strategy personalized mails to people who have
• Social Media Strategy never bought anything from our website
offering them discount coupons.
 STRATEGIES
• New Customer • Discount coupons offered would
be on the product which that
Acquisition Strategy customer might have searched
• Customer Retention on our website but didn’t make a
purchase so that our discount
Strategy coupons are relevant to that
• Mobile Strategy customer.
• Security Strategy • We would try and keep few
• Supply Chain Strategy exclusive products which are not
available on any of our other
• Payment Strategy competitor .This would help to
• Social Media Strategy attract new customers.
 STRATEGIES
• New Customer • We will be using a Sales Force Automation(SFA)
CRM so as to move closer to our customers. This
Acquisition Strategy CRM would help us to analyze the buying
• Customer behavior of our customer and based on which
we could formulate strategies to build even a
Retention Strategy stronger bond with our customers.
• Mobile Strategy
• Security Strategy • Based on the products bought recently by our
customers we would be sending them mail and
• Supply Chain offering complimentary products
Strategy
• Payment Strategy • Besides this we can have a loyalty system
where a customer gets a point based on the
• Social Media purchase he made and the customer can
Strategy redeem those points and discount on his next
purchase.
 STRATEGIES
• New Customer • We will use a Mobile CRM as it is an
Acquisition Strategy integral part of a well-thought out
• Customer Retention ecommerce customer relationship
Strategy management system.
• Mobile Strategy • For android and other operating
• Security Strategy system we would develop an
• Supply Chain application which would be same as
Strategy our website .Many companies
• Payment Strategy create their application which are
• Social Media somewhat different in user
Strategy interface and thus confuses the
customers
 STRATEGIES
• Maximum Security to be deployed in the
• New Customer first and second year.
Acquisition Strategy • Secure form of http i.e. https used for
• Customer Retention the website.
Strategy • Firewalls and anti-virus to be installed.
• Mobile Strategy • The mobile app to be developed for
• Security Strategy different platforms and payment gateway
for direct purchases.
• Supply Chain
• Different levels of data view for different
Strategy
levels of employee.
• Payment Strategy
• 128 bits of encryption for payment
• Social Media gateway.
Strategy • An SMS sent to the registered mobile
number whenever a login is made at the
client side.
 STRATEGIES
• New Customer • Build-to-Stock (Push) and
Acquisition Strategy Build-to-Order (Pull).
• Customer Retention
Strategy
• Just in Time to maintain
• Mobile Strategy minimum inventory.
• Security Strategy • Demand Forecasting .
• Supply Chain • Package tracking for
Strategy regular update on the
• Payment Strategy location of the item.
• Social Media • Use of 3PL for downstream
Strategy supply chain.
 STRATEGIES
• New Customer
Acquisition Strategy Supplier
• Customer Retention
Strategy
• Mobile Strategy Supplier Our Comapny
• Security Strategy
• Supply Chain
Strategy Supplier

• Payment Strategy
Customer
• Social Media
Strategy
 STRATEGIES
• New Customer • Flexibility of payment:
Acquisition Strategy  Cash on Delivery
• Customer Retention  Net banking
Strategy  Credit Card
• Mobile Strategy
• Security Strategy • Creation of a free business Paypal account
• Supply Chain for payments as it ensures security against
Strategy fraud.
• Payment Strategy
• Social Media • An optional minimum payment of 10%
through online coins to ensure long term
Strategy association. Special discounts on the same.
 STRATEGIES
• New Customer Association with e-
Acquisition Strategy newspapers

• Customer Retention
Strategy
• Mobile Strategy Pay-per-click
(PPC)
• Security Strategy
• Supply Chain
Banners on
Strategy related
• Payment Strategy ecommerce
websites and
• Social Media blogs

Strategy Social networking Almost 90% of our sales

websites like come through Facebook:
Facebook, twitter Urban Ladder’s COO
etc. Rajiv Srivatsa
 STRATEGIES
• New Customer
Acquisition Strategy Facebook business URLs on existing
page to accept business cards and
• Customer Retention orders. pamphlets.
Strategy
• Mobile Strategy
Information to Addition of
• Security Strategy existing customers website to Google
• Supply Chain through emails, places and other
messages etc. online directories.
Strategy
• Payment Strategy
Availability
• Social Media through search
engine
Strategy optimization
 AGENDA

Market
SWOT Roadmap Strategies Conclusions
Scanning
 CONCLUSIONS
• Online furniture is a niche segment characterized
by high growth.
– Profitable to enter the market and get additional
sales.
• Channel conflicts to be handled by maintaining
the discounts offered to offline and online
partners and cross channel collaboration.
• High reliance on social media to tap the full
potential of the market.
THANK YOU