Cloudtail Confidential

The Back to School Event

Kidswear Business on CT
On CT, the kid’s footwear business was launched in October, 2014 with 16-character merchandise brands (Barbie, DORA, Disney, etc.)
and a selection of 1234 ASIN’s and delivered a GMS of INR 1.6 MM. CT contributed to 12% of overall Amazon’s kid’s footwear business.
In July 2018, this category was revamped by expanding selection in the already existing brands and by onboarding new brands and
delivered a GMS of INR 70.25 MM across 42 active brands with a selection of 8900 ASIN’s at Dec’18 exit and a contribution of 45% to
overall Amazon’s kids footwear business. 2019 is planned to deliver a Net ordered GMS of INR 242.2 MM (246%) with 18000 selection
count and across 55 active brands with planned contribution of 65% to overall kid’s footwear business on Amazon.

Kidswear Market in India (Size, Growth, Segmentation and Online share)

The apparel and footwear industry for kids in India has witnessed a healthy growth at a CAGR of 11.9% during FY’2012-FY’2017. The
overall market grew from INR 436.3 billion in FY’2012 to INR 763.9 billion in FY’2017. In FY’2012, the market dynamics between apparel
and footwear stood at 91.9% to 8.1% respectively which represented revenues worth INR 401.0 billion and INR 35.3 billion respectively.
The market share of footwear has showcased an upward trend as it moved up from 8.1% to 10.2% during the period of FY’2012-
FY’2017. Moreover, the footwear industry is more organized as compared to apparel, with almost 7% of the revenues being generated by
the organized sector. Thus, the footwear industry grew at a healthier pace of 17.0% during FY’2012-FY’2017 as compared to 11.4% of
the apparel industry in the same time period. The kids’ apparel and footwear market is expected to incline from INR 763.9 billion in
FY’2017 to INR 1,393.3 billion by FY’2022, registering growth at a CAGR of 12.8% during the period FY’2017-FY’2022.
Kids belonging to the age group of 8-14 years contributed for maximum market share (45%) in terms of revenue generation followed
by 4-8 years (30%), 2-4 years (18%). For CT, 8-14 years contribute to 35% followed by 4-8 years (22%) and 2-4 years (24%) & others
(19%). Sport shoes and school shoes are the most used footwear products by kids in everyday life. In FY’2017, sales of sport and
school shoes accounted for 18% each of the overall followed by sneakers (10%), flip flops & slippers (8%), boots (7%), sandals (6%),
bellies (6%), formal and party wear (5%), clogs (4%), mojaris (4%) and others (14%). For CT, casual footwear hold the highest revenue
contribution (25%), followed by shoes (18%), Bellies (12%), Flip flops and Slippers (12%), school shoes (11%), Sports (7%) & Others
(15%).
Kids’ footwear industry has been largely an unorganized one, with organized brands comprising 4% of the overall market as of FY’2017.
Bata Liberty, Lancer, Relaxo, Nike, Reebok and others have been the prominent players in the organized branded wear market amongst
others. The online market for kids’ apparel and footwear has grown at a CAGR of 28.5% between FY’2012-FY’2017 from INR 2.2 billion
in FY’2012 to INR 7.6 billion in FY’2017. The online market for kids’ apparel and footwear is quite a consolidated market, owing to top
two pure-play players comprising for majority(56.6%) of the market share in this space. As of FY’2017, FirstCry emerged as the market
leader, contributing to about 37.5% of the overall online market. Flipkart, along with its two subsidiaries: Myntra and Jabong,
accounted for 26.2% market share in FY’2017. Amazon and Snapdeal accounted for 3.1% and 1.9% market share, respectively in
FY’2017. Firstcry, FK brands have PL contributing to 40% of their overall business thus an opportunity for CT.

Challenges
The biggest challenge for kids shoes today is the share of unorganized market (96% compared to Shoes category average of 92%).
Limited availability of branded segment and expansion of current catalogue in those brands due to high MOQ’s (1000 per style).

The biggest challenge in school shoes is the limited selection availability across top school shoes brands and other challenge being
the MRP as it is on the lower side thus restricting other non-school shoes brands to venture into the kid’s school segment.

Opportunities
The kid’s footwear category is untapped in the online segment thus providing huge opportunities to grow. Firstcry and Hopscotch are
the highest revenue generators for kid’s fashion due to its private labels thereby providing an opportunity to CT to plan a private label
around kid’s fashion. Casual shoes, Bellies and booties are the three main categories being offered with an average ASP of INR 359
as almost 60% of the total offerings are below INR 500.
Highest contributing age buckets are 8-14 years and 4-8 years with a combined revenue of 75% for India but for CT, the same is 55%
thus providing an opportunity to expand selection in these age buckets. We will correct the size curve as per industry trends and
brand’s offline sales contribution.
Sports shoes and school shoes have revenue contribution of 18% each to the overall kid’s footwear but for CT, the same is 7% and
11% respectively thus providing an opportunity to expand offerings in both sports and school shoes.
This category would also enable us to build a replen portfolio due to selection being constant and stock availability not being an issue
with the brands throughout the year.

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Purchase Behavior and Target Customer

Growing demand of kids’ apparel and footwear products, rising disposable income of parents, increasing brand awareness, growth
in international brands and adoption of branded products by fashion savvy younger generations have all resulted in the incline of
this market.
The target customer for school shoes depends on demographics mainly age. For Kids (3-5 years), the target consumers are
mothers whereas for teens (8-12 years), it is mainly the end consumer.
The fact that school shoes form an integral part of the formal school attire and has a low life cycle due to regular wear and tear,
it becomes a necessity for the parents to shop school shoes. The purchase behavior for school shoes mainly depends upon four
factors:
1. Seasonality - The opening of new sessions in schools plays the most important factor for shopping school shoes. Schools in
North open in 1st week of April whereas the same in West, Centre and South opens in Mid-June – 1st week of July.
2. Age/Size – School shoes are mainly required by kids and teens and because of their growing age and change of foot
size, it becomes a necessity to purchase school shoes.
3. Occasion – Basis the occasion, which are mainly everyday wearers (black shoes) and sporty (white shoes), the purchase
decisions are made.
4. Price – Since school shoes have high usage rate and greater probability of wear and tear so consumers intend to invest
low on these products. Thus, elasticity in pricing influences the purchasing behavior of consumers.

Making Amazon Fashion the go-to destination for School Shoes (Back to School Event)
In merchandising, back to school is the period in which students and their parents purchase school supplies and apparel for the
upcoming school year. At many department stores, back to school sales are advertised as a time when school supplies, children's, and
young adults' clothing goes on sale. Office supplies have also become an important part of back to school sales, with the rise in
prominence of personal computers and related equipment in education; traditional supplies such as paper, pens, pencils and binders.
In India, the back to school sales traditionally start in the end week of March when schools are about to open in North India and end
in early June with the opening of schools in South, West and central India.
With industry tailwinds in favor of school shoes & our readiness in this category, we are seeking to replicate the A.in ‘Great Indian
Shopping Festival’ construct to create a recurring BTS focused property every year. The overall objective of this event will be to
position Amazon Fashion as the go-to destination for all things School and this event would also help us capture New customers as
well as increase repeat for the platform due to the need of the category which would also lead to cross selling (Lunchboxes,
stationaries, fashion).
In past, also, BTS has been planned by Amazon where 3X GMS growth has been observed during the period. For CT, last year GMS
growth of 125% (YOY) has been observed for school shoes with limited selection availability across brands (170 Teen ASIN’s). Also,
PFB the search trends for last year for school shoes: -

Searches –

 Google Trends (also refer to related top keywords) Interest can be observed over 2 peaks (end of March, end of May-June)
 2.5x spike in searches vs BAU observed
 Customers searched for school shoes with brands – Bata, Adidas, Nike, Liberty, Action, Reebok, Paragon, Campus, Lakhani,
Force 10 (Liberty), Puma

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The BTS event will not only act as a growth driver for school shoes where 4X jump from BAU is planned on NET served units (420 from
current 105) but would also help in the growth of the overall kid’s footwear on CT. As per last year sales data, 1.2X jump in NET served
units was observed during event days when compared to BAU. With ~150% growth in selection YOY and aggressive pricing, the growth
of 1.3X is planned on non-school shoes brands (520 from current 400).

Store & Event Construct (Refer Table 1.1 & 1.2)

As stated above, we’d like to conduct 2 editions of the Back to School event. Central event timelines are Wk 13-15 (March end, April
beginning) and Wk 20-22 (May end, June beginning) The first edition of the activation will be a ‘two weeks’ event between 25thMarch
- 7th April 2019. The brand event construct is stated below: -

1. Showcasing merchandise authority

- New launches (Lakhani, Action, Liberty, Paragon and Bata) showcase
- Logo on kid’s footwear store for the brands (Bata, Liberty, Paragon, Action, Lakhani and Red tape)
- Virtual Bundling for school shoes (Black + White, and Casual +Sports) - test runs going on for SPARX bundles

2. Driving output measures

- Selection expansion in top school shoes brands (Refer table 1.3)
- Deals and Discounts sections – 2 DOTD’s, 2 BD’s on each event days and LD’s
 School Shoes Under 399: Liberty, Paragon, Action & Others
 Kids Footwear :40%-70% off on Clarks, crocs, Barbie & Others
- AMS from the brands (Character brands, Paragon, Bata, Liberty, Walktrendy)
- VPC (Liberty, Character brands, Lakhani, Paragon)

Success metrics (Refer table 1.4)

1. 2X growth in NET served units from BAU (Non-School brands)

2. 4X growth in NET served units from BAU (School shoes brands)
3. Selection growth – 1400 Teen ASIN’s in school shoes from 256 in Feb’19
4. Selection Growth Overall – 2500 ASIN’s to be added through dropship (Waltrendy already live, Kittens – to be live by month
end)
5. Share of School shoes in terms of GMS to overall kid’s footwear category – 26% from current 12%
6. CCogs – Around ~5 lacs CCogs negotiated with the brand (4% of the overall GMS phase 1 plan)

Annexures:

1.1 Working backwards event planning

BTS_March-June
Peace Event Comment
No of Days 94 28
Rate (units per day) 105 420 plan
Units plan 9,917 11760 plan
GV conversion 4.90% 4.9% estimated

GVs needed 2,02,378 6,07,143

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1.2 Stakeholders and Support Required

BTS_2019 First Edition_25th March - 7th April

Area Dates SPOC
Marketing
Marketing plan finalization 10th March Ratnakar/Rakshitha
Brand participation towards incentives - confirmation 10th March Ratnakar/Rakshitha
Creative from Design team 15th March Rakshitha
Creative approval from brand (checks) 15th March - 20th March Rakshitha
A.in level event amplification planning 25th Feb - 10th March Deepak/ Cross Site teams
AMS
Package construction 10th March Ratnakar
Co-opting brands for BTS 10th March Ratnakar
Brand confirmation last dates 15th March Ratnakar
Confirmation on AMS implementation readiness 10th March to 25th March Ratnakar
Kids Store Front
Wire Frame Finalization 10th March Ratnakar, Rakshitha
Seeking brand creatives for event 15th March Rakshitha
Store set up for merchandising 20th March Rakshitha
Store QC 23rd March Rakshitha
HQPs 23rd March Rakshitha
Sparkles 23rd March Rakshitha
Multiple ingresses for the store (identification & set up) 23rd March Rakshitha
Traffic and Merchandising
Blocking real estate (Bunks etc.)
Blocking real estate
(App only slots/ Social/ Prime slots/ Mass Push/ Emails etc.)
Gateway Campaign set up
Category pages Campaign set up
App Notification
Emails
Associate inputs
Social media activation
Inventory planning/ brand launches
Top 20 brands inventory planning (CT) 10th Feb Akriti
IB planning, basis requirements 15th Feb Akriti
IB completion for critical brands 12th March Akriti
Go live post imaging 20th March Akriti
CCogs Negotiations (8% Additional funding on MRP) 12th March Akriti
Pricing go live (CT) 24th March Akriti/Nitin

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1.3 Stock Planning for BTS 1st Edition: -

Brand Sales Plan (Mar-April) Current ASIN Current SOH Planned ASIN Planned SOH

Bata 1500 34 978 250 3750

Force 10 (from Liberty) 1064 67 1341 120 2040

Prefect (from Liberty) 1500 98 527 212 3604

Joykart 1800 0 0 280 4200

Action 650 0 0 132 1056

Lakhani 820 1 1 201 2000

Paragon 850 21 423 131 1860

Red Tape 800 10 210 10 554
Schoolmate 540 137 1823 139 2150
Nike - 2 2
Adidas 310 0 0
Campus - 1 1 120 1776
Puma 620 0 0
Grand Total 10482 420 5760 1545 22990

1.4 School Shoes Category contributions (CT)

(i) Units View (Last Year)

CT Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Overall
Sales 113 95 64 169 208 725 1004 1997 2579 5120 2656 2394 17124
Distinct ASIN Count 25 19 14 18 52 170 208 294 291 430 375 310 329
% Sales share of LOB 1% 2% 1% 3% 2% 6% 6% 11% 17% 12% 12% 12% 12%
% ASINs Share of LOB 1% 1% 1% 1% 2% 5% 5% 6% 7% 5% 5% 5% 3%

(ii) Units View (2019)

CT Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Overall
Sales 4507 2176 5179 7584 11335 15467 8900 7500 12000 10000 8000 8000 100647
Distinct ASIN Count 281 256 1200 1200 1400 1600 1600 1600 1600 1600 1600 1600 1439
% Sales share of LOB 13% 12% 25% 27% 28% 27% 16% 13% 19% 10% 15% 11% 16%
% ASINs Share of LOB 3% 3% 13% 12% 13% 13% 13% 12% 11% 11% 10% 10% 10%

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Kids Execution Plan

Summary
As detailed in the previous document, the kid’s footwear category is untapped in the online segment thus providing opportunities to
grow as the overall kid’s footwear is worth INR 35.3 billion in FY17 compared to CT which was INR 0.01 billion. The market share of
footwear has showcased an upward trend as it moved up from 8.1% to 10.2% during the period of FY’2012-FY’2017.These
opportunities were identified while studying Kidswear market size in India and it was found that there are many segments which are
gaps for CT such as lower share in categories such as ethnic, sports shoes, etc., lower share in age bucket of infants and Youth, higher
ASP buckets and seller labels (Unorganized Market). The actionable against each is mentioned in this doc.

Action Plan on the Opportunities:

There were various opportunities identified while studying market data with respect to age group, category, seller labels, etc. PFB the
details against each:

1. Category Level: PFB the category wise market and CT share in terms of GMS for CY 17.:

Category Market Share (2017) CT Share (2017) CT Proj (2019)

Sports shoes 18% 7% 10%
School Shoes 18% 11% 18%
Sneakers 10% 5% 7%
Flip-Flops and slippers 8% 13% 10%
Boots 7% 2% 4%
Sandals 6% 22% 15%
Bellies 6% 12% 8%
Formalwear 5% 8% 6%
Partywear 5% 2% 5%
Clogs 4% 8% 6%
Ethnic 4% 0% 2%
Booties 3% 1% 2%
Others 6% 9% 7%
Grand Total 100% 100% 100%

While, there are few categories where CT is performing better than the market but there is a potential of INR 0.07 billion in the
remaining categories where CT is under trending when compared to the market:
a. Sports Shoes – Nike, Puma, Adidas Group are one of the biggest brands for kid’s footwear both offline as well as IC’s. We
are working on the selection expansion (~ 1000 ASIN’s) for these brands but the offerings are limited by the distributor and
even the depth that are offered are low. Sports shoes are planned with Red Tape (~10 Options), Liberty (~40 Options) and
Kittens (~52 Options) that should be live by Jul’19.
b. School Shoes: While the market has 18% share of school shoes, but CT had only 11% in 2017. The current trending school
shoes contribution is 40% due to ongoing BTS event but post the event, the plan is around ~22%. There is still an opportunity
in Bata (current share of ~7% to overall kid’s shoes compared to 20% in offline market), Action Shoes (current share of ~1%
to overall kid’s shoes compared to 12% in offline market) and Sports School Shoes in Campus. Nike, Puma and Adidas
(current share ~1.2% to overall kid’s) whereas it has a share of 15% to overall school shoes in the market (restricted offering
from distributor’s end). Also, we will be looking to onboard Gola Shoes which is one of the biggest seller (30% market share
in unorganized market.
c. Sneakers: Selection expansion is planned Puma, Walktrendy, Liberty and also, we are working to onboard Trase which is
the highest seller of Sneakers on Amazon as well as FK (~ 7K net served units monthly)
d. Boots: Selection expansion is planned in Kittens, Barbie and Walktrendy in AW19 (~ 35 styles).
e. Booties: Selection expansion in kid’s merchandise brands (Barbie, Disney, Frozen) and seller labels (Chiu and Walktrendy)
will take the share to 3.2% from current trending of 1%
f. Ethnic: CT has no ethnic brand live currently on the platform but following seller labels offer ethnic (mojaris) footwear on
IC’s/Firstcry: Dchia, Aria + Nica, Ethniks, Cute Walk by Babyhug, Tahanis, Little Pals. We will be connecting and completing
the onboarding of these labels by Q2

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2. Age Level: PFB the age wise market and CT share in terms of GMS for CY 17.:

Age Market Share CT Share

CT Proj (2019)
Group (2017) (2017)
Infants 7% 2% 5%
2-4 yrs 18% 13% 15%
4-8 yrs 30% 45% 38%
8-14 yrs 45% 40% 42%
Grand
100% 100% 100%
Total

There are opportunities for CT in Infants, 2-4 yrs. and 8-14 yrs. age bucket (10% of the market share) as we are under trending when
compared to the market data. To correct the same, we have changed our buying approach. We take inputs from brands on their
offline/IC’s size curve and then compare it with CT and Platform sales, thus finalizing the buys basis industry performance and CT
performance. We should see CT contribution increasing in under trending age buckets by Q4 exit.

3. ASP Bucket: PFB the age wise market (organized market) and CT share in terms of GMS for CY 17:

ASP Bucket Market Share CT Share

<200 1.2% 5.3%
200-400 8.0% 24.1%
400-600 8.2% 15.1%
600-800 8.2% 9.1%
800-1000 12.5% 9.7%
1000-1200 18% 10.4%
1200-1400 20% 9.4%
>1400 24% 16.7%
Average ASP 1292 608

The average ASP for CT across Kids Footwear is 508 for FY17 whereas the same for the organized market is 1292. The difference of
more than double in the ASP’s is because of two reasons: (i) Lower share of high MRP brands (<30% in terms of GMS): Nike, Puma,
Adidas, crocs, BATA have ASP of INR 2000-2500 offline whereas CT operates at an ASP of 900 across these brands due to higher share
of lower MRP stocks bought and the average discounting on these brands in kid’s category which is ~40%-50%. (ii) Higher share of
OSM stocks: The Kids Portfolio had an average discounting of 52% in FY17 thus affecting the ASP’s compared to offline retail which
operates at an average discounting of 15% for a year. We are taking corrective action by expanding selection in brands like
Mothercare, Red Tape, crocs, Puma, Nike and Adidas which are high MRP brands and should affect our ASP’s positively. The inwards
across these brands should be inline by Q2 Exit with ~4k ASIN’s being added to the current inventory. With the inwards planned from
these brands, the Q4 exit ASP for kid’s footwear is estimated to be 565 INR from current trending of INR 394.

4. Unorganized Market: The biggest challenge for Kids is the limited availability of options across brands and the high share of
unorganized market (96% when compared to overall shoes of 92%). Thus, to grow exponentially (400% YOY) and expand selection
(20K from current 10K), a benchmarking has been across IC’s and platform and high potential brands/seller labels basis selection/GV
Share on Amazon are filtered to be expanded/onboarded this year. These Brands are divided in priorities ranging from 0 to 3
depending on the Selection and potential of the brand. The P0 brands will be onboarded by Q2 exit, P1& P2 by Q3 exit and P4 by Q4
exit.

There is an opportunity of ~12K ASIN that CT can onboard if selection in above brands is expanded or these brands are onboarded via
CT. The below brands are risks and in the above selection expansion, they are not considered.
a. Nike, Adidas and Reebok have limited offering due to sourcing from distribution.
b. Private Labels: There are private labels also mentioned in the above which is difficult to be onboarded as other portals
are not aligned. Eg. First Cry private brands – Cutewalk by BabyHug, Kidlings, etc.

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Potential Brand/Seller Labels (Offline, Option ~ ASIN

Existing/New Platform Priority
Online) Count Count
IVEE New FirstCry 59 295 P2
Beanz New FirstCry 31 155 P2
Cutewalk by BabyHUG New FirstCry 2900 14500 P0
KidLIngs New FirstCry 63 315 P2
Magic Needles New FirstCry 195 975 P1
Aria Nica New Hopscotch 82 410 P2
Dchica New Hopscotch 225 1125 P0
Asian Shoes New FK 456 2280 P0
Miss & Chief New FK 66 330 P3
Khadims New FK 63 315 P2
Chiu New FK 229 1145 P0
U2 Shoes New FK 58 290 P3
Claptrap New FK 44 220 P3
Lifestyle Brands New Myntra 150 750 P2
Next New Myntra 210 1050 P3
Native Shoes New Myntra 67 335 P2
Little Soles New Myntra 56 280 P1
Nike Existing Myntra 165 825 P0
Puma Existing Myntra 1016 5080 P0
Adidas Existing Myntra 450 2250 P0
Kittens Existing Myntra 520 2600 P0
Tuskey New Myntra 114 570 P1
Trase New Amazon 20 100 P0
Neska Moda New Amazon 225 1125 P1
Lil firestar New Amazon 26 130 P1
Fashion shoes New Amazon 30 150 P3
Touchwood New Amazon 3 15 P3
Instabuyz New Amazon 159 795 P3
Mishlee New Amazon 36 180 P3
Infano New Amazon 251 1255 P2
Voberry New Amazon 171 855 P2