Knowledge Partner

Growth Strategy for

Babyoye

Media Partner

Industry Overview
50 million
babies
0-2 years

$5 billion
Market

2014: $100
million
2017E: $500
million
Product Category Shares in Baby CARE Market in 2015
4%3%

41%

51%

Products
Apparel
Footwear
Toys

High
Potential
160+ cities
131
100
smar
t
cities
Tier II and
III

131
Majo
r
Com
petit
or
Cash on
delivery

KEY DRIVERS
High Disposable Income
Rising Awareness
Increased Women
Workforce

Euromonitor, RNCOS, Business Standard, ASSOCHAM

WINIONS,IIM AHMEDABAD

Understanding the Opportunity- Micro Analysis

Monthly Spend
(INR)

Year wise Split

3,000

Total Spend (INR)

45%

29%

Durables >50%,
Minimum on Diapers
(3%)

Gross Margin
Retailer

Team Analysis

29%

Wellness (40%)
with main on
diapers (30%) and
Textiles (23%)
apparel (11%),
shoes, blankets
and towels

25%
WINIONS,IIM AHMEDABAD

1,08,0
00

26%
Wellness (48%) with
main on diapers
(37%) followed by
Textiles (32%)
apparel (18%) and
Toys (11%)

24%

27
%
3

Current Situation
Operations
Operations
115 Stores l 55 Cities
92 COCO & 23 franchise owned
Store Size: 1000-3000 sq. ft.
Revenues of INR 206 Cr & net loss of
INR 119 Cr in FY15
Babyoye:~ INR 30 cr. (67% YoY growth)
of revenues FY-14

Revenue
Revenue Streams
Streams

Offlin
e
COCO
&
FOFO

Privat
e
Label
Distrib
ution/li
censin
g

Online
Babyo
ye

Competition
Competition
Retail
Space
Online
Offline
Omni
Specialty
Stores
Company Website, Team Analysis

Marketing
Marketing

Competitors

Premium
Premium Positioning
Positioning
SEC A and B
High disposable
income

WINIONS,IIM AHMEDABAD

Age: 24 to
40 year
Moms

Educated/
Working
Moms

Digitally Active

Objectives

Financial

Engagement

Channel
Integration

To reach a target revenue of INR 1000 Cr. over the next

two years
To increase revenue achieved per square feet
To increase transaction value and purchase across
categories
Increase Customer Loyalty to improve profitability and
lower dependence on discounts
To increase adoption beyond early adopters
To achieve synergies across online and offline channels
To enhance experience across online and offline channels
to provide seamless experience
To generate both in store and online traffic

WINIONS,IIM AHMEDABAD

Opportunity Set-Revenue Growth

Share of
Wallet for
Babyoye

1
Average
Average
Spend:
Spend:
35000
35000
INR/Year
INR/Year

Online:
Online: 40%
40%

30
%

Offline:
Offline: 60%
60%

70
%

Yearly
Revenue (INR)

54
%

4,200

Omni
Omni
Channel
Channel
Strategy
Strategy

15,00
0

Omni Channel Strategy will increase share of wallet

Babyoye
Online
Revenue

<5% of
total

Firstcry Online
Segment

50%
revenue
s

50%
traffic
from
mobile

Increasing
Increasing
Share
Share of
of
Online
Online

Potential of online growth needs to be hacked

Babyoye
Offline
Presence

115 stores
55 cities

Firstcry Offline
Presence Plans:

~ 130
stores
~ 129
cities

400
stores by
2017

Increasing
Increasing
Geographic
Geographic
al
al Scope
Scope

Offline presence to be increased to tap potential cities

Company Website, Team Analysis

WINIONS,IIM AHMEDABAD

Opportunity Set-Cost Reductions

Online Cost Breakup (%
rev.)

Cost of Goods Sold: 58%

21%
40%
7%
7%
3%
12%

Offline Costs: Key

Components

Reduce
Reduce
Acquisition
Acquisition
Costs
Costs

Rental Cost: 23%

Employee cost: 9%

11%

Customer Acquisition Cost:

INR 500

COGS
Discounts
Logistics/Invesntory/Warehousing/Pac
king
COD+Payments Gateway
Free Shipping

Currently Babyoye gets

Key Cost Driver: Rental
-40%
Cost
Cost reduction through omni channel synergies & better
engagement
Zinnov Report, Team Analysis

WINIONS,IIM AHMEDABAD

Increase
Increase
Engagement
Engagement
to
to Reduce
Reduce
Dependence
Dependence
on
on Discounts
Discounts

Synergies
Synergies in
in
Logistics
Logistics
and
and
Inventory
Inventory
managemen
managemen
tt

Omni Channel Strategy

WINIONS,IIM AHMEDABAD

Category Management-Marketing
Apparels, Shoes, Accessories, Toys
BUYING
BEHAVIOR

Variety Seeking*- Look

to experiment with
brands

Value Offered

DRIVERS

Online

Self Browsing require

visibility
Need to touch and feel
Need low risk of using new
brand
Need to perceive
differentiation
Offline

Information

Browse variety online and

Check availability at nearest store

Convenience

Access to larger variety with easy

browsing - large images & size charts

Can select from online collection

through in-store terminal - fulfilled next
day

Risk

Easy exchange policy

Drop off online returns at offline stores

Promotional Schemes

Bundling schemes are valued bundle

with accessories napkins, socks etc

Bundling schemes are valued bundle

with accessories napkins, socks etc

SYNERGY

Physical properties assessed by touch

Provide access to variety (online) while reducing risk by physical assessment (offline)Availability at nearest store
Accept returns from online purchases at offline stores
WINIONS,IIM AHMEDABAD

* Sales & Distribution Management; Pingali Venugopal; Sage Publications

An Omni Channel Transaction

An OFFLINE and ONLINE
transaction
Visits Babyoye
store

Decides to
purchase
Apparel

Checks &
experiences
brands from
stock

An ONLINE and OFFLINE

transaction
Logs
in the

Places
order
through
terminal

Searches for
variety on
the in store
terminal

Orders passed to
the common
warehouse
/fulfilment store

Orders passed
to the common
warehouse
/fulfilment store

Orders
delivered by
Mahindras
logistics

Customer
receives the
order

Customer
visits the
store

smartphon
e

Decides to
purchase toy and
orders through
Babyoye app

Order
delivered

Orders
delivered by
Mahindras
logistics

Customer
receives the
order, isnt
satisfied

WINIONS,IIM AHMEDABAD

Customer
changes the
product at
store
Shows
synergy

Exchanged toy
returned to the
common
warehouse /
fulfilment
store
10

Category Management-Marketing
Baby Gear, Feeding , Furniture
BUYING
BEHAVIOR

Problem solvingComplex and important

purchase and high risk

Value Offered

DRIVERS

Online

Access to information
Expert comments
In-depth reviews
Experience

Offline

Information

Buying guides/videos on product

categories

Provide knowledgeable in store sales

support

Convenience

Access to variety of products can

browse easily

Ease of using and testing before

deciding

Risk

Review by content moms and In-depth

interviews

Easy return in case of manufacturing

defect

Promotional Schemes

Focus on quality warranty

Focus on quality after sale service

SYNERGY

Online reviews/guides provide information and Offline stores used experience zones
WINIONS,IIM AHMEDABAD

11

Category Management-Marketing
Baby Food and Bathing Products
Subcontract to Doctors
major influence of
doctors regarding
selection of brand and
store

BUYING
BEHAVIOR

Value Offered

DRIVERS

Online

Availability of key brands

Ease of ordering
Quality assurance

Offline

Information

Show recommendations by doctors as

quality assurance

Convenience

Easy ordering to key brands large

SKUs

Risk

Ensure fresh stock

Ensure fresh stock

Promotional Schemes

Price competitive schemes

Price competitive schemes

SYNERGY

Show doctor recommendations

Availability of key brands in Small SKUs
for urgent requirements

Online channel covers planned monthly buying and Offline channel covers urgent buying
occassions
WINIONS,IIM AHMEDABAD

12

Category Management-Marketing
Diapers
BUYING
BEHAVIOR

Habit- Brand decision

already made on prior
experience

Value Offered

DRIVERS

Convenience of ordering
Convenience of delivery
Discounts
Bulk quantities

Online

Offline

Information

Show bulk options available for required

brand

Show availability of small SKUs

Convenience

Easy ordering and access to offers

Key brands available in stores

Risk

Low brand risk:- Maintain inventory to

minimize stock out

Low brand risk:- Maintain inventory to

minimize stock out

Promotional Schemes

Price competitive schemes

Price competitive schemes

SYNERGY

Online and offline cover both monthly and urgent buying occasions
WINIONS,IIM AHMEDABAD

13

Omni Channel Synergies-Increase in Share of Wallet

CURRENT
SITUATION

Average
Average
Spend:
Spend: 35000
35000
INR/Year
INR/Year

POST CHANNEL
INTEGRATION

Average
Average
Spend:
Spend: 35000
35000
INR/Year
INR/Year

Share of Wallet
for Babyoye

Online:
Online: 40%
40%

30
%

4,200

Offline:
Offline: 60%
60%

70
%

15,000

54
%

19,20
0

Share of Wallet
for Babyoye

Yearly Revenue

Online:
Online: 40%
40%

40
%

5,700

Offline:
Offline: 60%
60%

80
%

17,000

64
%
Team Analysis

Yearly Revenue

22,70
0

WINIONS,IIM AHMEDABAD

KEY
TAKEAWAY
We can target 18%
increase in the
annual revenues
due to synergies
obtained from
omni-channel
strategy
We can target to
increase the share
of wallet from
30% to 40% in
online and from
70% to 80% in
offline channel
14

Omni Channel Synergies Reducing Logistics & Inventory

Costs
Logistics & Inventory Cost Breakdown for online business
17%
15%

10%

Costs as % of GMV

2.1%
0.8%
1%
1%
1%
1%

15.5%
1.5%
0.3%
1%
1%
1%
1%

5%

5%

5%

5%

Current (FY 16)

Target (FY 18)

5%

0%

Inventory

Cost of Damages

Return of Inventory

Packing

Warehousing

Transit Losses

Inbound Transport

Outbound Transport

Team Analysis

WINIONS,IIM AHMEDABAD

KEY
TAKEAW
AY

The logistics and

inventory costs
are estimated to
reduce by 1.5%
due to a
reduction in
damages and
inventory cost

15

Marketing

WINIONS,IIM AHMEDABAD

16

Marketing Activities
Above The Line (ATL) Marketing Activities
Television
Ads to be placed
in strategic
timeslots keeping
in mind stay-athome lifestyle of
expecting
mothers

Internet
Advanced data
analytics
techniques to
understand web
browsing &
shopping
of TG (BTL)
Belowpatterns
The Line

Magazine

Billboard

Ads to be placed
in special
pregnancy &
parenting related
magazines

Billboard banners
to be placed
close to
catchment areas
such as
prominent
hospitals

Marketing Activities

Mail

Pamphlet

Push messages

Trial boxes

Send 2-3 mails

per week on
upcoming offers,
discounts,
promotions and
health awareness

Put posters in
major hospitals,
place pamphlets
in visiting rooms
which for visiting
parents

Send customized
messages based
on purchase
history, online
searches and
location

Tie up with major

hospitals and
offer hard cover
trial boxes to
new mothers

WINIONS , IIM AHMEDABAD

17

Internet Advertising Strategy

Benchmarking
Benchmarking
Metrics
Metrics
Website rank

Site traffic

370k

1.9
mm

1149

Bounce Rate

37%

Issues
Issues Faced
Faced

39%

Interest Over Time

Babyo
ye

Source: Google Trends,2014-15

Revamp website

299

Time on Site

4m53
s

Firstcr
y

7m
19s

Solutions
Solutions

Current Scenario
FirstCry & marketplace
websites have been
proactive in advertising on
the internet
Competition has
implemented effective
ecommerce techniques such
as SEO & SEM
WINIONS ,IIM AHMEDABAD

Implement best
practices of SEO & SEM
- Improve text to HTML
ratio
- Improve Google page
Increase brand
indexing
awareness
Leverage the
opportunities
available in Mcommerce & Fcommerce
- Improve direct visits
(proportional to
higher sales) to the
website(30% v/s
Firstcrys 41%)
18
- Posts offers and

Suggestions for Babyoye App

Interactive one-stop mobile app to increase engagement
Interactive game for
mothers

Pregnancy Planner

Push messages for

events

Relevant push messages based on locatio

Promote parenting techniques Plan
&
& recommend products throughout the
and stage of pregnancy to advertise
products through the game
9-month duration
relevant events

Growth marker

Music for babies

Dedicated music channel for kids.

Push through messages regarding information on
Target audience for relevant advertisementsHealth and products in line with the growth stage of the baby
WINIONS,IIM AHMEDABAD

19

Engagement

WINIONS,IIM AHMEDABAD

20

Engaging with the new-borns

Based on in-depth interviews of 15 mothers and surveys of 10 mothers
ROLE
OF
DOCTO
R

The doctors clear all

my doubts talk and
knows what will
work for me
I am prepared for
the hormonal
depression, but the
feeling of isolation
hits you
I wanted to be healthy
during pregnancy & fit
post delivery
It makes my day if someone
appreciates the effort I am
putting in
FEELINGS

Surprisingly men go
through pregnancy
depression too !

ROLE
OF
HUSBA
ND

I know he wants to
help and be involved
but doesnt
understand what is
going on
I need to find so many
new things
playschool, dai, toy
libraries ..
This was a big part of my life, I
NEEDS
wanted to preserve my
experience

WINIONS,IIM AHMEDABAD

21

Engaging with the new-borns

A child gives birth to the Mother, Father & the Family
CONNECTING WITH
MOM

INITIATIVES
Share with Us

Share with the Babyoye

community
Blogs by mothers,
celebrities
Monthly Magazine

When she feels

isolated

Talk to Us

When she
needs
Information/hel
p

When she
wants to be
appreciated

Talk to the Babyoye

community
Monthly events at offline
stores on health,
managing childbirth

Search with Us
When she
wants to be
Healthy/Fit
WINIONS,IIM AHMEDABAD

Search the Babyoye

classifieds
Local lists with home
services, doctors, daycare, pharmacies, yoga &
22
fitness

Engaging with the new-borns

A child gives birth to the Mother, Father & the Family
CONNECTING WITH
DAD

INITIATIVES
Learn with Us
Articles by fathers on how
to manage
Key details you should
know

When he feels
confused

When he wants
to ensure
safety

When he wants
to connect with
mother & child

Bond through
Us

Exclusive sessions for the

couple, father & child
bonding

Trust Us
Find information about
safety and quality
products, practices

Wants to
contribute
WINIONS,IIM AHMEDABAD

23

Engaging with the new-borns

A child gives birth to the Mother, Father & the Family
CONNECTING WITH THE
FAMILY

INITIATIVES
Shop with Us

When want to
buy quality
products

Assurance of quality &

safety
Guarantee of returns &
replacements

When want to
meet other
families

Want to plan
events

Link through
Us

Monthly family bonding

sessions, play dates

Celebrate with
Us
When want to
attend events
WINIONS,IIM AHMEDABAD

Be part of offline
celebrations during
festivals & holidays,
shopping events
24

Engaging with the new-borns

A child gives birth to the Mother, Father & the Family
PRESERVING
MEMORIES
When want to
capture and
preserve
experiences

INITIATIVES
Preserve with
US

Online memory book to

store & categorize events
Get printed copies &
downloads

Share through
Us

Share memory book with

social circle
Photography & writing
events

When want to
share
experiences
WINIONS,IIM AHMEDABAD

25

Engagement-Step Beyond
Use your own spark to light the fire !

How communities get built

Network effects are important after tipping point is reached
Market internally to the 34000 strong Mahindra family
2,00, 000+ members in the Mahindra family including associated companies
Add members fast to kick start the community
Club
Mahindr
a

Mahindr
a
Business
es
Mahindr
a Life
spaces

Company Data

Mahindr
a
Financial
Services

Mahindra Holidays & Resorts India Ltd. - Club

Mahindra Holidays, Club Mahindra Fundays
and Zest
Club Mahindra 45 resorts
Add 12,000 members each year FY 15
Cumulative members ~ 190k September 2015
82% occupancy rate in FY 15
Mahindra Financial Services
Present in over 2.4 lakh villages across India
Customer base of 3.6 Mn+ through 1108 offices
across 26 states and 5 UTs
Mahindra Lifespace Developers
~20 projects in urban areas (readymade
catchment area of targeted Sec A & Sec B
population)
26
WINIONS,IIM AHMEDABAD

Engagement-Step Beyond
Extending the Community to Customers-Loyalty Program

Referrals

Active Involvement

Cardholders linking their social

media account with the card can
gain points if people on social
media circles buy products from
Babyoye

Points will accrue if they review

products
Points on involving in engagement
programs
Points on contributing to articles

Additional Benefits
Earn reward points on every purchase made
Exclusive access to parenting e-books, DIY toy videos, other educational videos
based on cumulative purchase value(Levels of items unlocked to choose from)
Surprise gifts/cards on the birthday of the child
Special offers on branded/ exclusive items

WINIONS,IIM AHMEDABAD

27

Execution of Engagement: Connecting with the Society

Why?
Children outgrow
the products at fast
pace

What?
Give away the
products after their
obsolescence

Inconvenience of
disposal of baby
clothes and toys
Parentage brings a
wave of new
emotions towards
kids and this
initiative will bring a
connect with the
community

How?
Drop the products
at convenient
locations(company
stores, clinics,
malls)
Earn credit points in
the loyalty card

Assurance that the

products are
reaching the
underprivileged
WINIONS , IIM AHMEDABAD

Promotion of Loyalty
Program

28

Geographical Expansion Plan

WINIONS,IIM AHMEDABAD

29

Geographic Expansion-Phase-wise Approach

3 parameters were used to decide on which regions to focus on for growth

Smart Cities have the potential

to grow big. Selection of Smart
Cities:
Stage 1: Past track record
under JNNURM, service levels,
financial strength to decide
selection at State level
Stage 2: Economic impact of
smart city
plan, inclusivity, e-governance,
citizen
34
100
participation to decide
Citie
Planne
financing
s
d of
Mo
smart
cities
Smart
Cities

m&
me

Increase your presence

in SMART cities

2
STATES

SMART CITIES

REGIONS

HIGHER PER CAPITA

INCOME

PRESENCE OF
COMPETITORS

Location Benchmarking
New Delhi &
Maharashtra have the
highest PCI
(Annual Income>
100000INR)
South & West Regions
come in higher PCI
(Annual Income>
50000INR)

FirstCry

Mothercare

Babyoye

129

19

55

Babyoye

Grow fast in higher per

capita income areas

Sources: Wikipedia, company websites, www.mapsofindia.com

WINIONS,IIM AHMEDABAD

Ensure your presence

wherever your
competitors are
30

Geographic Expansion-Phase-wise Approach

Phase 1 (17 cities)
Phase 2 (37 cities)
Phase 3 (20 cities)
24 stores in 6
49 Stores in 12
25 Stores in 6 months
months
Months

Smart Cities and

Presence of
Competitors
Source: Company Website,

High Per Capita and

Competitors
WINIONS,IIM AHMEDABAD

Remaining Competitors
31

Geographic Expansion-Store Additions and Format

COCO & FOFO growth plan
218
174
200

130
115
45%
20%
80%
55%

150
100

72%

61%

39%

28%

50
0

2009

2010

2011

2012

2013

2014

2015

2016e 2017e 2018e

Store Type

Invest (INR Lac)

Remarks

COCO

40

Interiors and hardware (INR 20 Lac) ; Stock

(INR 20 Lac)

FOFO

Marketing cost INR 2 Lac split equally

WIMNIONS , IIM Ahmedabad

New FOFO
stores
added in FY16 is
expected to
be 35 and we
plan 49 FOFO
in FY-17 and
FY-18
We estimate
RoI of 18%
in the second
year of
operations
32
for franchise

Financial Analysis

WINIONS,IIM AHMEDABAD

33

Financial Analysis Revenue Growth Plan by Source for

Babyoye Brand
Revenue Growth by Source for Babyoye Brand
Private Label

Offline Retail

Online Retail (GMV)

1500
1134
49%
1000

CAGR (FY17-FY18)

76%

702

Revenues (INR Cr)

40%
500

211

Team Analysis

560
280

365
29%
262%
191
9%
18
FY 15

51%
105
227
33
FY 16e

WINIONS,IIM AHMEDABAD

9%

358

64
FY 17e

42%
471
9%
103
FY 18e

34

Financial Analysis Revenue Growth Plan for Offline Retail

Revenue Growth Breakup for Offline Retail (INR Cr)
500
400
300
200
100
0

32

153

59

227

Key Metrics Per Store

Paying Customers
Required Footfalls
Team Analysis

KEY
TAKEAWAY

Additional revenue
in offline retail of
INR 244 Cr
Addition of
stores is key
driver with 63%
contribution of the
increase

FY-16

FY-18

1,167

1,265

1,460

(assuming 80% Conversion)

WINIONS , IIM Ahmedabad

1,581

35

Financial Analysis Revenue Growth Plan for Online Retail

Internet revenue (GMV) growth breakdown
600
500
400
300
200
100
0

140

315
105

Key Metrics Online Retail

Additional revenue
in online retail of
INR 455 Cr
Increase in
customers is key
driver with 69%
contribution of the
increase

FY-16
Ticket Size (INR)
Share of Internet wallet
Customers
Transactions Yearly/Daily
Team Analysis

KEY
TAKEAWAY

FY-18

1300

(5% growth assumption)

30%

1568
40%

2,46,017
WINIONS , IIM Ahmedabad

9,84,067
336

Financial Analysis Cost Reduction Estimates

Online cost reduction breakdown (INR Cr)
300
250
200
150
100
50
0

INR. Cr
CAC Cost
LTV
CAC/LTV
Team Analysis

We target 7% cost
reduction in
0
online business
Key driver will be
reduction in
customer
acquisition cost
due to online and
offline overlap
Internet Cost Reduction Breakdown for Babyoye Brand in FY 18
20

163

KEY
TAKEAWAY

Without Synergy

Contribution

With Synergy & Engagement

1500

Certain ATL costs shared

with Offline marketing

1250

12,804

17,072

12%

7%
WINIONS , IIM Ahmedabad

37

Executive Summary
OBJECTI
VE

METH
OD

RESUL
TS

FINANCI
AL
Revenue Target: INR 1000
Cr.
Increase Profitability
OMNI CHANNEL &
MARKETING
Better customer service
through synergies from
omni-channel
Reduction in cost structure
due to omni-channel
synergy
Marketing- ATL & BTL,
Internet & Advertising,
Babyoye App
FINANCI
AL
Total- 1134 Cr (FY18)Online:560 Cr, Offline:471
Cr, PLB:103 Cr
7% Cost reduction can be
targeted

ENGAGEME
NT
Increase customer loyalty

CHANNEL
INTEGRATION
Offline and Online synergy

Increase adoption rate

Enhance Experience

CONNECTING WITH
FAMILY
Initiatives- Connect with
Mother, Father and the
Family
Loyalty program,
Connecting with the
Mahindra Family
Connect with Society- Toy
Store

GEOGRAPHICAL
EXPANSION
Three phase geographical
expansion plan

ENGAGEME
NT
Share of wallet: 30->40%
(Online), 70->80% (Offline)

CHANNEL
INTEGRATION
Customer Acquisition Cost:
1500-> 1250

Customers: 246017->
984067

Life Time Value:12804->

17072
38

WINIONS , IIM AHMEDABAD

98 Stores in two yearsSmart Cities, High Income,

Competitors
Expansion through FOFO
model

Appendix

WINIONS,IIM AHMEDABAD

39

Franchise Ecosystem
1500
80%
conversio
n

1205

Annual
revenues
~1.8Cr

Ticket
size
1200
INR

One time
cost ~
2lac INR
Annual
spend ~
15k INR
WINIONS , IIM AHMEDABAD

40

THANK YOU

WINIONS,IIM AHMEDABAD

41