Wharton Online Capstone Project-Snapdeal

Wharton Business Foundations Capstone

Digital Goods: Tie-up with Indian Coaching

Industry

Aditya Bhide6th November 2016

“Unbox Dreams, Unbox Zindagi”

CONTENTS

1 Product : Online Video-Coaching content

Situational Analysis

Segmentation, Targeting and Positioning

Operations Plan

Financial Plan

Integration, Evaluation and Pre-Mortem Analysis

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PRODUCT - Online Video-Coaching Content Offering subscriptions for video-based educational content by a variety of competitive exam coaching providers in India on Snapdeal through a specialized interface

Education sector in India

Formal Education Non-Formal Education

K-12Graduation

Pre-SchoolVocational TrainingE-learningAcademic Publishing

Coaching Industry

Coaching Industry

Test Based Curriculum Based

K-12Graduation Courses

Graduation-Test Preparatory courses

Post Graduation-test Preparatory courses

Example: SAT, JEE, Science, Commerce, AIIMS, AIPMT

Example: CAT, CMAT, GRE, GMAT, CPT, CA, TOEFL, GATE

Masters

Classroom Coaching

Viewing online videos through web-interfaces

Tie-Up with various coaching class providers

to list their online content on Snapdeal’s portal on a subscription basis

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PRODUCT - Online Video-Coaching Content Offering subscriptions for video-based educational content by a variety of competitive exam coaching providers in India on Snapdeal through a specialized interface

NEED (Problem Statement)

Although many coaching classes provide their content digitally via video lectures, they do so on their personal websites and lack the reach to market their product across the

country.

SOLUTIONSnapdeal is the ideal marketplace to bridge this gap between coaching providers and

exam aspirants offering customers a variety of digital educational video content to choose from.

VALUE ADD FOR STAKEHOLDERS

Coaching classes get a larger reach and visibility across the nation thereby boosting sales

Increased revenues through subscription commissions. It would also draw a potential of 10 million youth yearly to their portal capturing a loyal customer base. To top it, Snapdeal would hold the distinction of being the first to foray into educational digital goods market disrupting the entire education industry.

Student customers are the biggest gainers with access to top-quality education at the click of a button while located in any corner of the nation. There is no larger impact than transforming the lives of billions at a time when India desperately requires leaders for its future.

CONTENTS




Operations Plan

Financial Plan


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SITUATIONAL ANALYSIS

1 External Environment

Economic Perspective

Social & Technological Perspective

Political & Legal Perspective

Industry Structure: Barriers & Competition Marketing Channels

2 Internal Environment

Resources Required

Brand Diagnosis

Strengthening & Weakening Factors

Demand: Market Size & Elasticity

External Environment (1/6)



The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.

According to the IMF, the Indian economy is the "bright spot" in the global landscape. India also topped the World Bank’s growth outlook for 2015-16 for the first time with the economy having grown 7.6% in 2015-16 and expected to grow 8.0%+ in 2016-17.

Retailing in India is one of the pillars of its economy and accounts for about 10 percent of its GDP. The Indian retail market is estimated to be US$ 600 billion and one of the top five retail markets in the world by economic value. India is one of the fastest growing retail markets in the world, with 1.2 billion people.

A report by the National Sample Survey Office (NSSO) revealed that 20% of Indians pursuing degree courses and 13% pursuing post-graduate courses and above avail private tuition. Tutoring as an industry is estimated to be $11 billion, growing 11–12 percent year-on-year and is expected to touch $16 billion by 2017.

Overall Economy

Coaching Industry




As evidenced by the above data, the number of internet users is growing by 19% YoY. There is greater adoption of E-commerce and Digital Devices. India is becoming more digitally literate and is willing to make purchases online.

All of the above, contributes to a conducive environment for providing digital content in the field of education




• Digital India was launched by the Hon’ble Prime Minister of India, Shri. Narendra Modi on 2 July 2015 - with an objective of connecting rural areas with high-speed Internet networks and improving digital literacy. The vision of Digital India programme is inclusive growth in areas of electronic services, products, manufacturing and job opportunities etc. and it is centred on three key areas – Digital Infrastructure as a Utility to Every Citizen, Governance & Services on Demand and Digital Empowerment of Citizens.

• The Government of India has undertaken an initiative namely Bharat Net, a high speed digital highway to connect all 2.5 lakh local village bodies of country. This would be the world’s largest rural broadband connectivity project using optical fibre.

• Education was featured amongst the ‘9 pillars’ of the Union Budget 2016-17

• The Union Budget FY17 focused on providing entrepreneurship, education and training in 2,200 colleges, 500 government industrial training institutes, 300 schools and 50 vocational training centres via MOOCs. Another major initiative proposed in the Budget was the launch of digital literacy schemes to reach six crore rural households in the next three years. This indicates the government’s intentions to uplift online education in India.

• At present, the VAT regimes in India are not equipped with provisions to tax Digital Goods. Although a few states are taxing them via VAT. Once the GST Bill gets passed, the government might introduce steps to tax digital economy in the Parliament. This is essential to bring in more clarity as far as investments in India’s digital economy are concerned. VAT will be taxed to the seller and not the marketplace



Demand : Market Size & Elasticity



Industry Structure: Barriers & Competition

Snapdeal Flipkart Amazon IndiaFounded 2010 2007 2013

Market Share 14-15% 37% 21-24%

Gross Merchandise Value 26% 45% 12%

Company Valuation $6.5 bil $10 bil -

Number of Sellers 3,00,000+ 90,000 85,000

Losses Rs 1328.01 cr Rs 2000 cr Rs 1723.6 cr

Possible Barriers to Entry

Possible Barriers to Exit

Private coaching classes may not want to list their video-subscriptions on Snapdeal because :

• Competing with other players on the same webpage of Snapdeal may lead to a scenario of survival of the fittest

• A commission (5-30%) needs to be paid to Snapdeal for every purchase/subscription by consumer

Might be difficult to pull the plug due to capital employed for creating a separate user interface/portal and support.

Exiting might send a negative message to consumers and investors

• Snapdeal has been losing ground in terms of market share to its 2 biggest rivals, Amazon and Flipkart.

• This opportunity is unique for Snapdeal to venture into an as yet unexplored space and capture millions of loyal customers



Marketing Channels

Current marketing approach used by Coaching Industry are through the following channels:

Besides the above, coaching classes rely majorly on Word-of-Mouth publicity. All these media are effective in promoting the brand but it is still restricted to a particular geography and is unable to make a wider presence.

Listing their video-lecture series online on Snapdeal’s platform opens up much larger markets. Snapdeal currently has over 40 million users. The prospects for coaching classes to reach outside their geographic areas to these users is therefore extremely enticing.

Hoardings

Bus/Trains

Brochures

E-mails

Newspapers

Social Media/ Search Engines


1 External Environment




Industry Structure: Barriers & Competition Marketing Channels

2 Internal Environment

Resources Required

Brand Diagnosis


Demand: Market Size & Elasticity

Internal Environment (1/3)


Resources Required

• Negotiate with online coaching content providers

• Strike deals with major players of every competitive exam coaching

TOP MANAGEMENT

FINANCE TEAM

• Appropriate funds for development of video-content platform

• Monitor Return on Investments on the parameter of:

Capital Employed + Maintenance Cost

VS Subscription + Ad Revenue

MARKETING TEAM OPERATIONS TEAM

• Continuously advertise and increase outreach

• Analyse trends of purchase and acquire new content accordingly

• Design, develop, implement and maintain the web-portal

• Offer support services to users



Brand Diagnosis

PositioningIndia’s Ultimate Online Shopping Destination. Snapdeal’s vision is to create India’s most reliable and frictionless commerce ecosystem that creates life-changing experiences for buyers and sellers

PricingSnapdeal lets sellers list their products on its website free of charge. However, the sellers agree on a selling commission ranging from 5-30% of a product’s sale value to be paid to Snapdeal. Snapdeal also earns revenue through selling ad-spaces on its marketplace.

PromotionsSnapdeal majorly focusses on offering discounts to customers. In addition, it has promoted its marketplace by entering into unique partnerships with Samsung, Uber, ClearTrip, Housing.com, Windows, Mahindra Commercial Vehicles etc

PlaceSnapdeal does not operate on the Inventory-model like other marketplaces. Instead, it relies on a Market-place model by letting over 300,000 sellers list more than 35 million products from over 125,000 brands on its website and deliver these products to buyers from 6000+ cities and towns in India.




Strengthening factors within the organisation for proposal Snapdeal is looking to enter digital goods as per its business strategy Low capital to be employed Interface to be developed would be fairly simple to code Less development time

Hindering factors within the organisation for the proposal Snapdeal may not be able to customise the interface to every coaching class’s video

and allied requirements Snapdeal may not want to invest in a new interface for digital goods

CONTENTS




Operations Plan

Financial Plan


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SEGMENTATION, TARGETING AND POSITIONING

1 Market Segmentation

2 Market Targeting

3 Market Positioning

MARKET SEGMENTATIONWho is the Market?

Geographic Segmentation

• Pan India Urban and Rural youth• No access to physical classrooms• Reliable access to mobile/PC’s &

Internet.

Income based Segmentation

Lower Middle Class to Rich

Demographic Segmentation

Behaviour Preference based Segmentation

Psychographic Segmentation

• Looking for a brands credibility

• Aspiring minds• Passionate about learning • Scan the market

thoroughly before choosing a product

• Require additional coaching

• Are comfortable with online purchases

• Prefer to stream lectures than attending a physical classroom

Youth between the age group of 14-25 years

MARKET SEGMENTATIONMarket Analysis

What does the market buy? • The market purchases physical as well as online content of coaching classes

When does the market buy? • The market buys as and when it demands• More purchases are made during the start of an academic year

Where does the market buy?• Currently the market buys from websites of individual coaching

content providers. It is now proposed to buy from Snapdeal’s interface

Why does the market buy?The market buys because a) it does not have access to physical classrooms; b) It wants flexibility in deciding its study sessions; c) It wants high-quality coaching; d) It can afford to spend on education; e) It finds the interface simple to use; f) It can choose from multiple options



2 Market Targeting


MARKET TARGETING

According to Population Projection of Ministry of Human Resource and Development, Government of India, 2016:Age Group Population Education

6-10 years 130 million Primary (I-IV)11-13 years 73 million Upper Primary (V-VIII)14-15 years 49 million Secondary (IX-X)16-17 years 44 million Senior Secondary (XI-XII)18-23 years 141 million Higher Education

• Therefore, our target group consists of youth between the age 14-25 i.e 235 million• The Target group will be further filtered based on:

o Income (Lower middle class to rich)o Access to PC/mobile and Internet

Target Group



2 Market Targeting


MARKET POSITIONING

CURRENT POSITIONINGIndia’s Ultimate Online Shopping Destination. Snapdeal’s vision is to create India’s most reliable and frictionless commerce ecosystem that creates life-changing experiences for buyers and sellers

Positioning of Proposal

Points of Difference Providing Education & a learning experience online

Points of Parity A Digital Goods Provider

Communication & Advertising Propaganda

“Unbox Dreams, Unbox Zindagi”

Aiding Snapdeal’s Positioning Not only creates life-changing experiences. It now changes lives

*Zindagi = Life (in Hindi)

CONTENTS




Operations Plan

Financial Plan


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OPERATIONS PLANOperational Diagram

Data Storage & Processing Servers Coaching Class Providers

Snapdeal Website

Internet Customer/ Student

• The core operations of the service will be delivering content directly to the consumer (B2C model) where the user visits Snapdeal and then clicks on Education tab. User is redirected to the page : https:www.education.snapdeal.com. User now logs in his credentials and sees a dashboard and his currently subscribed videos. This interface lets the user watch stored content as well as watch live lectures.

• Support operations would be required separately to handle customer queries as well as glitches and bugs if they arise• The primary distribution channel for which the interface would need to be developed would be: A) Computers B) Tablets C) Mobile Phones D) Smart Televisions

CONTENTS




Operations Plan

Financial Plan


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FINANCIAL PLAN

Financial Projections

Investments & Revenues

Initial Investment (In Rupees)Development of Interface 50,00,000

Marketing Campaign 1,00,00,000Workforce Training 10,00,000

Data Centre’s & Server Upgradation

20,00,000

TOTAL 1,80,00,000

Initial Investments

(in Rupees) 2016 2017 2018

Market Size 23,50,00,000 270250000 310787500

Subscribers (1 %) 23,50,00,00 2702500 3107875

Price for Each Subscription (Average) 15,000 15,000 15,000

Revenue (10% of subscription amount) per subscription 1,500 1,500 1,500

TOTAL REVENUE (Subscribers x Revenue) 3,52,50,00,000 4053750000 4661812500

Initial Investment 1,80,00,000 1,00,00,000 1,00,00,000

EBTDA 350,70,00,000 404,37,50,000 465,18,12,500

The CAGR is taken to be 15% based on CRISIL (S&P) Report

We are just looking to capture 1% of the market.

With such a projection, we are looking at profits of Rs 1,72,50,000 or USD 25,825,078

CONTENTS




Operations Plan

Financial Plan


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INTEGRATION, EVALUATION AND PRE-MORTEM ANALYSIS

1 Time-Table of Activities

2 Evaluation of Project Success

3 Pre-Mortem Analysis

Time-Table of Activities INTEGRATION, EVALUATION & PRE-MORTEM ANALYSIS

January February March April MayResearch video-content coaching class providers I

Shortlist options for every segments II Develop user interface and integrate with

Snapdeal III Negotiate and form alliances with each IV

Buy Data Servers. Import and Store video content V Platform Testing VI

Workforce & Support Training VII Project Launch VIII

Evaluation of Project Success

INTEGRATION, EVALUATION & PRE-MORTEM ANALYSIS

• Search behaviour• Demography (Age, Location)• Increased page views, hits• Number of new users registered onto Snapdeal which is

attributed to this project

Measures to Evaluate Success

• Number of subscriptions• Return on Capital Employed• Feedback, comments and ratings given to products

Based on the following:

Following Data:

ANALYZE

Pre-Mortem Analysis

INTEGRATION, EVALUATION & PRE-MORTEM ANALYSIS

A managerial strategy in which a manager imagines that a project or organization has failed, and then works backward to determine what potentially could lead to the failure of the project or organization. Management can then analyze the magnitude and likelihood of each threat, and take preventative actions to protect the project or organization from suffering an untimely "death"

THREAT MAGNITUDE

Private coaching classes may not want to list their video-subscriptions on Snapdeal because they would not want to compete with other players on the same platform

Private coaching classes maybe reluctant to use this model as it may cannibalise their physical classroom coaching business

Snapdeal creates a standard interface that restricts coaching classes to provide customised audio/visual/text delivery of content thereby failing to

attract customers

Low

Moderate

High

Wharton Online Capstone Project-Snapdeal

Business

Transcript of Wharton Online Capstone Project-Snapdeal