![1. India – one of the world’s largest consumer markets
2. Mobile – India’s favorite purchase
3. Retail – How India buys bought
4. New India – Rise of E-commerce
5. The paradigm shifts again!
6. Emergence of Hyper-local
7. Hyper-local at The Mobile Store – a pioneering case study
8. The FED advantage [Fastest, Expert, Delivery]
9. Looking Ahead
10. Summary
Report Index
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Hyper local tms_yuvraj
- 1. The Hyper-Local Retail Revolution and a case study on mobile retail The India Experience Yuvraj Ruia | October 2015 This presentation is a snapshot of the hyper-local retail revolution in India. It includes a case study on India’s mobile retail category and the adoption of hyper-local format by The Mobile Store, a leading player in the country’s organized mobile retail market. As one of the world’s fastest growing economies, the Indian market is an area of interest for businesses worldwide. The presentation attempts to contextualise retail purchase trends over time and focuses on the emergence of new trends that are shaping up in response to the country’s young and growing consumer base. About the author: I am a student intern with The Mobile Store, India.
- 2. 1. India – one of the world’s largest consumer markets 2. Mobile – India’s favorite purchase 3. Retail – How India buys bought 4. New India – Rise of E-commerce 5. The paradigm shifts again! 6. Emergence of Hyper-local 7. Hyper-local at The Mobile Store – a pioneering case study 8. The FED advantage [Fastest, Expert, Delivery] 9. Looking Ahead 10. Summary Report Index 2
- 3. India – one of the world’s largest consumer markets 3Source: KPMG, FICCI Total Market Retail Market Unorganized Organized Online #1.29billion population, growing annually by 1.2% #2largest and continually growing consumer base #65% share of youth (age <35) in total population - 84mn #5 largest consumer market in the world by 2030* #12.7X rise in gross annual income over 2009-2030 (from INR 56,332 bn to INR 717,127 bn) Among the world’s largest & fastest growing economies, the Indian consumer market is witnessing format evolution & global interest
- 4. 4 Mobile market in India Mobile share in total e-commerce sale #1billion mobile subscribers in India #12% CAGR for mobile subscriber growth annually #250 million mobile handset sales annually #270 million smart phone users, and growing #16billion USD mobile market size by value -: 0% 10% 20% 30% 40% 50% India China UK France Brazil Australia USA Germany Russia Japan 2014 India’s share highest in the world 4.4 5.9 7.9 8.9 13.6 16 0 20 2010 2011 2012 2013 2014 2015F Mobile – India’s favourite purchase category Source: KPCB Mary Master Internet Trends 2015, Technopak Research Mobile, as a category, shows path-breaking trends and insights, given India’s vast and ever-growing mobile penetration
- 5. Retail – How India buys bought 5 Traditional Retail Purchase Preference Enablers for Changing the Purchase Pattern Brick and mortar shop format prevalent ‘Touch and feel’ of product – an important factor Known and trusted retailer preferred Scepticism for online purchase and payment Low penetration of online banking system #330million have access to Internet today #80% of online access is through mobile #25% mobile users have Internet access Secure & convenient payment gateways Price discounts & tax saving on online purchases Purchase pattern in India has evolved – move from completely offline based stores to e-commerce channels Source: www.internetlivestats.com
- 6. New India – Rise of E-commerce 6 455 1152 3… 212 0.6 76 0 200 400 600 800 1000 1200 1400 1600 2012 2021 E-retail Modern Retail : Brick and Mortar Traditional Retail:brick and Mortar $1440bn $490bn 0.40% 3% 5% 24% 0% 5% 10% 15% 20% 25% 30% 2014 2020 Total retail Organized retail Indian retail market size (USD bn) E-tail’s share in India’s retail sector (net sales) E-commerce share of organized retail to become 5 fold in the next 5 years going up to 24% of the total market Source: Technopak Analysis, Gartner Research
- 7. The PARADIGM SHIFTS Again 7 Challenges with E-commerce Opportunities for a New Paradigm Last mile logistics: poor connectivity & access Diluted customer experience due to outsourced delivery High demand for cash on delivery: 30 day cash turnaround Customer segments (esp. rural) seek product ‘touch & feel’ Product return/rejection + lack of confidence in after-sales service Need to create local product centres near the customer Enhanced and value-added approach to product delivery Shrink the time & space gap between billing & booking cash Find a way to retain best of both worlds – Brick & Click Add a physical face to the online space for comfort & assurance Need gap identified in the market for the benefits of E-commerce to be coupled with advantages of traditional retail
- 8. Emergence of Hyper-Local 8 What is Hyper-Local Hyper-Local retail is oriented around a well-defined community with its delivery mechanism, backed by mobile devices & GPS technology, directed from and towards the population (both suppliers and customers) within that area. It therefore offers a speed and ease of servicing that is unmatched by e-commerce giants, thereby shortening the delivery period and giving customer a ‘touch and feel’ reminiscent of the ‘brick and mortar’ retail experience. All large retail players working with new start-ups specialising in on-ground quick-turnaround logistics, especially for low value high frequency purchases like groceries & food delivery. Hyper-Local matches immediate demand with the nearest available supply in the most cost and time optimized manner
- 9. Adoption of Hyper-Local in India 9 Best of Both Worlds: Brick & Click Quick Wins for Hyper-Local in India Hyper-local has emerged as a result of: Rise of internet users, surge of payment options Proliferation of geo-location aware devices This growth fostered primarily by the need for: Rising impatience among consumers Need for excellent last mile delivery experience 2014 witnessed a rise of hyper-local delivery start-ups in India ~100+ start-ups founded in the last 18 months USD 130mn+ invested across 28rounds, bulk in past 6 months Top segments: Groceries, Food Delivery and Horizontal B2C Top players: Grofers, TinyOwl, Swiggy, ZopNow, PepperTap USD 15bn food delivery market, growing 40% YoY in India Groceries and food delivery segments have seen a sudden increase in the entrance of hyper-local retail players, other categories slowly catching up
- 10. Case Study: pioneering Hyper-Local for Mobile Retail in India 10
- 11. 11 Introducing The Mobile Store (TMS) – the One Stop Mobile Solution Shop TMS is India's first countrywide chain of telecom retail outlets. The format is that of a one stop mobile solution shop that provides complete telecom solutions, offering a wide range of multi brand Mobiles, Mobile Accessories, Connections (Prepaid and Postpaid), Mobile Repairs, Mobile Exchange, Bill Collections, VAS etc. all under one roof. Consumers can avail of After Sales Services not only in the city of purchase but at any of TMS outlets across the country. TMS has forayed into other mode of retailing as they launched their first E-Commerce website in 2008 (themobilestore.in) and 2nd (theelectronicstore.in) in 2013. It has made inroads into the hyper-local delivery market by tying up with existing E-Commerce giants and strike a co-existing model retaining the best of both. Introducing The Mobile Store pioneering Hyper-Local for Mobile Retail in India
- 12. 12 Category Disruption and Growth Plans at TMS 200mn USD revenue (2014-15) 150 SKUs (Stock Keeping Units) across 19 brands 550 stores in 92 cities 44 distribution centres 1 million handsets sold per annum Multi-channel retail: physical, online & hyper-local Capture the digital ecosystem: mobile & related 800 stores in 200 cities 80% coverage of the smart phone market 10 million handsets Current: Vision: The Mobile Store: Quick Facts pioneering Hyper-Local for Mobile Retail in India
- 13. Hyper-Local at TMS: Why do it! 13 Traditional Retail Physical face of seller Speed of delivery Assurance of service Online Retail Hyper-Local Retail Convenience of shop from home Electronic payment gateway Attractive price discounts Order from comfort home Expert delivery from next door seller Price of online, service of offline Brings the store to your door BRICK & CLICK: Combining the best of both worlds! TMS: First in the country to pioneer the Hyper-Local format in the Mobile Retail category TMS’ unique competitive advantages enabling Hyper-Local: Multi-channel approach: physical stores, online sites & mobile app Integrated presence across value chain & customer life-cycle Partnership with other players – product brands & ecommerce No other player in the category has in-house infrastructure to match Brick with Click; aided by Technical Know-how!
- 14. Hyper-Local at TMS: How it works! 14 Powered by FED: Fastest, Expert Delivery FED is a Hyper-Local Service offering with a unique edge of providing fastest deliveries with expert assistance It fulfils an increasing number of online customers who are willing to avail paid express delivery options It replicates The Mobile Store purchase experience at the customer’s door step: Expert Technical Assistance Bouquet of expert services that are unmatched by any other hyper-local mobile seller: Free phone set up Free data transfer Touch & feel of product Best price, paid online Two year complete cover Best operator plans Easy financing options Best buy-back price FASTEST EXPERT DELIVERY
- 15. 15 Layer 1 Layer 2 Layer 3 Layer 4 Layer 5 Layer 6 Layer 7 Price Comparison Site Marketplace Site Marketplace warehouse Courier pickup from market place warehouse Courier aggregation point Courier disaggregation point Delivery to Customer by Courier boy TMS Store Delivery by Expert Online retailers 72 Hours Vs 59 minutes Traditional Online TMS Hyper-Local at TMS: Our USP! Expert delivery targeted in 59 minutes, guaranteed in 2 hours | unmatched industry best-practice offered by TMS
- 16. Hyper-Local at TMS: What it does! 16 Purchase Financial Assistance Customer Advice Value Creation: Technical Support and Mobile Expertise in-built in Delivery Repeat Cycle Buying Intent Research Accessories Data Transfer Buy BackInsurance and Warranty Enables value capture at every step of the product purchase chain Establishes TMS brand relationship at every step of the purchase life-cycle, as displayed above Creates partnership opportunities with ecommerce giants and mobile brands for cross-selling & up-selling Improves inventory management (to add estimate of targeted index reduction) Increases same store throughput as well as per store sales, revenue and margins Achieves brand loyalty resulting from superior customer experience and offering
- 17. Hyper-Local at TMS: What it does! 17 COMPETITION: Central focal point servicing the entire customer base, increasing time and reducing speed of delivery TMS: Concentrated spheres of delivery and dedicated focal points for each customer segment, increasing speed and reducing time of delivery, also allowing customization & value addition Brings us closer to the customer than any other player & therefore gives us a premium on proximity - Competition - TMS
- 18. Challenges overcome by TMS for going Hyper-Local 18 Challenges we faced How we overcame them 1 How to be visible to very large customer base, given the competition Listing on price comparison and marketplace sites to ensure maximum reach through the very large number of visitors to these websites (my smart price, snapdeal, etc.) 2 How to offer a price that is comparable to online platforms Collaborating with online marketplace sites and cross selling handset accessories and VAS to customer during delivery 3 How to build trust with customers to allow value-added delivery in their living rooms Providing full security to customer by monitoring and recording interaction of customers with FED experts. Additionally ensuring fool-proof hiring, background checks and onboard training. 4 How to servicing the high demand coming through FED Formulating an algorithm to locate nearest store in cascaded manner for speedy servicing and monitoring of every request 5 How to ensure easy and smooth purchase experience of buyer Updating customer with real time delivery status and continuous assistance by a customer support executive for any issue and queries
- 19. Looking Ahead: What’s Next?! 19 Hyper-local at TMS is ideally positioned to capitalize on national programmes & stated priorities of the Indian government Digital India will create digital infrastructure across the country and provide access to its young and growing population Jan Dhan Yojana will amplify financial inclusion and provide banking facility across the rural and urban landscape Tie-ups with mom & pop stores Category expansion beyond mobiles Increase reach, enhance portfolio Capture entire digital ecosystem
- 20. Political • The govt. top priorities are digitization (through Digital India) and financial inclusion through the PM’s Jan Dhan Yojana • Both these programmes are opportunities for TMS growth model as it is a perfect intersection of mobile & commerce Economic • As India’s young and growing population enters the workforce, it creates purchasing power that further increases demand • Stronger microfinance engine further drives the consumption push from the bottom of the pyramid Social • Both parents working is increasingly the norm in most urban cities, this means less time for shopping chores • This results in online shopping or labor migration, both require cash transfer convenience and expert delivery Technology • Mobile penetration and fast increasing technology reach makes India an ideal market for the hyper-local retail revolution • With the coming of 4G tele-services and cheap data plans, online consumption will overtake traditional modes of consumption Environment • Reduction in paper/ metal currency is a must for carbon footprint reduction across developed and developing economies • Online payment gateways through digital hyper-local support that cause without losing the benefits of physical transactions Regulatory • For wider tax net, the government will support digitized cash as it ensures transparency of transactions and online records • There have been tax evasion concerns with large e- commerce players exporting from single point. Hyper- local prevents that. Looking Ahead: What’s Next?! 20 Hyper-local at TMS is ideally positioned to capitalize on the government’s stated priorities and industry’s changing landscape
- 21. Individual Learnings and Take-Aways from the Internship 21 1. Industry knowledge Mobile and Retail are among the two most relevant categories for a growing and young consumer base This internship gave me insight and exposure to the strategic and operational aspects of both 2. Hands on experience I was assigned individual projects and targets within a small team (Project FED) This gave me the opportunity to gain hands-on implementation experience 3. Team work Working at TMS taught me the importance and relevance of collaboration This was crucial given that most of our projects involved cross-functional expertise for success 4. Time management I learnt the value of timing as a key success factor of an organization’s growth This was emphasized even more at TMS, given the fast pace at which the mobile industry is evolving daily 5. Big picture I learnt to appreciate the larger objective and longterm perspective of every single decision that a firm or a professional takes This is well illustrated at TMS as we aligned the business growth strategy with India’s national economic prerogatives
- 22. 22 The Hyper-Local Retail Revolution and a case study on mobile retail The India Experience End of Presentation