Quiz - Fintech, FMCG, ECommerce

FMCG
1
Contents
2
Course Contents
•FMCG Industry Overview

 Characteristics of the FMCG industry
 Size and Growth
 Segments
 Share of Rural and Urban demand
 Share of General Trade and Modern Trade
 Penetration and per capita consumption
 Numeric and Weighted Distribution
 Some common strategies adopted by FMCG players
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Course Contents
Category Analysis
 Category break-up in terms of different products
 Growth of different products within the category
 Company Market shares and changes over the years
 Brand shares and changes over the years
 New launches and key category trends
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Course Contents
• FMCG Company Analysis

 Business Mix
 Growth
 Margins
 Distribution
 Analysis of Brands
 New Launches in the last 2-3 years and their performance
 Focus categories for the future
 M&As – Why and their impact?
•Impact of Modern Retail on FMCG
5
Industry
Characteristics
6
CHARATERISTICS OF FMCG INDUSTRY
• Steady growth industry with less cyclicality

• Diversified categories
• Diversified companies
• MNCs – Hindustan Unilever, Reckitt Benckiser, Procter &
Gamble, Nestle etc
• Pan Indian FMCG companies – ITC, Godrej, Emami, Marico etc
• Regional FMCG companies – Arun Ice creams, Arasan Soap, RSPL
etc
• Unbranded products
• Diversified Distribution Channels
• General Trade
• Modern Trade
• E-commerce
• DTC
7
Size and Growth
8
Indian FMCG industry size is expected to become $220 bn in 2025.
FMCG: MARKET SIZE AND GROWTH
in US $bn
250
220
200
Slow Growth due to
•Demonetization
150 •GST
110
100
83.3
68.4
49 52.8
50 38.8 43.1
33.3 35.7
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2025
Source: ibef, Statista

9
Segments
10
Food and Beverages constitute more than half of the FMCG industry.
FMCG: SEGMENTAL SHARE

• Food & Beverages
Health Food Drink, Coffee, Tea, Biscuits,
Noodles, Chocolates, Soft drinks,
Packaged Atta etc
• Personal Care
Hair Care, Soaps, Deodorants, Oral Care etc
• Household Care
Floor Cleaners, Detergents, Dishwash, Toilet
Cleaners etc
Source:
https://www.elearnmarkets.com/blog/sector-fmcg/
11
Rural Vs Urban
12
Rural markets contribute to 35% of the industry revenues and contribute to
50% of the new store additions between 2000 and 2022
SHARE OF RURAL AND URBAN MARKET
New Store Additions
35% Between 2020 and 2022,
Rural 8 lakh new FMCG stores were

Urban
added and more than half of
65% that has come into the rural
area.
Source:
https://economictimes.indiatimes.com/industry/cons-products/fmcg/fmcg-industry-faced-
consumption-slowdown-in-urban-markets-degrowth-in-rural-areas-in-2021-nielsen/
articleshow/89944642.cms?from=mdr
13
Modern trade constitute 15% of the overall FMCG sales which is
much lower than that of other developing or developed countries.
SHARE OF MODERN RETAIL IN FMCG

90% 85%
85%
80%
70%
70%
60%
60%
50%
Modern Trade
40%
40%
30%
30% General Trade
20% 15% 15%
10%
0%
India China Malaysia USA
Source:
1.Industry Reports
2.https://www.indianretailer.com/article/whats-hot/retail-trends/why-traditional-trade-
share-in-grocery-retail-to-fall-by-20-pc-in-next-5-years.a7736/
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PENETRATION AND PER CAPITA CONSUMPTION
• Penetration and per capita consumption are the two important
growth levers for FMCG industry
• Penetration refers to the reach of the category in %
• Per capita consumption refers to the average usage
15
PENETRATION AND PER CAPITA CONSUMPTION
• FMCG companies try to achieve growth either by increasing
penetration or per capita consumption or both;
• Examples
• Launch of Shampoo Sachets
• Launch of pocket size deodrants is an example of the strategy to
increase per capita consumption
16
Even urban penetration of many product categories are
low which indicate high growth potential.
URBAN PENETRATION OF SELECT CATEGORIES
Source: Industry Interactions

17
India’s per capita consumption is half of Indonesia and
one-fourth of China.
LOW PER CAPITA CONSUMPTION
• “per capita FMCG consumption spend in India is amongst the lowest in the
world, giving the industry a long runway for growth. Matching up to
Indonesian levels would grow the market by 2X and to China levels by 4X.”
Sanjiv Mehta, Former CMD, Hindustan

Unilever
Source: https://www.afaqs.com/news/marketing/55364_per-capita-fmcg-consumption-spend-in-india-is-amongst-the-lowest-in-the-world-
sanjiv-mehta-cmd-hindustan-unilever
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Industry Overview -3
• Numeric Distribution
• Weighted Distribution
• Share Among Handlers
19
Numeric Distribution, Weighted Distribution and Share among Handlers
• Numeric Distribution is the percentage of the stores handling the product.
• Weighted Distribution is the quality of distribution. It is the percentage of stores
handling product weighted by product category sales.
• Share among Handlers is the market share of the product in that outlet.
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ILLUSTRATION: NUMERIC DISTRIBUTION, WEIGHTED
DISTRIBUTION AND SHARE OF HANDLERS
Category Maggie Share of

Outlet Sales Sales Handlers
Category : Soups Outlet 1 10000
Brand : Maggie Outlet 2 3000 700 23%
Region: X Outlet 3 1000 500 50%
Outlet 4 4000
Outlet 5 2000 200 10%
Total 20000 1400
Numeric Distribution = Number of Outlets Selling Maggie Soups = 3 = 60%
Total Category Outlets 5
Weighted Distribution
= Sales Volume of the category in Stores selling Maggie Soups = 6000 = 30%
Total Sales Volume of Category in all outlets 20000
Share of Handlers = Volume of Maggie Sales in that Outlet
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Total Volume of the Category in that Outlet
Weighted distribution indicate the quality of distribution and higher weighted
distribution means stronger distribution network
Exercise
In one area, there are 2 stores selling biscuits. Store 1 sell 75 units and Store 2 sell 25 units of
biscuits. ITC’s biscuits are available in Store 1 but not in Store 2. Britannia’s biscuits are available
in Store 2 but not in Store 1. Which company has got the better distribution?
• Numeric Distribution (for both ITC and Britannia) = 50%

• Weighted Distribution for ITC = 75/100 = 75%
• Weighted Distribution for Britannia =25/100 = 25%
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Some common
Strategies adopted in
FMCG industry
23
SOME COMMON STRATEGIES ADOPTED BY FMCG
COMPANIES
• Frequent New Product Introduction

(NPI)
• New Categories
• New Brands in the existing Categories
• New Variants in the existing brands
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COMPANIES
• High spend on advertising

• FMCG brands are the biggest
contributors to advertising spends
across channels with 34% share,
followed by e-commerce at 14%
and automotive at 7%.
• Advertising expenses constitute
around 12-15% of the FMCG
company revenues
• For new brands (0-5 years),
advertising expenses go up to 22- Source:
Industry Interactions, Company Reports
25% of the revenues https://bestmediainfo.com/2022/02/fmcg-ad-spending-
growth-remains-muted-in-q3-fy-21-22
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COMPANIES
• WMI (Win in Many Indias)

 Target growth through offering products in multiple categories, multiple geographies,
multiple channels
 Multiple brands in a category
 Pan India brands and Region specific brands
 Brands across all price points – Premium, mid-market and mass market
 Personalized offerings
 Products in smaller package sizes
 Bundling
• Expanding Distribution
• Battle for Shelf Space
• Share of Shelf
• Location in Shelf
COMPANIES
• Green initiatives (Ex: Smart Fill machines https://www.youtube.com/watch?

v=vs4kqLryjJs)
• DTC
• Ex: Mamaearth, Sugar Cosmetics, MyGlamm, Wow Skin science
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Category Analysis
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Bath and Shower
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BATH AND SHOWER
Category Size : Rs. 30,000 Crores (FY 2023)
1% 7%
5%
87%
Bar Soap Talcum Powder
Body Wash Liquid Soap/Hand Sanitizer
Source:
Estimates from Company Documents , Media Reports and Industry Interactions
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Body wash and Liquid Soap will drive the growth of the category.
BATH AND SHOWER : GROWTH
Products CAGR (2018 -23) Expected CAGR

(2023-27)
Bar Soap 5% 4% to 6%
Body Wash 14% 15% to 17%
Liquid Soap/Hand 23% 12% to 14%

Sanitizer
Talcum Powder -3% -3% to -5%%
Overall Bath and 7% 8 to 10%
Shower
Source:
 Estimates from Company Documents , Media Reports and Industry sources
31
HUL, Reckits, Wipro and Godrej and Reckitts
holds more than 70% share
BATH AND SHOWER : COMPANY MARKET SHARES
Company 2017 2023

HUL 43% 36%
Wipro 6.5% 11%
Reckitts Benckiser 7.5% 10.5%
Godrej 10% 10%
ITC 2% 4%
Nirma 7% 1%
Source:
32
Top 6 brands constitute 50% of the bath and shower
category.
BATH AND SHOWER : BRAND SHARES

Brand Company Market Shares
2017 2023
Lifebuoy HUL 14% 11%
Santoor Wipro 7% 10.5%
Dettol Reckitts 8% 10%
Lux HUL 12% 9%
Godrej No.1 GCPL 6% 6.5%
Source:
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NEW LAUNCHES AND KEY TRENDS
•Due to Covid, Hygiene has become a key driving force

•Hand sanitizer has moved from being a niche to essential
• Traditionally Hand Sanitizers had limited brands like Dettol, Lifebuoy and Himalaya
• COVID-19 created exceptional consumer demand and hence many new entrants
• Even biscuits players like Parle launched their hand sanitizers
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•Attribute and Benefits based competition

• Ex: PH battle (Seabamed vs HUL vs Brinton)
https://www.youtube.com/watch?v=0kmA5GucCAU
https://www.youtube.com/watch?v=_vSRdwdGDAI
 https://www.youtube.com/watch?v=7NmXilDJ8gc
•Products with multiple attributes
 Wipro’s soap brand variant Santoor Glycerine with Vitamins.
 Godrej consumer products launched Cinthol Confidence + as a health soap with
deodorising properties.
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•Products with new attributes

• Dove Gentle Exfoliating Body Wash
•Nature based products (Herbal/Ayurvedic)
• Ex: Mysore Sandal Millenium (150 g soap priced @ Rs. 810 )
•Gender specific products
•Trading up of lower middle and middle income households from bar soap to body
wash / shower gel.
•Talcum powder decline is going to continue due to substitutes and health concerns.
•To regain some of their share, HUL has launched
 Liril body wash and bar soap variants with a strong freshness proposition
 Lux Botanicals
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Hair Care
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Hair Care
6% 2%
19% hair oils
Shampoos and Conditioners

46%
Colourants
Saloon Haircare
Styling agents
27%
Source:
Estimates from Company Documents , Media Reports and Industry sources
38
Colourants, Saloon Hair care, Styling products will
drive the growth in the Hair-Care category.
HAIR-CARE : GROWTH
CAGR (2018-23) Expected CAGR

Category (2023-27)
10% 12% to 14%
Hair Oils
Shampoos and 5% 4 %to 6%
Conditioners
Colourants 12% 13% to 15%
Saloon Hair Care 13% 15% to 17%
Total 12% 13% to 15%
Source:
https://www.mordorintelligence.com/industry-reports/india-hair-care-and-styling-products-market-industry
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Hair care category is quite fragmented. Top 7
companies put together account for only 60% of the
share.
HAIR-CARE : COMPANY MARKET SHARES
Company Market Shares

2012 2023
Marico 7% 17%
HUL 15% 16.5%
L'Oréal India Pvt Ltd 7% 8%
Dabur 10% 7%
Procter & Gamble 9% 7%
Emami 5% 4%
Source:
Estimates from Company Documents , Media Reports and Industry sources
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India’s Coconut Oil War
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• HUL and also it’s parent company were on
acquisition spree in 1980s and 1990s.
• Some of the major acquisitions were:

• Brooke Bond
• Lipton
• Kissan
• Ponds
• Kimberly Clark
• Lakme
• Tomco (Tata Oil Mills Company)
42
TOMCO’s acquisition
• Tomco had several popular brands – Hamam, Okay, Moti, Magic etc
• Tomco also had one coconut oil brand – Nihar though it’s market share was
only 7%
• Marico’s parachute was the market leader in Coconut oil segment with a market
share of 48%
• HUL wanted to buy Parachute brand and add it’s list of acquisitions but Harsh
Mariwala, Founder and Chairman of Marico refused to sell.
• Parachute brand contributed to more than 60% of the revenue of Marico.
43
Coconut Oil War
• HUL launched a full-blown assault on Parachute through it’s

acquired brand Nihar.
• Though Nihar had only 7% share while Parachute had 48% share
in Cocunut oil, HUL outspent Parachute on advertising by 2: 1
ratio
• HUL significantly increased discounts to retailers giving them a
35% margin on Nihar against Marico’s 10% and displaced
Parachute from many retail stores.
• Many industry insiders thought that the best option for Marico
was to sell Parachute brand to HUL
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Marico had a better understanding of Coconut
oil business
• Parachute was Marico’s main brand.
• They had in-depth knowledge of branded coconut oil:
consumer insights, sourcing expertise, a well-established
distribution and marketing set-up, and the significant cost
optimization achieved across the value chain.
• In contrast, for Hindustan Lever, this was one among several
product categories that they had in India and it was far from
being a significant component in their portfolio.
45
How Marico responded to HUL’s assault?
• Mr. Harsh Mariwala met with Mr. Karsanbhai Patel of Nirma

• Ran a massive TV ad campaign focusing on the importance of coconut in
Indian tradition.
• The campaign struck a strong emotional chord with the consumers.
• Till then Marico’s distribution was confined to urban areas
• Due to tough competition from HUL expanded the distribution in rural
areas. Appointed more than 300 super-distributors to sell only to rural
markets and compensated them for additional costs.
• Incentivised the sales force
• Created a war room to take quick decisions
• Launched rejuvenated parachute brand with new packaging
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Result of the Coconut Oil war
• Between 2002 to 2006, Parachute’s market share increased from 48% to 52%
• Though Nihar shared increased from 7% in 1993 to 15% in 2002, it’s share
dropped to 8% in 2006
• HUL requested Marico to take over Nihar brand.
• Marico acquired Nihar brand for Rs. 216 crore in 2006.
• Strengthened their position in Hair care by widening the portfolio:
 Hair oils – Parachute Coconut Oil, Parachute Advanced, Nihar Naturals and
Livon Silky Potion.
 Styling agents - Set Wet, Parachute After Shower and True Roots Botanical
Hair Tonic.
 Shampoo – Hair and Care
47
Why Hair Care category is very
fragmented?
48
Why the Hair care category is fragmented in terms of Market Share?
• Different companies have got their own niche within Hair care
• Marico’s dominance primarily come from their strength in Hair oils
• HUL is the market leader in shampoo segment within Haircare and has Clinic Plus, Dove,
Sunsilk, Clear and TRESemmé brands.
• L’Oreal is the dominant player in the Saloon Hair category
49
Parachute, Clinic Plus and Dove are the 3 biggest Hair-care
brands.
HAIR-CARE : BRAND SHARES

2012 2023
Parachute Marico 5% 9%
Coconut Oil
Clinic Plus HUL 8% 5.5%
Dove HUL 2.5% 5%
Head & P&G 5.0% 3.5%
Shoulders
Bajaj Bajaj Consumer Care 3% 3.5%
Source:
Estimates from Company Documents , Media Reports and Industry sources
50
KEY TRENDS
• Early greying of hair and hair fall issues trigger growth of Ayurvedic natural oils
 Early greying of hair and hair fall have increased significantly compared with previous
generations.
 The key factors triggering these issues have been changes in diet, pollution, increasing
stress and the usage of hair care products containing chemicals.
 There has been a surge in demand for Ayurvedic hair care products such as oils and
shampoos, and for products that are produced naturally.
 According to Euromonitor International’s Voice of the Consumer: Beauty Survey, in
2021, 46% of respondents choose or prefer Hair care products with all natural
ingredients.
51
KEY TRENDS
• Onion juice set to gain traction as an ingredient in hair care products

In India, Onions apart from cooking have been used to stop hair fall and aid hair
growth.
Sulphur from onions help in preventing hair loss, growth of strong and thick
hair and healthy skin.
There has been a strong surge in searches for onion oils in the past three years in
both offline and online.
Major FMCG companies such as Marico, Emami and Bajaj Consumer Care have
all launched onion-based hair oils, alongside several direct-to-consumer (D2C)
brands, such as Mamaearth and Wow Skin Science.
Wow Skin Science also launched a shampoo that contains onion.
52
KEY TRENDS
 Many concerns about hair - volumising, dryness, heat, moisturising,

shine, etc
 Brands promoting SLS and paraben-free hair care products (Ex: Body
Shop, Khadi, Forest Essentials)
 Return to high growth of salons as covid pandemic subside.
 Personalization based on hair type (Ex: Bare Anatomy, Freewill)
 Personalization based on Dosha type (Ex: Vedix)
 Large number of variants – pollution control, weather based etc.
 Customers are also willing to spend more for hair care
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Deodorants
54
Deodorant
22% Liquid Deodorants

(Pumps)
1% Roll ons
Sprays
77%
Source:
55
Deodorant category is expected to grow at a healthy
rate due to low level of penetration.
DEODRANTS : GROWTH
CAGR (2018- Expected CAGR

Category 23) (2023-27)
Pumps 14% 19% to 22%
Roll Ons 10% 12% to 14%
Sprays 9% 11% to 13%
Total 12% 14% to 16%
Source:
https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-market/articleshow/
68623268.cms
56
Deodorant category has been undergoing a major
churn in terms of market share.
DEODORANT : COMPANY MARKET SHARES

Company Market Shares • Vini Cosmetics and ITC
2013 2023
which did not even exist 10
Vini Cosmetics Pvt Ltd 0% 21%
years ago are the top 2
ITC 0% 11%
players.
Hindustan Unilever Ltd 30% 9%
• HUL’s share had dropped
Nivea India Pvt Ltd 6% 8%
significantly from 30% to 9%
Helen Curtis India 2% 6%
Source:
https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-market/articleshow/
68623268.cms 57
Fogg, Engage and Park Avenue are the 3 biggest brands.
DEODORANT : BRAND SHARES

2013 2023
Fogg Vini Cosmetics Pvt Ltd 0% 21%
Engage ITC 0% 11%

Park Avenue Helen Curtis India 2% 6.5%
Wild Stone McNroe Chemicals Pvt 10% 6%

Ltd
Axe HUL 24% 5.8%
Source:
https://timesofindia.indiatimes.com/business/india-business/itc-eyes-top-position-in-deo-market/
articleshow/68623268.cms
58
KEY TRENDS
 HUL lost bulk of it’s market share in the last decade from 30% to 9% despite having 6
brands – Axe, Dove, Denim, Rexona, DIY, Sure due to:
 Wrong promotional strategy for Axe
 Failure of brand extensions of Dove, Denim and Rexona
 Failure of New Launches like DIY, Sure
 Failure to bring innovation in products or promotions.
 ITC introduced the Pocket size Deo in it’s Engage brand which is a big hit.
 Fogg made huge gains through it’s unique liquid deodorant, auto-pause mechanism and
innovative marketing (Ex: Deodorant as a Gift product)
59
On-Trade Vs Off-Trade
60
Almost 46% of Soft drinks sales by value are to on-trade
channel.
SOFT DRINKS : OFF-TRADE VS ON-TRADE BY VALUE

Products Off-trade On-trade
Bottled Water 49% 51%
Carbonates 41% 59%
Fruits and vegetable
Juices 77% 23%
Concentrates 100%
Sports and Energy
Drinks 71% 29%
Overall Soft drinks 54% 46%

Note:
1. On-trade is selling to hotels , restaurants, pubs. (Ex: Coca Cola-
McD, Pepsi-Pizzahut)
2. Off-trade is sales to the end customers through retail outlets.
61
Company Analysis
62
KEY PARAMETERS FOR FMCG COMPANY ANALYSIS
 Business Mix
 Growth and Margins
 Distribution
 Analysis of Brands
 New Launches in the last 2-3 years and their performance
 Focus categories for the future
 M&As – Why and their impact?
 Key Initiatives of the company
Hindustan Unilever
Limited
64
Overview, Business
Mix, Growth and
Margins
65
HUL, among MNC peers is the largest contributor to overall group
turnover
HUL: THE JEWEL IN UNILEVER’S CROWN

Indian Revenue
as % of Global
Company Revenues • 90% of Indians use at-least one HUL product.
Hindustan
Unilever 12% • India is the second biggest market for Unilever after
Reckitt Benckiser
(India) 7%
US.
Colgate Palmolive
(India) 3%
Mondelez (India) 3% • India is expected to become the largest market for
Procter & Gamble
(India) 1% Unilever between FY 27.
Nestle (India) 2%
L'oreal (India) 1%
Source: Company Reports

Personal Care products contribute 42% of HUL ‘s Sales
but close to 50% of it’s profits.
BUSINESS MIX: REVENUE AND PROFIT CONTRIBUTION
Revenue Contribution EBITDA Contribution
Food &
Food & Beauty Refresh
Refresh and ments,
ments, Beauty
Persona 23%
28% and
l Care,
Persona
38%
l Care,
48%
Home
Home care,
care, 29%
34%
Source: Company Documents

HUL annual growth increased from 7.8% between 2003 to 2010
to 8.6% between 2010 and 2022.
REVENUE GROWTH TRENDS

60
50.3
%
50
R : 8.6
CAG 45.3
40 37.7 38.2
33.9 34.6
32.1 32.9
7.8 %
28.9
30
G R : 26.6
CA 22.8
20.2 20.5
20 16.5
14.8
13
11.1 10.8 11.9
10
0
FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY
2003 2004 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

HUL’s margin decreased between 2003 and 2010 but on an
upward trend since 2010.
EBITDA Margin in %
30%
25%25%
25% 23%
21% 21%22%
19%20%20%
20% 18%
16% 17%17%
15% 15%15%
15% 13%14% 13%
10%
5%
0%
FY FY FY FY FY FY FY FY FY FY
2003 2005 2007 2009 2012 2014 2016 2018 2020 2022

HUL has been able to increase the margins for each of its
segments.
BUSINESS MIX : SEGMENT WISE MARGINS
EBITDA in % FY 17 FY 18 FY 19 FY 20 FY 21 FY 22
Beauty and 23.6 25.3 26.5 28.1 28.5 28%

Personal Care
Home Care 11.1 14.6 16.8 18.8 19.9 19%
Foods and 14.1 15.2 17.3 16.5 16.6 18%

Refreshment

Analysis of Distribution
and Brands
71
HUL has strongest distribution in both General and
Modern Trade
DISTRIBUTION: GENERAL TRADE AND MODERN TRADE
Company General Trade Modern Trade

Reach Sales
Contribution
HUL 9.5 mn 21%
Dabur 6.8 mn 17%
ITC 6.7 mn 16%
GCPL 6.2 mn 12%
Colgate 5.4 mn 12%
Marico 5 mn 20%
Source: Company Documents, Industry Sources

72
Winning in many Indias (WMI) is one of the important
strategies of HUL.
HUL’s brands straddle the entire price pyramid across, different

categories.
Examples
Premium Brands Surf, Dove, Taj Mahal, Lipton
Rin, Sunlight, Pepsodent, Bru, 3

Mid-priced Brands Roses
Mass Brands Wheel, Lifebuoy, Taaza, Sunsilk
73
PERFORMANCE OF TOP BRANDS
2011 2022
No. of Brands with Annual 0 2 (Surf Exel, Brooke
Revenue of more than Rs. 5000 Bonde)
crores
No. of Brands with Annual 0 8 (Wheel, Glow &
Revenue of Rs. 2000 crores to Lovely, Lifebuoy,
Rs. 5000 crores Horlicks, Dove, Vim,
Rin)
No. of Brands with Annual 7 (Surf Exel, 6 (Lakme, Ponds, Lux,
Revenue of Rs. 1000 crores to Wheel, Brooke Clinic Plus, Lipton,
Rs. 2000 crores Bond, Fair & Boost)
Lovely,
Lifebuoy, Lux,
Rin)
Source:
Company Documents
https://www.livemint.com/companies/news/huls-dove-rin-vim-brands-enter-rs-2-000-crore-
club-in-fy22-11651132046035.html
74
While 10 of the top 11HUL brands belong to Personal care, 5 of the
top 6 FMCG brands of ITC belong to Food and Refreshments.
TOP ITC BRANDS
• Ashirwad Atta > Rs. 6500 crores
• Sunfeast biscuits > Rs. 4500 crores
• Bingo Chips and Snacks > Rs. 3000 crores
• Yippie Noodles > Rs. 1500 crores
• Mint-o, Candyman, Gum on > Rs. 750 crores
• Vivel > Rs. 600 crores
75
PERFORMANCE OF NEW LAUNCHES
Brands launched in the Category Performance

last few years
Indulekha Hair oil, Shampoo
Lever Ayush Beauty and Personal Care
Comfort Fabric Conditioners
Love and Beauty Planet Beauty and Personal Care Excellent or
Love and Care Liquid Fabric Wash Good
Magnum Ice Cream
Pure Derm Shampoo
Cif Surface Cleaner
Citra Skin Care Poor
Sure Deodorants
Source: Company Analysis

HUL is betting on 9 categories for future growth.
FUTURE CATEGORIES
Facewash, Instant
Explode
Coffee, Handwash
Soups, Hair
conditioner, Liquid Accelerate
Detergents, Fabric
Conditioners
Bodywash, Liquid Seed

Dishwash

77
Analysis of recent
M&As of HUL
78
RECENT ACQUISITIONS
Source: Company
79
INDULEKHA
Indulekha is the most expensive even

among Ayurvedic oils
• Acquired in April 2016 for Rs330 crs, the brand had

an annual turnover of Rs100 crs
• In 2019, the brand clocked a turnover of Rs400 crs
(4x) and the Valuation increased to Rs. 2000 crs
(6.8x)
• HUL converted a regional brand into Pan India
brand through it’s distribution and marketing.
Source: https://www.business-standard.com/article/companies/hul-s-
indulekha-enters-rs-2-000-cr-club-three-years-after-acquisition-
119082301346_1.html
80
GSK MERGER
• HUL-GSK merger is the biggest in the Indian consumer goods space.

• GSK major brands Horlicks, Boost, Viva and Maltova
• Health Food Drinks (HFD) is an under penetrated category and HUL aims
to grow the category more than 5x
• Post merger, HUL launched Rs. 2 , Rs. 5 and Rs. 10 sachets of
Horlicks and Boost to increase penetration.
• Distribution Synergies
• Strengthening of GSK brands in North and West where Mondelez is the
leader.
• Cross Promotions
• Cost Reduction (GSK had very high operating Cost structure )
81
Key Initiatives of HUL
82
• Project Shakti
• Project Shikhar
83
Project Shakti
84
PROJECT SHAKTI: MOTHER OF ALL RURAL
MARKETING SCHEMES
https://www.youtube.com/watch?v=Idu-tFCle2A
85
MARKETING SCHEMES
• Launched in 2001 as CSR to empower Rural Women.
• Rural women from poor background villages were appointed as HUL Distributors –
“Shakti Ammas”
• Training to them would be provided by HUL’s team of Rural Sales Promoters (RSPs)
in various areas - sales, marketing, accounting, fundamentals and problem-solving
techniques as well as improving their communication and negotiation skills.
Note: https://www.hul.co.in/planet-and-society/case-studies/enhancing-livelihoods-through-project-shakti//
86
MARKETING SCHEMES
• In 2023, HUL had more than 1,60,000 Shakti Ammas (SAs) covering 18 states.
• Through Project Shakti, HUL reached more than 4 lacs of the 6.4 lacs villages in India.
• Sales through Project Shakti is in the range of Rs. 3500 crs to Rs. 4500 crs which is around 7-
8% of the company’s turnover.
• During Covid lockdown, Project Shakti has helped HUL to ensure uninterrupted supply of
products in rural India.
• Though it started as CSR, Project Shakti now gives huge strategic advantage to HUL and
contributing to the company’s mainstream business.

Note: https://www.hul.co.in/planet-and-society/case-studies/enhancing-livelihoods-through-project-shakti//
87
Shikhar app
Digital Leap for Small Retailers
88
Shikhar – Not just an ordering app
• Through Shikhar app, Kirana Stores could place orders with HUL directly, without the
involvement of distributors and sales personnel.
• More than an order placement app, Shikhar app empower the shopkeepers in several ways:
 Retailers could see different offers and schemes that the company was offering at any
point in time.
 They get notifications about the details of the orders, dispatch schedules, and delivery
time.
 Shopkeepers could also see the products that were in demand in their locality.
 Shikhar app also give recommendations to shopkeepers on which products they needed
to stock to improve sales.
89
Shikhar app – How it works?
• SHOPKHATA
 Shikhar also has an additional feature called ShopKhata.
 This enables the retailers to maintain records of the goods sold on credit and the amount
received.
 Through ShopKhata, the shopkeepers could send reminders to the customers about payments
due as well.
90
Shikhar app – How it works?
• Credit Availability through SBI partnership

 According to CEO of HUL,
“In India, as many as 10 million retailers faced problems in accessing credit because of their
informal operation and non-adoption of digital technology”
 HUL’s retailers who use the company's Shikhar app will be able to avail SBI’s instant
paperless overdraft facility of up to ₹50,000 to retailers to help them settle their bills
with distributors.
 This has been enabled through SBI’s YONO (You Only Need One) app.
 HUL-SBI partnership would greatly help small retailers in accessing credit.
91
Shikhar app in Numbers
• Over 5,00,000 retailers are ordering through Shikhar app.
• This constitute over 6% of HUL’s massive reach of 9 mn outlets.
• 60 per cent of the retailers in towns with a population of over 5,00,000 started using Shikhar
app.
• Value of orders placed through Shikhar app has been doubling every year since it’s launch in
2020.
Source:
•News Reports
•https://bloncampus.thehindubusinessline.com/case-studies/how-hul-enabled-small-retailers-to-take-the-digital-
leap/article34812609.ece
92
93
Patanjali became third largest FMCG company in India in 2017.
NEW PECKING ORDER IN FMCG INDUSTRY

Company Revenue in Rs.
Cr 2017
HUL 30,783
ITC (FMCG) 10,337
Patanjali (excluding pharmacy) 9,200
Nestle India 9,159
Godrej Consumer Products 9,134
Britannia 8,844
Dabur 7,691
Marico 5,918
Colgate-Palmolive 4,010
Emami 2,480
Source: Capitaline, Business Standard
94
While Patanjali has grown almost 92x between FY 11 and FY 17
but it’s growth suffered for the next couple of years before
marginally recovering since 2019.
PATANJALI AYURVED: FMCG REVENUES

R s. C ro res
12000
10664
9810
10000 9200 9022
8330
8136
8000
6000 5000
4000
2006
2000 1184
100
0
Source:
ET, Business Standard and other Media Reports
95
1. How Patanjali grew very fast between 2011 and 2017?
2. Why their growth stagnating after 2017?
3. Analysis of Ruchi Soya acquisition
96
How Patanjali grew very fast between 2011 and 2017?
97
FACTORS CONTRIBUTING TO PATANJALI’S SUCCESS
BETWEEN 2011 TO 2017
 FLANKER STRATEGY
 Alternative Distribution System
 Ayurvedic products
 Low Price
 Less Advertisements and promotion costs
 Branded House Strategy
 Combination of Yoga, Baba Ramdev’s popularity, Spirituality, Nationalism
and Religion
 Initially entered less competitive categories
 Launched products across many categories in short time
98
PRESENCE ACROSS CATEGORIES
• Patanjali’s top 3 categories -

Cow(Ghee) (Rs. 1467
Crores), followed by
Toothpaste (Rs. 940
Crores) and them
Shampoo (Rs. 850 Crores).
• These three products
contributes ~35% of the total
sales.
Source: https://unlistedzone.com/analysis-of-patanjali-an-indian-fmcg-giant-of-baba-ramdev/
99
Why Patanjali’s growth stagnated from 2017?
100
While Patanjali has grown almost 92x between FY 11 and FY 17
but it’s growth suffered for the next couple of years before
marginally recovering since 2019.
PATANJALI AYURVED: FMCG REVENUES

R s. C ro res
12000
10664
9810
10000 9200 9022
8330
8136
8000
6000 5000
4000
2006
2000 1184
100
0
Source:
ET, Business Standard and other Media Reports
101
•Lack of readiness of the Channel for GST compliance in 2017
•Other strong FMCG companies increased their focus on Ayurvedic and
Nature based products.
•Quality issues on certain products and risk of branded house strategy
•Serious Process Issues
• Weak Distribution
• Poor Replenishment– Many retailers report frequent stockouts
• Receivables of 86 days1 much higher than the industry average of 14 to
21 days.
• Excessive Diversification intentions(Logistics, SIM cards, Solar panels,
Phones, Jeans etc)
•Fail to become market leader or achieve critical market share in many of the
categories
Source:
1. https://unlistedzone.com/analysis-of-patanjali-an-indian-fmcg-giant-of-baba-ramdev/
102
Acquisition of Ruchi Soya
103
OVERVIEW
• Ruchi Soya had strong core business portfolio.
• It landed into trouble because the earlier promoters made huge losses in trading
activities and in their international business.
• This led to debt in their core business and the company had to go to insolvency
process.
• Patanjali acquired Ruchi Soya in 2019 for Rs. 4350 crores under insolvency process.
• After acquisition, rebranded as Patanjali Foods.

104
Why Patanjali acquired Ruchi Soya?
• Strong presence in cooking oils including mustard, sunflower,

Portfolio of established palm, cottonseed and groundnut oil.
brands • Robust brands portfolio of Mahakosh, Ruchi Gold, Ruchi
Star, Sunrich, Soyumm, Tulsi, Ruchi No.1, Bakefat, Avanti,
and vanaspati and other brands, are well positioned in the
market.
• Ruchi Gold is India’s highest selling palm oil brand.
• One of the largest integrated oil seed solvent extraction and
Strong backward linkages edible oil refining companies in India.
• The largest oil palm plantation company in India, with
allocated area of ~5 lakh hectares, of which ~60,000 hectares is
currently developed.
• Pioneered soya chunks with a leading ~40% market share in
Leader in soya foods India through its brand ‘Nutrela’.
• Exports Soya products to more than 31 countries
105
Ruchi Soya Turnaround
• Professional Management through big ticket hiring:

• Hired former Reliance Retail and Cargill Chief Executive, Sanjeev Asthana, as CEO,
• Hired Sanjeev Khanna, who had previously done stints with ITC, Metro Cash &
Carry and BigBasket, as COO.
• Improved Operations
• Prior to takeover, 12 out of the 23 manufacturing facilities of Ruchi Soya were
functional.
• More than 20 plants became operational by 2022
• Refining Capacity utilization increased from 40-50% to 60-65%
• Crushing Capacity utilization increased from 30% to 50%
Source:
https://www.businesstoday.in/interactive/immersive/patanjali-ramdev-ruchi-soya-fmcg-company/
Media and Company Reports
Industry Interactions
106
Ruchi Soya Turnaround
• Strengthened distribution:
• Added 2400 new distributors
• Launched an app called BPos, which has helped retailers to place order online and resolved
many supply chain issues.
• Built personal rapport with distributors through face-to-face meetings
• Towards profitability:
• Ruchi Soya's commodity products generate low margins in the range of 6-7% while their
branded business like Nutrela generate 20% to 25% margins
• After acquisition, Patanjali has increased the focus on branded business
• Targeting to achieve 80% of revenues from branded business.
Source:
https://www.businesstoday.in/interactive/immersive/patanjali-ramdev-ruchi-soya-fmcg-company/
Media and Company Reports
Industry Interactions
107
Patanjali delivered top notch financial performance of
Ruchi Soya after it’s acquisition.
FINANCIAL PERFORMANCE
Rs. Crore FY 20 FY 21 FY 22 2 Year
CAGR
(FY20 to
FY22)
Net Sales 13,117.8 16,318.6 24,205.4 36%
EBITDA 400.9 954 1487 92.6%
EBITDA 3.1% 5.8% 6.1%
Margin %
Net Profit 224 680 806 90%
Source:
Company Reports
108
Ruchi Soya’s stock turned a multi-bagger after the
acquisition by Patanjali.
Share Price in Rs. Market Cap in Rs. crores
60000 49,840
1375
1500 50000
40000
1000 30000
216
20000
500 10000
6.88 0
2019 Aug-23
0
2019 Aug-23
https://www.business-standard.com/article/companies/patanjali-group-eyes-rs-1-trillion-turnover-over-the-
next-5-7-years-122091601256_1.html
Ruchi Soya’s acquisition Patanjali to become 2nd largest FMCG company in
India.
FY2022 Annual Revenues in Rs. crores

50,300
40,000
15,994

https://www.business-standard.com/article/companies/patanjali-group-eyes-rs-1-trillion-turnover-over-the-
next-5-7-years-122091601256_1.html
Impact of Modern
Retail on FMCG
111
Modern trade constitute 15% of the overall FMCG sales which is
much lower than that of other developing or developed countries.
SHARE OF MODERN RETAIL IN FMCG

90% 85%
85%
80%
70%
70%
60%
60%
50%
Modern Trade
40%
40%
30%
30% General Trade
20% 15% 15%
10%
0%
India China Malaysia USA
Source:
1.Industry Reports
112
Share of modern trade in FMCG has been increasing steadily.
SHARE IN MODERN TRADE TRENDS
30%
25%-30%
25%
20%
15%
15%
10%
5%
5% 1%
0%
2000 2010 2020 2030E

Source:
1.Industry Reports
113
Impact of Modern Retail on FMCG
Pros Cons
• One more distribution • Shift in Bargaining power
Channel • Private Labels
• Modern retail can increase • Channel Conflicts with
the sales due to better General Trade
visual merchandising and
Store level activation
• Less distribution cost

114
Data Source for FMCG
115
• Equity Analyst reports (Edelweiss, HDFC Securities, Prabhudas
Liladhar, Nirmal Bang, Nomura, Motilal Oswal etc).
• Equity Analysts reports can be accessed for free at Trendlyne (
https://trendlyne.com), ET intelligence and websites of Equity
Analyst Companies
• Annual Reports of FMCG companies
• Statista
• Euromonitor
• CMIE
• ET intelligence, ET Prime
• https://the-ken.com
• Many other databases
• Talk to the people from the industry (Ex: your alumni)
• Regular reading of business dailies
116
FINTECH
KEY POINTERS
• What is Fintech? What are the major segments within Fintech?

• Why Fintech industry is growing fast?
• How China became the biggest market for many Fintech segments and remained so till 2020?
• How Ant Financial became the largest Fintech company ?
• Why Chinese government has been cracking down on tech companies after 2020?
• Segmental Analysis
• Digital Payments
• P2P Lending
• Roboadvisory
What is Fintech?
• Technically, FinTech refers to the use of technology in the financial services
industry.
• In practice, Fintech companies generally indicate those technology companies that
provide financial services
FINTECH: KEY SEGMENTS
Fintech
Digital Payments Alternative Lending Robo Advisory Insure Tech

or P2P lending
Fintech Growth Drivers
Emergence of
Global Financial Exponential enabling
Crisis of 2008 and growth of E- Ease of use
technologies
the resultant risk commerce and like
aversion of banks Social Media Blockchain, AI,
ML, Quantum
Computing
How China became
and remained Fintech
Capital till 2020?
LOW PENETRATION OF TRADITIONAL BANKING
• Banks in China were mostly State owned, not efficient and predominantly lend to big
enterprises.
• Small businesses, micro-enterprises and rural population were largely ignored by the
traditional banks while in US and Europe, penetration of the banking services are much
higher.
• In 2015, while more than 85% of US citizens had credit score less than 1/3 rd of the
Chinese population had credit score

GROWTH OF E-COMMERCE/SOCIAL MEDIA COMPANIES
• Chinese E-commerce and social media grew very fast in a short period of time (Ex:
Alibaba, Tencent)
• E-Commerce companies have huge advantage when it comes to providing financial
services
• Because so much is sold via these apps, Alibaba and Tencent know the health of many
small businesses and individuals across China.
• As a result, they can lend to small companies and individuals with no credit score that
banks might consider too risky.
• E-Commerce/Social Media companies can understand other financial needs much better
than the banks.
Source:
https://www.technologyreview.com/2018/12/19/138354/how-china-got-a-head-start-in-fintech-and
-why-the-west-wont-catch-up/
ABSENCE OF STRICT PRIVACY NORMS
• Many technologies which would not be possible in US/Europe/India due to privacy
concerns can be easily implemented by Chinese companies (with the consent of the
Chinese government).
• Chinese companies control far more and see into more of their users’ lives than any
individual companies in the US/Europe/India can ever do.
• This helped them to identify individual needs accurately.
Source: https://www.technologyreview.com/2018/12/19/138354/how-china-got-a-head-start-in-fintech-and-why-the-west-wont-catch-up
LOW ENTRY BARRIERS
• In the initial years of Fintech, China left the Fintech market virtually unregulated .
“Abner An, Founder of Daokoudai, a P2P platform, said that “there was no entry barrier to
start a P2P business [at the beginning],” and anyone could “spend RMB 40 (US$ 5.8) to buy
some [P2P] software from Taobao…anyone start an online lending business without any
regulator’s scrutiny.”
• In US /Europe/India, Fintech companies need to follow financial sector regulations.
Source: https://www.technologyreview.com/2018/12/19/138354/how-china-got-a-head-start-in-fintech-and-why-the-west-wont-catch-u
MANY TECHNOLOGIES COMPANIES ARE NOT ALLOWED TO OPERATE
IN CHINA
https://en.wikipedia.org/wiki/List_of_websites_blocked_in_mainland_China
AMAZON IN CHINA
• Amazon entered China in 2004 market by acquiring Chinese Ecommerce company “Joyo.com”.
• But right from the beginning, Amazon faced stiff competition from Chinese e-commerce giants
Alibaba and JD.com.
• Chinese customers found product offerings, User Interface, marketing etc of Alibaba, JD.com
superior to Amazon.
• Chinese government also tacitly promoted its domestic companies.
• Amazon never gained any traction in China and always remained a marginal player
• In 2019, Amazon shut down it’s China operations.
• Amazon had a market share of less than 1% when it exited China

CHINESE FINTECH COMPANIES MASSIVE IN SIZE
• In May 2019, Mainland China

had eight of the world’s leading
FinTech unicorns, with an
average value of $26.8 billion.
(compared to $3.2bn for US)
• That is eight times greater than
the average value of North
American FinTech unicorns.
• Hong Kong hosts 4 more
unicorns, taking China’s total to
a remarkable 12 unicorns.
Source:https://www.penser.co.uk/fintech-in-asia/fintech-in-china/
ANT FINANCIAL : GLOBAL GIANT
• Most highly valued Fin-tech company in the world till 2020
• Alipay overtook both PayPal and Square combined in volumes in 2014.
• In 2018, the company’s $150 billion valuation was about the same as the combined
market capitalization of Morgan Stanley and Goldman Sachs.
• The company’s valuation was $320bn in October 2020 (Paypal’s market Capitalization
was $250 bn on 21st January 2021) before it’s IPO was called off.
Source:
1.
https://www.reuters.com/article/us-ant-financial-valuation-exclusive/exclusive-chinas-ant-aims-for-200-billion-price-
tag-in-private-share-sales-sources-idUSKBN1ZG1C6
KEY SUCCESS FACTORS FOR ANT FINANCIAL
• Business Spread
• Big Data advantage
• Government investment and Regulatory support
• No legacy and need for disruption
• Financial Cloud Platform
• International Expansion
BUSINESS SPREAD
• Ant Financial is a holding company for eCommerce giant Alibaba’s financial products.
• It includes multiple financial businesses operating in areas such as
• Digital payments: Alipay
• Micro loans (Ant Micro Loan)
• Personal finance:
 Marketplace lending: Ant Check Later
 Wealth management: Ant Fortune
• Online banking: Mybank
• Insurance : Sesame
• Financial Cloud: Aliyun
BIG DATA ADVANTAGE
• Ant Financial is a part of Alibaba’s huge e-Commerce ecosystem and had the following
advantages
 Access to a large customer data
 Faster conversion of Alibaba’s ecommerce customers also to Fintech services
 Accurate evaluation of credit risk
 Mammoth Technology infrastructure

GOVERNMENT INVESTMENT
• Alibaba group had enormous support from Chinese government till 2020.
• Chinese government has direct stake in Ant Financial through China Investment Corporation
(CIC), China Consumer Bank (CCB), China Life, China Post Group.
LOW ENTRY BARRIERS AND NO LEGACY AND HENCE NO NEED FOR
DISRUPTION IN CHINA
• US and Europe had highly developed banking sector beginning from 18th Century
• Credit cards were launched as early as 1950s
• Fintech companies in US/Europe companies had to challenge this legacy.
• In contrast, when Ant Financial started it’s payment arm in early 2000s, there was no legacy and
much to disrupt.
FINANCIAL CLOUD PLATFORM
• Alibaba set up it’s cloud division (Aliyun) as early as 2009 when Amazon and Google
were conducting tests and proof-of-concepts.
• It’s a one-stop shop for all financial solutions including risk management, deposits,
mobile apps, infrastructure as a service, platform as a service, know your customer
(KYC), etc.
• Aliyun experienced rapid growth aided by the fact that many foreign cloud providers
were barred from entering mainland China.
INTERNATIONAL EXPANSION
• International expansion is a new but important strategic goal for the current stage of Ant’s growth,
and the main focus is on Asia.
• Acquired significant stake in Indian payments giant Paytm (owns 42% stake)
• Invested in Singapore-based company V-Key and partnered with Thai payment firm Ascend.
• It also has digital wallet licenses in countries such as Indonesia, the Philippines, and Vietnam.
Why China is cracking
down on Fintech?
“Rectification”
• When Ant Financial IPO was stalled, it was thought to be a crackdown on Alibaba.
• Later controls were extended to many internet companies (Ex: Tencent Holdings,
JD.Com and TikTok owner ByteDance Ltd. and ride-hailing giant Didi Chuxing).
• Tech companies becoming very big for Chinese government’s comfort.
• Chinese government felt that these internet companies are not really tech companies
bringing innovation but are earning through transactions.
• No real impact on economy in terms of jobs, income growth and building human
capabilities.
• Tech companies bringing in bad social behaviour - excessive gaming, reckless lending
and borrowing.
• Concerned about educational inequality and content w.r.t Ed tech companies.
• Felt the need to shift the focus back to manufacturing.
Digital
Payments in
India
In April 2023, almost 900 crore UPI transactions valuing Rs. 1.4 lac crore happened in India.
UPI : SIZEAND GROWTH
Source:
https://www.npci.org.in/what-we-do/upi/product-statistics
UPI has a market share of more than 80% percent in transaction volume and value while credit
and debit cards have under 15% share put together..
UPI VS OTHERS
Source:
https://www.smartprix.com/bytes/upi-was-the-most-preferred-payment-mode-in-india-in-2022/
MDR ABOLITION
• Merchant Discount Rate or MDR is the rate (processing fee) charged to a merchant (seller
or the service providers) on transactions made via credit or debit cards or UPI or Wallets.
• Merchant Discount Rate (MDR) was abolished and made to zero for all UPI transactions
from Jan 2020.
• Prior to its abolition, this fee was typically between 1%-3% of the overall amount.
Phone Pe is the market leader in Digital payments in India with 47% market share.
UPI MARKETSHARE
PHONEPE : GROWTH AND REACH
• Over 200 mn monthly active users, with most of its growth coming from tier-2 and tier-3 cities.
• Over 4 billion transactions per month.
• Acquired gigindia, a marketplace for gig workers.
• Till June 2022, PhonePe has raised a total of $2.6B in funding over 18 rounds that includes
Tiger Global Management , Tencent and General Atlantic as investors.
• Valuation of more than $12 bn
Source:
https://economictimes.indiatimes.com/tech/technology/phonepe-says-it-clocked-100-million-transactions-in-a-day-for-the-first-t
ime/articleshow/90823278.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
https://www.business-standard.com/article/markets/phonepe-prepping-for-ipo-seeks-valuation-of-8-bn-10-bn-report-122061500
738_1.html#:~:text=PhonePe%20had%20last%20raised%20USD,Management%20and%20Tencent%20as%20investors
.
https://www.google.com/search?q=phonepe+valuation&rlz=1C1SQJL_enIN964IN964&oq=phonepe+valuation&aqs=chrome..69i
57j0i512l3j0i22i30l3j69i60.3337j0j9&sourceid=chrome&ie=UTF-8
Phonepe’s revenues increased more than 10 times between 2019 and 2023 while its losses as
percentage of revenues have come down due to expense control
FINANCIAL PERFORMANCE
All in Rs. Crores

Losses as % of Revenues
•2019: -1034%
EBITDA •2020: -476%
•2021: -257%
•2022: 113%
•2023 (9 months): 21%
urce:
ttps://entrackr.com/2021/01/phonepe-operating-revenue-jumps-2x-to-rs-372-cr-losses-fall-marginally/
tps://entrackr.com/2021/10/phonepe-revenue-jumps-85-in-fy21-outstanding-losses-mount-up-to-rs-6329-cr/
tps://entrackr.com/2023/02/phonepe-posts-rs-1913-cr-revenue-in-first-9-months-of-2022/
PHONEPE: “SWITCH”: SHORTCUT OF APPS
• Launched 'Switch' (web-apps platform) in March 2018, and has over 250 apps, which has also
played a significant part in the merchant partnership story.
• 'Switch' allows a customer to move seamlessly between PhonePe and his/her favourite food,
shopping and travel apps from within the PhonePe app itself and without downloading
different apps.
• It collects revenue from a partners through the 'Switch' platform for placement of apps, sale
and promotions
PhonePe is betting big on multiple revenue streams.
PHONEPE: OTHER REVENUE SREAMS
• It offers financial services such as tax-saving funds, digital gold, mutual funds, and insurance
products, including car and bike insurance, domestic travel insurance, dengue and malaria
insurance, personal accident cover and international travel insurance.
• Earns a commission for the payment of electricity bills, water bills, gas bills, and more.
• Has announced that it will be charging up to Rs 2 worth of processing fees against all the
mobile recharges made over its digital app, as of the reports dated October 23, 2021.
BIG DATA ADVANTAGE
• Like Alipay, Phone Pe can gain Big Data Advantage of being a subsidiary of Flipkart
• Flipkart can encourage use of Phone Pe through attractive cashbacks and offers
• Flipkart can enrich it’s customer understanding through Phone Pe’s payment data of more than
a 2.5 billion transactions per month.

Despite much less market share in UPI compared to Phonepe, Paytm clocked much higher
revenues than Phonepe in FY 23.
PAYTM Vs PHONEPE
Parameter Paytm Phonepe
UPI Market 15% 47%

Share
Revenue in FY 23 Rs. 7990 crs Rs. 1913 crs1
Note:
1. Phone pe’s revenue was for 9 month period in FY 23
Source: Company Documents, RBI, I-Sec Research

Source: https://inc42.com/features/paytm-broadens-focus-beyond-payments-to-fintech-ahead-of-mega-ipo/
Paytm has been achieving impressive growth and achieved operational break even in the 4th
quearter of FY 23.
PAYTM : FINANCIAL PERFORMANCE
FY 21 FY 22 FY23 FY 24 E FY 25 E
Revenue in Rs. cr 2802 4974 7990 10440 13220
Contribution Profit in 362 1498 3900 5720 7510

Rs. crore
Contribution profit 12.9% 30.1% 48.8% 54.7% 56.8%

margin
EBITDA (before -Rs. 1767 -Rs. 2340 -Rs. 176 Rs. 250 Rs. 420
ESOPs) in Rs. Crs
EBITDA margin in % -63.1% -47% -2% 2.4% 3.2%
Source:
1. Company documents and media reports
Paytm’s breadth of services ensures that company has less dependency on UPI
payments for overall revenue growth.
PAYTM : MAJOR BUSINESS SEGMENTS
• E-Wallets
• Paytm Payments Bank Limited
• Paytm General Insurance Limited
• Paytm Life Insurance Limited
• Paytm Money Limited
• Paytm E-Commerce Private Limited
• Paytm Digital Gold
• Small Banking licence (in the future)
Implementation of UPI led to a decline on E-wallets where Paytm had dominance
E-WALLETS:
• Paytm was dominating the E-wallets segment.

• Implementation of UPI made E-wallets less convenient though wallets are still in usage
PAYMENT BANKS: KEY REGULATIONS
•Acceptance of demand deposits, i.e. current and savings bank deposits.

However, payment banks will initially be restricted to holding a maximum
balance of Rs. 100,000 per customer.
•Payment banks will not be allowed to disburse credit.
•They can also distribute simple financial products like mutual funds and
insurance.
•They can also charge MDR for Debit cards.
• The minimum capital of a payment bank is Rs. 1 billion.
159
PAYTM PAYMENT BANK LIMITED (PPBL)
• Launched in 2017
• Have more than 64 mn savings account holders and over 60 mn debit card holders
• Had crossed Rs. 5200 crores in Fixed Deposits.
• 35-40% market share in the Payments Banking space.
• In 2019, Paytm Money integrated with Paytm Payments Bank to offer seamless product and
services for investment and wealth management.
• Make money by investing the savings /current deposits in partner banks, cross selling of
financial products and MDR from Debit card transactions.
• PPBL is the primary bank for many rural and small business account holders which automatically
make them to come to Paytm for their other financial needs
Source:
•https://www.moneycontrol.com/news/business/startup/paytm-payments-bank-aims-to-open-10-crore-savings-account-by-ma
rch-satish-gupta-3756011.html
•https://www.moneycontrol.com/news/business/paytm-payments-bank-crosses-rs-600-crore-in-fixed-deposits-5240551.html
•https://www.livemint.com/news/india/paytm-payments-bank-reports-rs-29-8-crore-net-profit-for-fy20-11591700312170.html
Paytm has classified its revenues into five segments.
REVENUE SEGMENTS
1. Payment Services to merchants: (Ex: Payment gateways, EDC and Soundbox devices
etc)
2. Payment Services to Consumer : (Ex: Convenience fees)
3. Financial Services : Loans and sale of financial of Financial products
4. Commerce Services: Revenues from sale of services such as travel and entertainment
ticketing etc
5. Cloud Services: Revenues from providing Advertising cloud and software services to
merchants
Source:
•Industry Reports, i-sec research
Each segment of Paytm experienced impressive growth and Financial Services growth grew
the fastest in the last couple of years.
PAYTM: SEGMENT-WISE FINANCIAL PERFORMANCE
% Growth
between March 21
Particulars in Rs. Crs Mar-21 Mar-22 Mar-23 and March 23
Payment Services to
Consumers 969.2 1528.6 2237.2 131%
Payment Services to
Merchants 1011.6 1891.9 2556.8 153%
Finaancial Services and
Others 128.4 437.2 1598 1145%
Commerce Services 245.2 373.6 719.1 193%
Cloud Services 448 731.2 958.8 114%
Total Revenues 2802.4 4962.5 7990 185%

PAYMENT SERVICES TO MERCHANTS
Merchant base increased to 31.4m Devices deployed stood at 6.8m as on

FY23
Source: MOFSL
Revenue from payment services to consumers to grow at a slower pace as Paytm want to
use the consumers as footfall driver.
PAYMENT SERVICES TO CONSUMERS
• Consumer convenience fees

charged to consumers for
certain types of transactions
Source: MOFSL
Paytm disburses 3 types of loans.
LOAN PORTFOLIO
• Paytm Postpaid (BNPL) : Offers short-term credit of up to INR60k for a period of up to 30

days
• Personal Loans - Offers personal loans with an average tenure of ~15months and an average
ticket size of INR0.12m
• Merchant Loans - Offers merchant loans with an average tenure of ~12months and an average
ticket size of INR0.15m
Paytm postpaid constitute 52% of loan disbursement by value and 97% of loan
disbursement by volume.
LOAN DISBURSEMENT MIX LOAN DISBURSEMENT MIX
BY VALUE BY VOLUME
Source:
•Industry Reports, MOFSL
India’s BNPL market has rapidly grown to reach US$3-3.5bn in disbursals in FY21 and is
on track to grow to US$45-50bn by FY26 driven by user growth
BNPL MARKET SIZE
Source:
Commerce and Cloud services are expected to grow at a CAGR of 22%-24% between 2023
to 2025.
COMMERCE AND CLOUD SERVICES
• Commerce Services:
Revenues from sale of
services such as travel and
entertainment ticketing etc
• Cloud Services: Revenues
from providing
Advertising cloud and
software services to
merchants
Financial Services segment expected to grow fastest between FY 22-26
COMMERCE AND CLOUD REVENUES
Source:
•Company Reports, i-sec research
Financial services revenues are expected to contribute to 31% of revenues in FY 26 from
just 4% in FY 19.
CHANGE IN THE BUSINESS MIX
Source:
Analysis of Costs
Reduction in payment processing charges will have a significant positive impact on
profitability.
PAYMENT PROCESSING CHARGES
• Payment processing charges is the single largest cost for Paytm.

• These include technology costs and the charges are paid to banks for routing transactions.
• It is dependent on category of merchant, payment instrument used by the consumer, size and
number of transactions processed and network through which the transaction is routed.
• Going forward, the processing charges are expected to come down
1) Technology-driven optimisation of transaction routing,
2) Improvement in transaction rates from banks owing to our increasing scale.
Source:
Payment processing that constituted 98% of GMV in 2019 has reduced to 23% in
2023 and further expected to reduce to 18% in 2025.
PAYMENT PROCESSING CHARGES
Source: MOFSL, Company

Marketing costs as % of revenues dropped from 161% in FY 19 to 52.3% in FY 23
and expected to further drop to 43.2%
MARKETING COSTS
Marketing Costs in INR bn
Source: MOFSL, Company

Paytm is expected to achieve profitability (PAT) in FY 25.
PROFITABILITY
Alternative
Lending or P2P
Lending
How P2P lending Works?
• Alternative Lending companies operate as marketplaces linking borrowers to lenders.

• They primarily target borrowers are those with low credit score and small businesses that
are unserved or underserved by traditional banks.
• Their USP is to enable these customers to get a loan in the first place and very quickly.
• Typical interest rate would be higher than that of the banks but lower than the private
money lenders.
• For lenders, their selling point is higher rate of return compared to the bank rates.
• Investors also have the discretion to chose where their money should be lent.
REVENUE MODEL
• Since marketplaces do not take any deposits or lend their own money, they do not receive
an interest income.
• Instead, they earn their revenues from fees and commissions generated by matching
borrowers with lenders.
• Often investors also have to pay a service fee based on their payments or the amount
invested as well.
Alternative
Lending
Market place
Crowd Lending
Lending
(Business)
(Personal)
Bank-independent loan Bank-independent loan
allocation for SMEs. This allocation for personal use.
is for business purpose This is for peer-to-peer
only. lending.
ALTERNATE LENDING: GLOBAL SIZE AND GROWTH
Source: Statista
CHINA P2P
LENDING
CRISIS
BOOM YEARS (2011 to 2015)
• Between 2011 to 2015, China had a boom in P2P lending due to:
• Negligible regulations (Abner An, Founder of Daokoudai, a P2P platform, said that “there
was no entry barrier to start a P2P business [at the beginning],” and anyone could “spend
RMB 40 (US$ 5.8) to buy some [P2P] software from Taobao to start an online lending
business without any regulator’s scrutiny.”)
• Large unbanked population
• P2P lenders offered a return of 8-12% or more to the lenders which was much higher
than the bank interest rates.
• About 6000 P2P companies entered the Chinese market
Source: https://www.finextra.com/blogposting/17107/the-rise-and-fall-of-p2p-lending-in-china
REALITY CHECK
• The spark that ignited the turmoil in Chinese peer-to-peer lending happened in late 2015
when investors on the P2P lending platform Ezubao was suddenly unable to withdraw
their funds.
• Ezubao was later revealed as responsible for the biggest Ponzi scheme ever in Chinese
history involving $7.6 billion and 900000 investors.
• In 2016, Chinese Banking Regulatory Commission said that about 40% of P2P lending
platforms were in fact Ponzi schemes.
• Many P2P promoters went into hiding.
REGULATIONS FOR P2P LENDING
• The crisis forced Chinese authorities to tighten regulations :
• Some of the new rules include:
• Detailed negative list made for P2P businesses
• P2P platforms defined as “information intermediaries” rather than “financial institutions,”
• Prohibited online lenders from guaranteeing principal or interest on loans they facilitate
• P2P lenders are required to appoint a bank as their custodians
IMPACT OF REGULATIONS
• In it’s peak, there were more
5970 P2P lenders in China.
• By the end of 2018, only 1021
were left.
• China shut down all P2P
platforms by November 2020
P2P Lending in
India
KEY RBI REGULATIONS FOR P2P LENDING
• P2P lending platforms will have to register as an NBFC-P2P

• Minimum Capital Requirement Rs 2 crore required for starting NBFC-P2P
Source:
https://www.mondaq.com/india/financial-services/1052480/peer-to-peer-lending-and-its-regulation-in-india-
KEY RBI REGULATIONS FOR P2P LENDING
• Lending and Borrowing Norms

 Maximum investment by an investor across all P2Ps, shall be subject to a cap of Rs 50
lakh.
 Any lender that invests over Rs 10 lakh throughout P2P platforms should have a
minimum net worth of Rs 50 lakh.
 Aggregate loans taken by a borrower at any point of time, across all P2Ps, shall be
subject to a cap of Rs 10 lakh.
 Exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs
50,000.
 Maximum Duration of Loans – 36 months
Source:
https://www.mondaq.com/india/financial-services/1052480/peer-to-peer-lending-and-its-regulation-in-india-
INDIA P2P LENDING: MARKET SIZE AND GROWTH (US $BN)
• The major players in the P2P

Lending Market include
Faircent, RupeeCircle,
21.6% i2iFunding, Lendbox, Paisa

Dukan, OMLP2P, i-Lend,
LenDenClub Cash Kumar and
Kiva Micro funds among others.
• Indian P2P lenders claim that
they deliver 15% to 28% return
to investors.
Source:
https://www.industryarc.com/Report/19467/india-p2p-lending-market.html
https://admin.faircent.com/
Robo Advisory
What is Robo Advisory?
• Robo-advisors are digital platforms that provide automated, algorithm-driven
financial planning services with little to no human supervision.

GLOBAL ROBO ADVISORY MARKET SIZE AND GROWTH (US $bn)
18-20%
Source: statista
TOP GLOBAL ROBO ADVISORS BY AUM
Source: https://www.statista.com/statistics/573291/aum-of-selected-robo-advisors-globally//
HOW ROBO-ADVISERS WORK?
• When signing up for the service, investors are first asked to answer a series of questions
about the amount they’re looking to invest, their risk tolerance and expected returns.
• The platforms then usually assign each investor a risk category from 1–10.
• This number is then used by algorithms to invest.
• The revenue model of robo-advisors is based on minimum investment and significantly
lower fees as compared to traditional investment management firms.
ROBO-ADVISORS VS TRADITIONAL WEALTH MANAGEMENT
Parameters Robo-Advisors Traditional Wealth
Management Companies
Business Algorithm-based investment advice Individual portfolio management
Model by bank, company, or institution
advisor
Targeted Individuals with modest assets, High and ultra-high net worth
Investors technology-oriented clients
USP • Easy and affordable personal finance • High level of service
management • Top investment skills
• Individual approach
Fee • Up to 0.5% fee on assets • Up to 2% fee on assets
structure • Mostly no transaction-specific fees managed
• Potential additional fees per
transaction
Source: https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp
INDIAN ROBO ADVISORY MARKET SIZE AND GROWTH (US $bn)
38%-42%
Source:
https://inc42.com/datalab/how-robo-advisors-are-changing-the-financial-advice-industry-in-india/#:~:text=Assets%20under
%20management%20(AUM)%20in,%2D2025%2C%20according%20to%20Statista.&text=It%20is%20a%20boon%20for,investments
%20via%20robo%20advisory%20services.
TOP ROBO ADVISORS IN INDIA
• Finpeg
• 5nance
• Fisdom
• FundsIndia
• MoneyFrog
• Scripbox
• Goalwise
• 5Paisa
• Arthayantra
• Angle Broking – ARQ
Source:https://www.myvaluestocks.in/robo-advisors-in-india/
Influential
Technologies
KEY TECHNOLOGIES INFLUENCING FINTECH
• Blockchain
• AI and Machine Learning
• Application Program Interface (API)
• Cloud computing (Cloud)
• Quantum computing (Quantum)

2
0
1
E-Commerce
202 202
KEY POINTERS TO E-COMMERCE INDUSTRY
• Overall size, growth and segments of the e-commerce industry

• Growth drivers for the industry
•Top Categories sold online
• Sourcing and Inventory Models
• Analysis of Select Categories
• Business Models and performance analysis of Big Basket, Grofers, Pepperfry, Flipkart,
Amazon India and Jiomart
•ONDC – What is it and it’s likely impact?
• Trends in B2B Ecommerce, Business Model of IndiaMART, Udaan and Other players
• Story of Snapdeal
• Future Outlook of E-commerce Industry
203
Indian E-Commerce: Size,
Growth and Segments
204
Indian E-commerce industry grew from US $ 14 bn to
$115 bn in 8 years and expected to reach $350bn in 2030.
INDIAN E-COMMERCE INDUSTRY : SIZE AND GROWTH

In US $bn
400
350
350 %
R: 13
300 G
CA
250
%
200 R: 23 188
G
CA
150 % 115
R: 28
G
100 CA
50
14
0
2014 2023 2025 2030
In US $bn
205 205
KEY E-COMMERCE SEGMENTS
B2C E- Retail • Flipkart, Amazon, Jiomart
B2B • IndiaMart, Udaan, Just Dial
Online Ticketing • Makemytrip, Bookmyshow
Food Delivery • Swiggy, Zomato

KEY E-COMMERCE SEGMENTS
• Meesho, Dealshare, GlowRoad

Social Commerce
Information Portals • Bharat Matrimony, Magicbricks
Service Commerce • Urban Company, Housejoy, Helpr

207
D2C, C2C • FMCG companies, OLX

Growth Drivers
208
E-COMMERCE : GROWTH DRIVERS
•Lifestyle changes and Convenience

•Aggressive discounts and Ease of return
•Increase in internet and smart phone penetration
•Better entrepreneurial ecosystem over the last couple of decades.
•Availability of Funding options apart from debt
•Availability of wide variety of products online
•Cash on delivery
•Low penetration of e-commerce
•Growth in smaller cities, semi-urban and rural areas
209
Tier 2 and Tier 3 towns holds dominant share in the Indian e-commerce.
Tier 3
Tier 3 Towns,
Towns, Semi-
Semi- urban
urban and Rural
and Rural
Tier 2 cities
Tier 2 cities
Source: https://www.livemint.com/companies/news/tier-2-3-
regions-grab-a-larger-pie-of-e-com-market-11671380417276.html
Category wise Sales
211
Share of categories sold online has significantly changed in the last
few years
E-COMMERCE: CATEGORY WISE SALES
Product Categories Share in Revenues

2010-11 2022-23 2025-26 (E)
Electronics 70-75% 38-40 % 30-35%
Fashion (Apparels, 15-20% 35-37% 38-40%
Accessories, Shoes etc)
Groceries Negligible 10 to 12% 15 to 20%
Others (Jewellery, Furniture, Negligible 13-17% 20 to 25%
Pharmacy, General
Merchandise, Toys etc)
Books 10-15% 1-2 % 1-2%
Source: Industry Interactions, Media Reports

212 212
Profitability highest in lifestyle products; greater scale results in
better margins
CATEGORY WISE MARGINS
Product Categories Gross Margins (Percent)
Fashion (Apparels, 35 – 40%

Accessories, Shoes etc)
Electronics 12-14%
Grocery 18 to 20%
General Merchandise 20 to 22%
Books 10 to 15%
Source: Industry Interactions, Media Reports
213 213
Sourcing and Inventory Models
214 214
Marketplace model, On-demand sourcing model, Stocking model.
Market place model

•Zero inventory
•Ecommerce platform connects the seller and buyer
•May facilitate Logistics
• Also called as drop shipping model
Stocking Model
•Ecommerce platform maintain inventory.
On-demand Sourcing Model
•Pull-based model
•Ecommerce platform buy from the seller after receiving customer order, do quality
check and deliver to the customer.
•Very Less inventory
215 215
Online Grocery
216 216
Online grocery retail is expected to grow at a CAGR of over 33%
between 2017 to 2027 to reach $26.6 bn.
Source: https://www.globenewswire.com/en/news-release/2022/02/15/2385311/28124/en/Analysis-
of-India-s-Online-Grocery-Market-2021-to-2027-Featuring-Flipkart-BigBasket-Grofers-and-
Spencer-s-Among-Others.html#:~:text=The%20Indian%20Online%20Grocery
%20Market,63%20billion%20by%20FY2027.
217 217
Online grocery players followed either inventory based model or
hyper-local model.
ONLINE GROCERY : BUSINESS MODELS
Business Models
Inventory Based Hyper-Local

Model Model
218 218
Performance: Inventory Vs
Hyper-Local Model
219
TREND BETWEEN 2012 TO 2015
•Between 2012 to 2015, many players entered through the hyper-local due to:
•lower funding requirements.
•the order delivery time is relatively low
•easy to scale operations geographically
220 220
COMPARISON: INVENTORY MODEL VS HYPERLOCAL MODEL
INVENTORY MODEL HYPERLOCAL MODEL

•Average Customer Order Size: Rs.
•Average Customer Order Size: Rs. 500
1000
• Gross Margin (5%): Rs. 25
• Gross Margin (20%): Rs. 200
• Inventory and Warehousing costs
• Inventory and Warehousing costs
(10%): Rs. 100 (0%): Rs. 0
• Transportation cost per order: Rs. 30 • Transportation cost per order: Rs. 30
•Transport cost as % of Order Value: •Transportation cost as % of Order
3% Value : 6%
• Average Profit per order: Rs. 70 • Average loss per order: Rs. -5
221 221
Apart from lower margins, hyper-local players also face the
problem of inventory tracking and quality.
DISADVANTAGES OF HYPER-LOCAL MODEL IN GROCERIES
• Lower Margins
• Do not have the ability like inventory based players to offer
attractive discounts.
•Limited product variety
•Lack of real-time inventory as they tied up with Kirana Stores
• Quality issues
222 222
Online grocery segment saw many exists between
2015-2020
2015-20 : EXITS OF MANY ONLINE GROCERS
While 2015-2020 saw explosive growth, it also witnessed many exits in

Online grocery segment:
• Peppertap
• LocalBanya
• Grocshop
• Movincart
• GetNow
• Aagar
• Nearby
• Zopnow
223 223
Why Hyper local model do
well in Food Delivery
segment but not in Grocery?
224
 Margins: Gross Margins are high in online food delivery (50% to 60% compared
to online grocery (15% to 20%)
 Additional Layer: Online food delivery companies directly take from the orders
from the manufacturers (restaurants) while there is an additional layer in the
form of retailer in Online grocery
 Price: Prices are higher by 15% to 20% when ordered through online Food
delivery platforms compared to the restaurant prices
 Customer Behavior: Customer are highly price sensitive while purchasing
groceries compared to buying food from their favorite restaurants.

225
226
BIG BASKET : OVERVIEW
• Second largest player in the online grocery segment and
operates in over 40 cities.
• Deliver over 1.5 lac customer orders per day
• Follow Inventory model
• Acquired by Tata Group in May 2021 at a valuation of $ 2
billion.
227
Big Basket: Impact of Covid
228
IMPACT OF COVID
• Bigbasket' lost 80 percent of its workforce within two days of the

nationwide lockdown in March 2020
• But the orders kept pouring in.
• Hired 12,300 people in the next 16 days to manage the crisis.
Source: https://yourstory.com/2020/11/big-basket-workforce-covid-lockdown-rebounded
229
IMPACT OF COVID
• During the pandemic, Big Basket has seen tremendous growth

 Number of new customers - 84%
 Average Customer Visits – 55%
 Indulgence categories ( chocolates, noodles, namkeens ) – 50 to 140%
 Soda and Cocktail Mixes – 125%
 Colours and crayons - 354%
 Gardening Tools - 100%.
Source: https://www.livemint.com/companies/news/bigbasket-sees-sharp-spike-in-new-
customers-due-to-covid-11598961617898.html
230
Big Basket: Financial
Performance
231
Big Basket has almost doubled it’s revenues between FY 20 and FY 22
while its loss as percentage of sales has reduced to around 11.5%
BIG BASKET : FINANCIAL PERFORMANCE
Revenue in Rs. Crores Profit/Loss in Rs. Crores
FY 20 FY 21 FY 22
FY 20 FY 21 FY 22
Source:
Company Reports,
https://www.business-standard.com/article/companies/bigbasket-fy22-revenue-up-17-to-rs-7-119-cr-loss-widens-4x-to-rs-813-cr-
122071501323_1.html
232
Big Basket: Analysis of
Business Segments
233
BIG BASKET : ANALYSIS OF BUSINESS SEGMENTS
• BigBasket acquired three ventures- RainCan , Morning Cart and Kwik24.
• RainCan and Morning Cart were micro-delivery start-ups. Rebranded as
BBDaily
• Kwik24 was an instant vending machine. Rebranded as BB Instant
• BB Q commerce for quick deliveries
• Bigbasket has another segment - BB Beauty Store.
• Launched physical stores in the brand name of Fresho
• Big Basket has 6 segments – Big Basket, BB Daily, BB Instant, BB Q, Beauty
Store and Fresho.

234
BB Daily
235
BB DAILY
• Subscription based model
• On BB Daily, one can subscribe for milk, fruits and vegetables,
flowers, bread, dairy, eggs, breakfast cereals, tender coconut,
etc
 Frequency can be – Daily, Alternate day, Every 3 days, Weekly,
Monthly
• No need to place order on a daily basis.
• Subscription quantity/frequency can be modified anytime.
• Delivery happens typically between 5 am and 7 am.
236
BB Daily has helped Big Basket to increase customer touchpoints and
capture the small ticket size grocery demand.
BB DAILY
• Tremendous growth over the last 3 years .
• Number of orders doubling every year
Value to Big Basket
Value to Customers
• Expanding into new demand segment

• Convenience
• Improving Customer Stickiness
• Assurance of Delivery
• Easier Forecasting and hence better
inventory management
• Cash Flow
237
BB Instant
238
BB Instant help Big Basket to capture instant demand.
BB INSTANT • Unmanned vending machines that target

corporate offices, tech parks, and
apartment buildings in Tier I cities.
• Each machine carries about 50 -75 SKUs.
• Reach
• 200k + app users
• 600+ installation in apartments
• 500+ installation in offices
• It is helping Big Basket to capture the
instant demand
https://www.business-standard.com/article/pti-stories/bigbasket-to-invest-100mn-to-strengthen-supply-
chain-119042800327_1.html
BB Q
240
BB Q
 Q commerce is categorized under 2 formats –
 BB Now: Offers 10 to 20 minute delivery for 3500 items within 2.5 KM
radius
 BB Express: Offer 30 to 60 minute delivery for 8000 items within 6 KM
radius
 Launched in March 2022
 Late entrant into quick commerce, a segment that has attracted a lot of
funding and players, including Swiggy’s Instamart, Reliance backed
Dunzo, Blinkit, Zepto and Ola Dash.
 Touched 15,000 deliveries within 2 weeks of it’s launch
 Set up dark stores to provide these services
Source: http://timesofindia.indiatimes.com/articleshow/90633550.cms?
utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
241
Dark Stores are multiple small warehouses in the city (Dark Stores)
which are fed by the city’s Central Warehouse.
What are Dark Stores?

Dark Store 1 Customers
Mother DC Customers
Dark Store 3
242
QUICKER DELIVERY THROUGH DARK STORES
• Dark Stores have helped BB to:

• reduce the distance travelled to the customers’ location,
• reduce the delivery time
• improve inventory management
• Achieve 10-20 minutes delivery for BB Now and 30 to 60 minutes
delivery for BB Express
243
Fresho
244
FRESHO
• Launched first store in 2021

• Plan is to open 200 stores by 2023 and 800 stores by
2026
• Create a new significant growth opportunity for
BigBasket.
• Aim is to target 500 million customers who have not
yet started buying groceries online
• Leverage the advantage of Omni channel strategy
Source: https://indianexpress.com/article/cities/bangalore/bigbasket-enters-offline-
retail-unveils-first-fresho-store-in-bengaluru-7640971/
245
Beauty Store
246
BB BEAUTY STORE
• Launched in 2019.
• Wider variety of beauty products than in Supermarkets
• Competes with Nykaa in this segment
• Currently contributes very less but the target is to get 10% of overall sales
from the beauty segment
Source: https://yourstory.com/2019/06/startup-bigbasket-online-grocery-hari-menon-
plans-2020
247
Private Labels and Loyalty
Program
248
PRIVATE LABELS
• Private labels are the brands owned by Retailers
• Private Labels provide for higher margins and increase customer
loyalty.
• BB has launched private labels in variety of Food and Grocery
categories under Fresho and BB Royal name
• Private Labels contribute to about 38 percent of company’s revenues
Source: https://irecwire.indianretailer.com/interview/retail-people/bigbasket-to-invest-
rs-500-crore-to-expand-private-label-brands.i15/
249
LOYALTY PROGRAMS
• BB Star is the loyalty program of Big Basket
• Benefits of BB Star
• Free delivery
• Special offers, and priority on delivery slots.
• On certain busy days, slots are reserved for these members.
• Around 30-40 percent of the total consumer base has subscribed to the
loyalty program.
250
251
Existential Crisis in 2016
252
•Grofer’s started with Hyper-Local model
•In 2016, the company was in bad shape – reported a loss of Rs 225 crore on
the back of revenue of Rs 14.3 crore in FY16.
• It’s delivery costs was high , order size was low and the viability of the
business model was challenged.
Source:
•https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-better-
as-revenues-touch-rs-11-7-cr/738672/
•https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-crore-
softbank/
253 253
What did Grofers do to tide
over the crisis?
254
GROFERS TURNAROUND STORY
• Grofers made the following changes in the business model:

• Moved from Hyper-Local to Inventory based model.
• Replaced same-day delivery with next day delivery
• Increased the assortment of goods (like General Merchandise)
• Introduced Private Labels
• Launched Grofers’ membership/subscription-based service Smart
Bachat Club. It achieved subscription of 1,50,000 in 90 days of its
launch.
• Closed Operations in many cities in 2016 and focused primarily in
NCR, Mumbai, Pune and Bangalore.
Source:
•https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-better-
as-revenues-touch-rs-11-7-cr/738672/
•https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-crore-
softbank/
255 255
Grofers Turnaround
256
GROFERS TURNAROUND
• Order size increased from Rs. 750 in July 2016 to Rs. 1000 in December in
2016 and to Rs. 1800 in March 2020
• Daily orders increased from 13000 to 14000 in 2016 to 35000 to 40000 in
2018 and 1,90,000 in April 2020
• 40% of sales from private label brands
• 30% reduction in the delivery costs.
• After stabilizing it’s operations, it has expanded to 27 cities
• Rebranded to Blinkit in 2021
• Acquired by Zomato in June 2022 at valuation of Rs. 4,447 crores.
Source:
•https://www.financialexpress.com/industry/after-rough-ride-grofers-takes-a-turn-for-better-as-revenues-touch-rs-11-7-cr/738672/
•https://yourstory.com/2018/04/grofers-got-online-grocery-game-right-won-rs-400-crore-softbank/
•https://www.thehindubusinessline.com/companies/grofers-turns-profitable-ahead-of-year-end-target/article33233636.ece
•https://trak.in/tags/business/2020/08/03/jiomart-becomes-indias-1-grocery-app-now-delivering-4-lakh-orders-per-day-beats-grofers-big-
basket/
257 257
DESH KI NAYI
DUKAAN
258 258
•Comprehensive and ambitious
business model which include –
Reliance
Stores, B2B, Omni-Channel in B2C,
3 crore off-line 20 crore
Jiomart and retailers customers Inventory and Hyperlocal.
Warehouses
•Aims to connect 20 crore
customers to three crore offline
stores with their supply chain
network throughout the country.
259 259
Source: https://thestrategystory.com/2021/07/17/jiomart-business-model/
260 260
JIOMART’S ENGAGEMENT WITH SMALL RETAILERS
• JioMart has two ways in which it engages with small retailers.

• First, by being a distributor and supplying products to retailers and
• Second, by utilising the network of Kirana Stores to fulfil orders placed on
JioMart. (o2o- Online to offline model)
• Jiomart has been highly successful in pushing its private labels to the small stores.
For example
• More than 50% of Mumbai retailers stock JioMart’s private label products.
261 261
KEY MILESTONES
• Operate in more than 200 cities.

• Strategic Tie-ups: Meta invested Rs. 43,574 crores and acquired 9.99% stake in
Jio platforms in 2020
• Introduced whatsapp ordering of groceries
• Became the largest online grocery retailer within 12 months of launch
• Expansion to several other categories including electronics, fashion,
pharmaceuticals, and healthcare.
• Aggressive on acquisitions
• Acquired Netmeds, Urban Ladder, Milk Basket, Just Dial, 26% stake in
Dunzo, Metro AG, Campa Cola, tried to acquire Future Retail (which is
under litigation)
262 262
ONDC
UPI OF E-COMMERCE
263 263
OPEN NETWORK FOR DIGITAL
COMMERCE (ONDC)
• Most ambitious project of Government of India after UPI
• ONDC is a first of its kind e-commerce model in the world
• Project is spearheaded by Mr. Nandan Nilekani
• ONDC is a Network of a number of small and large-scale e-commerce players which
aims towards breaking the dominance of firms like Amazon and Flipkart
• Aim to democratize e-commerce
264 264
HOW ONDC WORKS?
https://www.youtube.com/watch?v=ugykOPSXskQ
265 265
Online Furniture and Handicrafts
266 266
Online Furniture is expected to reach US $2.2 bn in 2026 and online
furniture shoppers will grow to 48 lacs.
ONLINE FURNITURE : SIZE AND GROWTH
Online Furniture Size in US $bn Online Furniture Shoppers in lacs
2.2 48
18
0.8
0.2 8
2016 2021 2026 2016 2021 2026
267 267
ONLINE FURNITURE GROWTH DRIVERS
• Typically brick and mortar players display a few hundred furniture varieties
in their stores
• Players such as Urban Ladder and Pepperfry display over 10 lacs products in
their websites
• From wall paintings to clocks, coffee tables, sofas and beds, consumers are
ordering a wide range of products online.
• Tier 2 towns and below are a big market for online furniture due to the
limited presence of branded furniture stores.

268 268
Competition from Brick and Mortar Players
• Online furniture players tough competition from brick and

mortar stores.
• Physical stores offers live experience and helps to connect
strongly with customers.
• Several players such as Ikea and US furniture major Ashley
have entered the Indian furniture market.
• Ikea has plans to set up 25 stores and Ashely around 100
stores across the country.
• The brick-and-mortar category also comprises strong
domestic players such as HomeTown and Godrej Interio.
269 269
LOGISTICS AND RETURNS ARE A MAJOR CHALLENGE
• Logistics, especially return logistics is a major challenge in this segment for
online players
• Disconnect with the colour or quality perceived by the buyer on the website is
one of the primary reasons for returning furniture items.
• Returns are upwards of 20% compared to less than 3% in physical stores.
270 270
Pepperfry
271
Pepperfry’s losses have come down between 2019 and 2022.
Revenue in Rs. Crs Losses in Rs. Crs
260.61 247
206.78 220.99
183.48 194
167.20
105.20
FY19 FY20 FY21 FY22 FY19 FY20 FY21 FY22

Source: https://www.financialexpress.com/industry/pepperfry-posts-wider-net-loss-of-rs-194-cr-
for-fy22/2686516/20consolidated%20operating%20revenue%20decreased,crore%20from%20Rs
%20245.01%20crore.
272 272
Omnichannel strategy and Private labels helped Pepperfry to
improve it’s performance
OMNI CHANNEL STRATEGY AND INVENTORY MODEL

• Started operations with Market Place Model
• Expanded pursuing omni channel strategy by opening physical stores which
are called as Studio Stores.
• Had more than 100 physical studio studios across India.
• About 36% of Pepperfry’s revenues come from studio stores.
• Follow combination of marketplace and inventory model
• Inventory Model has helped them to launch private labels
• Private labels contribute to 40% of their overall sales
• On similar lines, Urban Ladder the other major online player also shifted to
omni-channel strategy.
Source:
https://inc42.com/buzz/pepperfry-revenue-grows-26-lower-advertising-costs-help-trim-loss/
https://cxoworldwide.com/home-brands-to-contribute-50-of-pepperfrys-1-billion-revenue-by-2021/
https://www.financialexpress.com/industry/pepperfry-posts-wider-net-loss-of-rs-194-cr-for-fy22/2686516/
273
PEPPERFRY LOGISTICS INITIATIVES
• Companies are using 3D technology and putting up high quality images to
ensure minimal colour and quality disconnect.
• Pepperfry established many warehouses and its largest warehouse in
Mumbai.
• Follows a hub-and-spoke model in order to cut down on logistics costs.
• The company has its own logistics network of ~400 trucks.
• Delivery times were reduced to less than 10 days from the earlier 2 to 3
weeks.
274 274
Flipkart Vs
Amazon
275
Amazon has better engagement compared to Flipkart. It gets
more customer visits per month than Flipkart and Myntra
put together.
CUSTOMER ENGAGEMENT : FLIPKART VS AMAZON (INIDIA) VS MYNTRA
FOR MARCH 2023
Flipkart Amazon Myntra

Visits per month 180.8 314.9 mn 61.2 mn
Average Visit 00.05.14 00.05.07 00.04.41

Duration
Pages per visit 6.02 7.29 6.39
Bounce Rate 49.32% 46.99% 52.29%
Source: https://www.similarweb.com/website/flipkart.com/vs/amazon.in/#traffic
276
Flipkart is the market leader in Smartphone but Amazon is
closing the gap.
SMART PHONE MARKET SHARE
Year 2019 2021 2022
Flipkart 53% 48% 46%
Amazon 36% 44% 45%
Others 11% 8% 9%
277
Flipkart has got huge lead in Fashion due to it’s acquisition of Myntra
and Jabong.
MARKET SHARE: FASHION
20%
Amazon
Flipkart+Myntra
70%
Source:
https://in.fashionnetwork.com/news/amazon-india-clocks-90-growth-in-fashion-segment-for-first-half,858621.html
Industry Estimates
278
Flipkart Vs
Amazon: Contd
279
ILLUSTRATION: DIFFERENCE BETWEEN REVENUE AND GROSS MERCHANDISE VALUE
(GMV)
Amazon sells 10 shirts at a price of Rs. 1000 each of which 3 shirts were later returned. Amazon get
a commission of 30%. Calculate the GMV and the Revenue?
• GMV = Rs. 1000 * 10 = Rs. 10000
• Revenue = Rs. 300 * 7 = Rs. 2100
280
Flipkart has been consistently outperforming Amazon in Festive
Season Sale.
MARKET SHARE IN ORDER

MARKET SHARE DURING FESTIVE SALE (GMV)
VOLUME (FY 22)
100 4 8
15 11 12
18
90
30
80 28 32 26
27
70 31
60
50
40
61 66 62
30 58 60
51
20
10
0
2017 2018 2019 2020 2021 2022
Flipkart Amazon Others
Source: https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-flipkart-sales-generate-rs-19000-
crore-in-6 -days/articleshow/71491146.cms?from=mdr
https://www.business-standard.com/article/companies/amazon-flipkart-and-others-clock-8-3-billion-in-festive-gross-
sales-120112700033_1.html
https://economictimes.indiatimes.com/tech/technology/flipkart-group-bagged-60-market-share-in-diwali-festival-sales-
report/articleshow/88192988.cms
https://www.business-standard.com/article/companies/meesho-surpasses-amazon-in-festive-order-volumes-flipkart-leads-
281
the-market-122100600697_1.html
FINANCIALS
REVENUE AND LOSSES IN Rs. Crore (FY 22)

Amazon
21,462 Note:
Flipkart + 1. Flipkart’s Stand alone revenues and losses
Myntra were Rs. 10,659 crores and Rs. 4,362 crores
respectively
2. Myntra’s standalone revenue and losses were
14,160 Rs. 3501 crore and Rs. 597 crore respectively
4959
Source:
3,649 1.https://entrackr.com/2022/09/amazon-india-
marketplace-revenue-crosses-rs-21k-cr-in-fy22-losses-
shrink-23/
2.https://www.livemint.com/companies/company-
results/flipkarts-loss-widens-51-to-rs-4-362-crore-in-
Revenue
fy22-11666943814436.html
Revenue
Loss
Loss
282
Flipkart Vs Amazon:
Customer Perception
283
AMAZON VS FLIPKART – CUSTOMER PERCEPTION
Preferred/Better
Amazon Flipkart
Metro and Tier 1 Cities
Tier 2 Cities and below
Customer Segment : Upper Middle Income and Above
Customer Segment : Middle Income and Below
Overall Customer Service

User Interface
Loyalty Program
Flipkart’s
Acquisitions
285
Flipkart has been making several acquisitions in the e-commerce space acquiring
payments, logistics, travel, pharmacy companies.
FLIPKART’S ACQUISITIONS
1. ANS Commerce 12. Jabong

2. Yaantra 13. PhonePe
3. SastaSundar 14. FX Mart
4. Cleartrip 15. Appiterate
5. Scapic 16. AdIQuity
6. Mecha Mocha 17. Myntra
7. Walmart India 18. Jeeves
8. Upstream Commerce 19. Letsbuy.com
9. Liv.ai 20. Chakpak
10. F1 Info Solutions & Services 21. MIME360
11.
286
eBay India 22. weRead
Amazon’s M&As
287
• Globally, Amazon has acquired more than 110 companies and invested in another 20 companies.
• In India, Amazon has made only limited acquisitions in e-commerce space like Tapzo, GlowRoad
• Amazon has picked up stakes in physical Retail companies in India
 Bought 5% stake in Shoppers Stop in 2017
 Bought 49% stake in More Retail in 2019
 Bought 3.6% stake in Future Retail in 2019In 2017,
288
Amazon’s Foray
into Physical
Stores
289
Amazon has been focusing on physical stores both in US and in other geographies
AMAZON: PHYSICAL STORES
• Amazon has forayed into traditional physical store formats but also experimenting with
innovative formats.
• Acquired US supermarket chain Whole Foods in 2017 for $13.7 bn.
• Experimenting with innovative formats like “Amazon Go” and “Roaming Treasure Truck”
• https://www.youtube.com/watch?v=NrmMk1Myrxc
• https://www.youtube.com/watch?v=beRphtBRyD8
• Amazon tried out other formats like Amazon 4 Star but closed them down.
Why Amazon is serious about physical store formats?
• Dominance of physical stores even in US
• E-Commerce constitute only about 14% of total retail sales even in US1
• Strategic Advantage in omni-channel strategy
• Amazon’s e-commerce supply strengths are transferable to running physical stores
• Superior customer data could help Amazon in successful physical stores.
Source: https://www.census.gov/retail/mrts/www/data/pdf/ec_current.pdf
Amazon – Future
– Reliance case
292
Amazon – Future
Overview
293
AMAZON – FUTURE RETAIL DEAL OVERVIEW
• Amazon picked up 3.6% stake in Future Retail in 2019.
• Future Retail had several formats like Big Bazaar, FBB, Easyday, Ezone, Nilgiris, Heritage etc.
• One of the conditions of this deal was that Future Retail should not be sold to Reliance Retail
• Future Retail was the second largest store based retailer at that time with retail space of 16.5 mn
square feet.
• Amazon’s strategy was to gradually increase it’s stake in Future Retail over a period of time.
294
Why Amazon bought minority
stakes in Indian store based Retail
companies?
295
• As we saw earlier, Amazon bought minority stakes in Indian Store based Retail companies
Bought 5% stake in Shoppers Stop in 2017
Bought 49% stake in More Retail in 2019
Bought 3.6% stake in Future Retail in 2019I
• Amazon do not want to acquire majority stake due to FDI restrictions in multi-brand retail in
India.
• This put Amazon at a disadvantage vis-à-vis Indian players like Reliance and Tatas in pursuing
Omni-channel strategy.
• Amazon was hoping that FDI norms for multi-brand retail will ease in the near future and then
they can acquire majority stake in India’s store based retail companies.
296
Future Covid Crisis and the
Reliance Deal
297
Future Retail’s Covid Crisis
• Due to Covid, Future Retail faced severe cash crunch

• The company’s debt increased to Rs. 13,000 crores.
• In August 2020, Reliance Retail agreed to buy Future Retail for Rs. 24,713 crores.
298
LEGAL BATTLE
• As we saw earlier, one of the conditions of Amazon - Future deal was that Future Retail should
not be sold to Reliance Retail
• Amazon invoked this clause and filed cases in Delhi High Court, Supreme Court and Singapore
International Arbitration Center (SIAC).
• Amazon effectively stopped this deal from going through.
• Due to legal hurdles and delays, Reliance called off the deal with Future Retail in April 2022.
299
Why Amazon wanted to stop the Future – Reliance deal?
• Reliance is already the largest retailer with 20 mn square feet of retail space
• Future Retail had 16.5 mn square feet of Retail space in 2020.
• If the Reliance-Future deal had gone through, the combined entity would get significant
competitive advantage in implementing omni-channel strategy.
• Amazon consider Reliance as its major competitor in the long-term and they wanted to stop
Reliance from gaining significant advantage.
300
Why Indian E-
commerce market
is very important
for Amazon?
301
• Amazon entered China in 2004 market by acquiring Chinese Ecommerce company “Joyo.com”.
• But right from the beginning, Amazon faced stiff competition from Chinese e-commerce giants
Alibaba and JD.com.
• Amazon never gained any traction in China and always remained a marginal player
• In 2019, Amazon shut down it’s China operations and it had a market share of less than 1% when it
exited China.
• US, China and India will be the top 3 e-commerce markets by 2026. So Amazon is not present in
China which is the 2nd largest e-commerce market in the world.
• If Amazon loses in India, they will not be there in the 2 of the top 3 e-commerce markets in the
world.
302
Last Mile Delivery
303
Last mile delivery pose a big challenge for e-tailers in India.
LAST MILE DELIVERY CHALLENGES
• In India, last mile delivery is a big challenge:
• First attempt delivery strike rate is 75% (which is considered to be dismal)
• 10-12% of all shipped items fail to reach the end customer
• Last mile delivery costs is about 45-50% of the overall logistics costs
(compared to 25 to 30% in developed economies)
Source: https://redseer.com/articles/amazon-ihs-program-disrupting-the-last-mile-
of-e-commerce-logistics-in-india/
304
Amazon has roped in local retailers to improve last mile delivery.
AMAZON LAST MILE DELIVERY: IHS
•Amazon’s IHS (I Have Space) focus on last mile delivery by involving Kirana
stores
•Packages are delivered by Amazon staff to the kirana stores.
•Kirana stores performs order fulfillment by acting as pick up point and complete
the system requirements.
•Paid a fixed rate for delivery.
305
Almost 35-40% of Amazon’s last mile delivery are
delivered by Kirana stores through IHS.
Source: https://redseer.com/articles/amazon-ihs-program-disrupting-the-last-
mile-of-e-commerce-logistics-in-india/
https://www.business-standard.com/article/companies/amazon-s-i-have-space-
aids-local-stores-expand-business-amid-pandemic-120102200773_1.html
306
IHS has benefitted both Amazon and the participating Kirana
Stores.
IHS:IMPACT
AMAZON KIRANA STORES
• Improvement in Delivery
• Additional income with
performance
little investment/cost
• Cost Reduction
• Increased footfall to the
• Ability to manage demand
stores and higher sales
spikes better
from the stores
• Prime real estate space near to
the customers.
307
Amazon through their Amflex program has roped students and
housewives to improve last mile delivery.
AMFLEX
• Run this program in more than 65 cities in 2022
• Any individual can also become Amazon delivery partner through AMFLEX.
• Primarily targeted to rope in students and housewives.
• An Amazon flex delivery partner can earn Rs. 120 to Rs. 140 per hour and Rs.
600 to Rs. 700 per day.
• More than 30,000 delivery partners have been enrolled through Amflex
program
308
Flipkart and Myntra has also roped in Kirana stores to improve
last mile delivery.
FLIPKART AND MYNTRA: LAST MILE DELIVERY
• Flipkart has roped in more than 30,000 kirana stores to improve last mile
delivery
• Myntra has roped in more than 12,500 kirana stores through
MENSA (Myntra Extended Network for Service Augmentation)
• Myntra delivers more than 70% of it’s customer orders through MENSA.
Source:
https://www.livemint.com/companies/news/flipkart-onboards-27-000-kirana-shops-to-
strengthen-last-mile-delivery-1568026845806.html
https://yourstory.com/herstory/2019/09/women-last-mile-delivery-myntra-mensa/amp
Snapdeal Story
310
Snapdeal : 2014 to 2017
311
SNAPDEAL’S FALL
“The one thing I am very, very clear about right now is that I think we’re going to be
No. 1 (in terms of sales) by March 2016. I think we’re going to beat Flipkart by then,”
Bahl said in an interview with The Economic Times. “I’m very confident that whatever
their (Flipkart’s) numbers are, we will be ahead of them by March (2016).”
- Kunal Bahl , CEO Snapdeal in August 2015
• Snapdeal had a peak valuation of $ 6.5 bn in 2015 and Flipkart’s valuation was
around $ 8 bn in 2015
•But in April 2017, Softbank which was the largest investor in Snapdeal was trying
to sell the company at a Valuation of less than $1bn.
What happened to Snapdeal between 2014 and 2017?

312
SNAPDEAL : 2014-2017
Fund raising and acquisitions
• By investing $627 mn in 2014, Softbank became the largest investor with 33%
stake.
•Other major investors were Nexus – 10%, Kalaari – 8%
• Snapdeal raised cumulatively $1.4 bn between October 2014 and early 2016
highest by an e-commerce in India during this period.
• Those cash reserves were used for customer acquisition (discounts and
advertising)
• Also used funds for acquiring several companies including Freecharge for $450
mn in 2015.
313
SNAPDEAL : 2014-2017
Softbank’s change of mind

• Despite pumping money, Snapdeal could not close the gap with Flipkart and Amazon.
• Softbank stopped any further investment in Snapdeal and began looking at other options and
invested $1.4bn in Paytm in 2017.
• Softbank wanted to Sell Snapdeal to Flipkart for $ 1bn and get a stake in Flipkart.
• But the above attempt did not materialize due to differences with other investors.
• In August 2017, Softbank invested $2.6bn in Flipkart which they later sold to Walmart.
•With the largest investor giving up, the general opinion was Snapdeal would shut down.
314
Snapdeal : Post 2017
315
After FY 2017, Snapdeal managed a mini-turnaround when nobody
thought it will survive.
SNAP DEAL : MINI-TURNAROUND
FY 2017 FY 2018 FY 2020 FY 2021 FY 2022

Revenue Rs. 1180 Rs. 535.9 Rs. 916 crs Rs. 510 crs Rs. 563 crs
crs crs
Profit/Loss -Rs. 5143 -Rs. 611 crs -Rs. 274 crs - Rs. 125 -Rs. 510.3
crs crs crs
The company got a new investor Mr. Anand Piramal in July 2019.
Source:
•https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/snapdeals-revenue-soars-73-
losses-drop-by-71-in-fy19/articleshow/70243470.cms?from=mdr
•https://www.businesstoday.in/current/corporate/snapdeal-revenue-rises-marginally-to-rs-846-
crore-in-fy20/story/425991.html
•https://www.cnbctv18.com/market/stocks/snapdeal-drhp-softbank-foxconn-sequoia-among-
selling-shareholders-revenue-losses-drop-in-fy21-11885842.htm
316
Snapdeal was able to treble their unique buyers between 2018 and
2020.
SNAP DEAL
Source: https://www.forbesindia.com/article/take-one-big-story-of-the-day/how-snapdeal-
is-turning-around-its-fortune/64189/1#:~:text=A%20pioneer%20in%20the
%20Indian,market%20valuation%20of%20%246.5%20billion.
317
How Snapdeal Turned Around?
• Less investor expectations
• In 2017-18, major investors like Softbank, FIH and eBay wrote off their
investments in Snapdeal.
• There was less pressure on the company to achieve steep growth targets. Source:
https://economictimes.indiatimes.com/small-
biz/startups/newsbuzz/anand-piramal-
• Rationalization invests-in-snapdeal/articleshow/
70346421.cms?
utm_source=contentofinterest&utm
 Snapdeal sold off all their non-core assets like Free Charge, US Based https://www.businesstoday.in/current/
corporate/snapdeal-revenue-rises-marginally-
to-rs-846-crore-in-fy20/story/425991.html_
Subsidiary Snapdeal Inc, it’s logistics arm Vulcan express etc
 Implemented aggressive cost reduction in manpower, rentals, advertising etc.
Reduced cost by 77% in just one year between 2017-18.

318
MODIFIED THE BUSINESS MODEL TO VALUE COMMERCE

Products: Low Priced Products
Categories: Apparels and

Products
Geography: Tier 2, Tier 3 cities and Rural
areas
Suppliers: Local Suppliers
319
• VALUE COMMERCE AT SNAPDEAL

• Most of the products the company sells have a ticket size of less than Rs.
500
• More than 85 per cent of Snapdeal's orders were shipped to customers
living in Tier 2 and 3 towns
• More than 70% of the revenues come from local brands or unbranded
products.
• Reduced their exposure to high priced but loss-making electronics and
mobile phones category.
• Apparels and Home Décor have become the top 2 categories.
Source: https://economictimes.indiatimes.com/small- biz/startups/newsbuzz/anand-
piramal-invests-in-snapdeal/articleshow/70346421.cms?utm_source=contentofinterest&utm_
320
Snapdeal’s losses expenses increased in FY 22 due to higher marketing and employee
costs.
Source: https://inc42.com/buzz/snapdeals-loss-quadruples-to-inr-510-cr-in-fy22-sales-rise-14-to-inr-540-
cr/
321
B2B E-Commerce
322
MSME SCENARIO
323
MSME
• MSMEs are the backbone of supplier and the buyer base for B2B e-
commerce companies.
• MSME segment contributes ~33% to India’s total manufacturing output
• 32% of MSMEs are digitally engaged, which acts like an Opportunity for
online B2B platforms
• Digitalization growing among MSMEs – 20% CAGR
Source: msme.gov.in, company

324
INDIAMART’S REACH
Parameter Value
Total Number of MSMEs 64 mn
GST registered MSMEs 10.7 mn
Registered Suppliers with Indiamart 7.1 mn
Indiamart’s Reach
Among all MSMEs 11%
Among GST registered MSMEs 66%
Source: ibef, msme.gov.in, Company

325
Indiamart Business
Model
326
IndiaMART - OVERVIEW
• IndiaMART - India’s largest online B2B

“Product and Price Discovery” platform.
• Typically, a buyer visits the IndiaMART
platform looking for a specific product.
• In response, IndiaMART provides a list of
suppliers to meet the requirements
327
IndiaMART – Revenue Model
• Indiamart’s USP is provide access to large number of Suppliers for
Buyers and access to large number of Buyers for
• Does not charge buyers
• Has 2 type of suppliers:
 Unpaid suppliers (6.93 mn )
 Paid Suppliers (0.17 mn)
• Prioritise paying suppliers’ listings, minimum number of RFQs
(Leads) thereby generating a higher number of leads for them.
• Provide Value Added Services to paid suppliers
328
Subscription Packages
Silver Gold Platinum

Minimum 30 - 40 80-120 200-400
Number of
RFQs(Leads) per
month
Cost/Lead Rs. 40 Rs. 30 Rs. 20
(approximation)
Note:
1. Supplier listings also will improve with each tier.
329
Indiamart Performance
Analysis
330
Network effect driven auto pilot business model
83 Mn – Product Listings, 95,000 –

Categories, 56 Industries
Increasing product listing as the

number of suppliers on the
platform increases
7.1 Mn – Suppliers
More suppliers getting Increasing buyers due to 149 Mn –

listed due to increasing an increase in product Registered
buyer inquiries and availability and higher Buyers
demand on the platform internet adoption
Increasing inquiries due

to an increase in buyers
and even many sellers
become buyers
97 Mn – Unique Business Enquiries
331
IMPACT OF NETWORK EFFECT
20% 19% Advertising Expenses
18%
16%
• Annual Traffic - 1071 mn
14%
• Repeat buyers – 55% 12%
10%
• Suppliers who are also buyers – 36% 8%
6% 5.50%
4%
2% 0.80% 0.40% 0.30% 0.20% 0.20%
0%
FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22
Source: Company
332
Indiamart generates more than 90% of the profits of the B2B e-commerce
segment1
INDIAMART’S GROWTH (CAGR) : BETWEEN FY 17 TO FY 22
• Traffic – 27%
• Registered Buyers – 30%
• Registered Supplier – 17%
• Paid Supplier - 12%
• Average Revenue per paying supplier – 7%
Proportion of Paid Suppliers out of Total Suppliers – 2.5%
Subscription Renewal Rate – 80%
Note: Udaan, TradeIndia, Moglix, ofbusiness, Zetwork has been considered as other B2B players
333
Udaan
334
Udaan’s revenues has increased from just Rs. 46 crores in FY 19 to
Rs. 9900 crores in FY 22
Udaan’s Annual Revenue in Rs. crores
9900
10000
8000
5919
6000
978
4000 46
2000
0 FY 19 FY 20
FY 21
FY 22
Source:
https://www.businessinsider.in/
https://entrackr.com/2022/01/udaan-revenue-shot-up-6x-to-rs-5919-cr-in-fy21/
https://entrackr.com/2022/12/udaan-scale-nears-rs-10000-cr-losses-go-past-rs-3000-cr-in-fy22/#:~:text=The%20sale%20of%20traded
%20goods,Rs%20138%20crore%20in%20FY21.
335
Though Udaan’s buyer and seller base is low its revenue is much higher than that of
Indiamart .
UDAAN vs Indiamart
FY 2022 Indiamart Udaan
Number of Buyers 149 mn 3 mn
Number of Sellers 7.1 mn 25000 to 30000
Annual Revenue Rs. 753 crores Rs. 9900 crores
Valuation / Market US $1.8 bn US $ 3.5 bn

Capitalization (March
2023)
Source:
Company Reports
https://www.businessinsider.in/
https://entrackr.com/2022/01/udaan-revenue-shot-up-6x-to-rs-5919-cr-in-fy21/
336
Udaan follows the market place model while Indiamart follows the classified model.
UDAAN BUSINESS MODEL
• Follow the market place model, wherein participants can buy and sell on the Udaan platform
while in Indiamart the actual transaction happen outside Indiamart’s plaftorm
• Udaan charges commission on transactions while Indiamart earns from subscriptions.
• Udaan provide Loan through it’s NBFC licence
• Udaan provide End-to-End services such as logistics and warehousing.
• Udaan model require huge investments. (Its yet to make profits)
• Udaan has first hand insights into who is buying what. (This data is not available with
Indiamart as the transactions happen outside Indiamart platform).
• Udaan can increase revenues by increasing the volume of transactions while Indiamart can
increase revenues only by increasing paid suppliers or subscriptions.
337
Other B2B players
338
OTHER PLAYERS IN B2B SPACE
• Moglix : Focus on MRO

• Power2SME: Focus on Raw materials and MRO
• Industry buying : Focus on industrial materials, tools and metals.
• Bizongo: Focus on plastics, chemicals and packaging industry
• mSupply: Focus on construction materials, pipes, machinery, electronic
products, home and interior products.
• Ofbusiness - MRO
• Just Dial
• Amazon and Reliance also have forayed into B2B space in India
339
E-COMMERCE : EXPECTED
FUTURE TRENDS
340
EXPECTED FUTURE TRENDS
• Joimart and Tatas would break into the top

•ONDC may become a big disruptor
•Industry Consolidation
• Omni –Channel Retailing
• Increase focus on Private Labels
•Emergence of new categories like Service commerce/Social Commerce / Re-commerce etc
• Reduction in Discounts
•Increase non-COD sales
•Niche / sectoral ecommerce companies will achieve profitability before big players (Ex:
Delhivery, Zomato, Indamart etc)
341

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FMCG

•FMCG Industry Overview

• FMCG Company Analysis

• Steady growth industry with less cyclicality

FMCG: MARKET SIZE AND GROWTH

Source: ibef, Statista

FMCG: SEGMENTAL SHARE

SHARE OF RURAL AND URBAN MARKET

New Store Additions

35% Between 2020 and 2022,

Rural 8 lakh new FMCG stores were

SHARE OF MODERN RETAIL IN FMCG

• Penetration and per capita consumption are the two important

growth levers for FMCG industry

• Penetration refers to the reach of the category in %

• Per capita consumption refers to the average usage

• FMCG companies try to achieve growth either by increasing

penetration or per capita consumption or both;

• Launch of Shampoo Sachets

• Launch of pocket size deodrants is an example of the strategy to

increase per capita consumption

URBAN PENETRATION OF SELECT CATEGORIES

Source: Industry Interactions

LOW PER CAPITA CONSUMPTION

world, giving the industry a long runway for growth. Matching up to

Sanjiv Mehta, Former CMD, Hindustan

• Numeric Distribution is the percentage of the stores handling the product.

• Weighted Distribution is the quality of distribution. It is the percentage of stores

handling product weighted by product category sales.

Category Maggie Share of

• Numeric Distribution (for both ITC and Britannia) = 50%

• Frequent New Product Introduction

• High spend on advertising

• WMI (Win in Many Indias)

• Green initiatives (Ex: Smart Fill machines https://www.youtube.com/watch?

Category Size : Rs. 30,000 Crores (FY 2023)

BATH AND SHOWER : GROWTH

Products CAGR (2018 -23) Expected CAGR

Liquid Soap/Hand 23% 12% to 14%

BATH AND SHOWER : COMPANY MARKET SHARES

Company 2017 2023

BATH AND SHOWER : BRAND SHARES

•Due to Covid, Hygiene has become a key driving force

•Attribute and Benefits based competition

•Products with new attributes

Category Size : Rs. 28,000 Crores (FY 2023)

19% hair oils

Shampoos and Conditioners

CAGR (2018-23) Expected CAGR

HAIR-CARE : COMPANY MARKET SHARES

Company Market Shares

• Some of the major acquisitions were:

• HUL launched a full-blown assault on Parachute through it’s

• Parachute was Marico’s main brand.

• They had in-depth knowledge of branded coconut oil:

consumer insights, sourcing expertise, a well-established

distribution and marketing set-up, and the significant cost

optimization achieved across the value chain.

• In contrast, for Hindustan Lever, this was one among several