COMPANY – LIMEROAD is a social commerce platform operated by A.M. Marketplaces Pvt. Ltd. Headquartered in Gurugram started on 07th June 2012i. INDUSTRY – E-COMMERCE (Earlier it was E-Commerce and Apparels but recently from March onwards it became specifically E-Commerce)
Industry Analysis
Earlier as LimeRoad was dealing only in women’s apparels its industry were more of ecommerce sites focusing on apparels and women wear. So, LimeRoad dealt with the likes of yebhi, yepme, myntra, jabong as competitors. But now recently as it has also started Men’s apparel, home décor and kitchen products, LimeRoad is aspiring to step into the league of big players like amazon, flipkart, ebay, snapdeal, etc. But as of now with the range of products LimeRoad has, it is more of a company dealing in fashion and lifestyle products. Below mentioned data and charts show the Retail-Industry and E-Retail Industry performance with the projections for next 3 years i.e. till 2019. We are here also considering the performance with projections in the earlier product group of apparel ecommerce.
e-retailing as a % of retailing 35 30 25 20 15 10 5 0
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apparel e-retailing as a % of e-retailing 30 25 20 15 10 5 0
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CAGR 2 1 0 2010.0
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CAGR-retailing
CAGR-eretailing
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CAGR apparel e-retailing
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In the above shown graphs, we could find the data till 2015 from the reference mentioned and based on the data we have estimated the further values. Graph-1 shows the expected rise in the E-retailing business as compared to the Retailing business. Graph-2 shows that although the Apparel E-Retailing is rising but then too it as a ratio to overall E-retailing is falling as there are many major players in market with a broad variety of products for the same. Graph-3 depicts the CAGR data for all categories. After 2015, being on a very conservative side we have considered the market to be stable and a little stagnant with the constant CAGR as of previous years for all four segments we considered. For retailing, mobile retailing, and apparel e-retailing we have very little variations in CAGR over the past 5 years and thus we considered them as having constant CAGR from 2015 as it is easy to model. To ensure consistency on modelling we took CAGR forecast for e-retailing as also constant with 2015 value.
PESTLE analysis for LimeRoad
Political factors The current Central Government has introduced a campaign of Startup India providing impetus to the startup ecosystem and thus has increased competition for LimeRoad in the e-commerce sector. Economic factors: Taxation in India: LimeRoad is an aggregator for its various vendors but does not have any inventory and is only a platform for customer to vendor interactions which is facilitated here following a marketplace model. Thus under the present tax scenario in India according to Section 65B(44) of Sales Tax Act the company has to pay no tax as it provides only a service as goods change hands directly from the vendor to the customer. However the company being headquartered in Gurgaon, Haryana might need to register with the excise and taxation department for payment of Value Added Taxv. The coming GST bill would have repercussions for the continuing business activities as firstly the definition of 'aggregator' suggests it applies only for services and that too, only for 'listing' of sellers. The definition of operator is when they facilitate payment which has separate tax liabilitiesvi. Also we have GST at source and thus there might be an increase in taxes to be paid by LimeRoad Interest rates:
As can be seen from the above plot, we have since 2010 seen a rising trend in interest rates which has only in the past year started coming down. Thus though the cost of borrowing for the company was high during its inception in 2012, it is slowly coming down. Also the customers would have more money to spend and thus sales by e-commerce would increase. Inflation:
The coming down of inflation rate over the past few years with it being stabilizing in between 4-6% is a boon for the e-commerce industry as the sales are increasing.
Social factors: Internet usage
Internet Subscribers (Million) 350.000 300.000 250.000 200.000 150.000 100.000 50.000 0.000
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As can be seen from the chart, the usage of internet in India has increased quite a lot and thus increasing the sales prospects of e-commerce sites like LimeRoad. Internet usage demographic:
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This shows that the maximum usage of internet is in the age group 15 to 44 which are the target market of LimeRoad and thus is a good market for sales.
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This shows that the percentage usage of internet for women is lower than that of men. LimeRoad initially was a women’s only store and thus could capture only woman’s part of the market and the male market only for gifting to a significant other. This drawback has been removed with LimeRoad providing men’s category. Technological Factors: The technological changes occurring in India especially as regards smart phone market have provided a direction for e-commerce sites like LimeRoad to provide a shopping app as an alternate way of shopping on LimeRoad. This change can be seen as
Sales via medium 16000 14000 12000 10000 8000 6000 4000 2000 0
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mobile internet retailing
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Legal Factors: E-commerce websites operating in India are required to follow many laws of India including the Information Technology Act, 2000 (IT Act 2000). As per the IT Act, 2000 these e-commerce websites operating in India are Internet intermediaries and they are required to comply with cyber law due diligence requirements as well. The Bombay shops and Establishments act, 1948 defines shops as those having premises which are absent for e-commerce sites and thus these may not be valid as shops.
Ecological factors: The conversion to Bharat-IV standards for fuel emissions by 04/2017 and Bharat-VI by 04/2020 has put a lot of pressure on the transportation sector and led to increased cost of transportation for goods thus affecting the margins of e-commerce sites.
Porter’s Five Force Model
Supplier Power: LimeRoad is working on a zero inventory marketplace model and is thus completely dependent of the companies which list their products on the site. Also these suppliers can list in any of the other eretailers and thus there is very high supplier power in determining the prices of the goods. LimeRoad is working on making at least 50% of the listings as exclusive to the site xi to improve which would require some incentives to the suppliers and thus their power increases.
Buyer power: There are a lot of e-commerce sites like Myntra, Voonik, Craftsvilla etc. and thus customers have a lot of options for buying items in the e-market scenario. There is also competition from brick and mortar stores which have a touch factor for increasing sales. Thus the buyer power is also more in this sector. Competitive Rivalry:
Large numbers of E-commerce companies have opened up adding to existing sites (Myntra, Voonik, Craftsvilla etc) and each one of them is trying very hard to increase their market share by providing lucrative offers. Thus there is high competition. Threat of substitution: Instead of Buying the Apparels online, the customers can buy it directly from a retail store as they will have the benefit of trying the apparels out. The other e-commerce sites are also substitutes for those listings which are common. However the exclusive listings have no such threat.
Threat of new entry: There are few barriers of entry into the e-commerce market in the current legal scenario and thus there are many new entries tapping into the same market. Thus the threat of new entries is ever present.
Past Performance Past analysis for LimeRoad
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As can be seen from the above Revenue figures, the sales have increased highly in the financial year 2014-2015 which can be seen as a validation of the market model. This momentum is further carried by the ad released in September 2015 xiii. The introduction of home décor products and men’s range is the strategy of increasing the product mix. The exclusive offers available from the designers and scrapbook feature has ensured that the user activity in the site has increased ensuring that the consumers would use them.xiv
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The expenses have increased to INR 48.1 crores from INR 16.9 Crores in 2013 to 2015 with a major increase going to advertisement and freight which are both necessary for expansion of the brand image and delivery of stock. SWOT analysis for LimeRoad
Strengths 1. Scrapbook –This is a social tool where users can create full wardrobe from items in catalogue and share it on social media ensuring publicity for LimeRoad. 2. Exclusive listings for items especially designs 3. Zero-inventory model Opportunities 1. To expand into tier two cities 2. Further increase their product mix in lifestyle segment
Weakness 1. Available in tier I cities onlyxvi 2. The offerings for Men and Home Décor are not advertised months after introduction 3. Perception as a women apparel store only
Threats 1. M&A’s of major players like Myntra and Jabong have strengthened Flipkart’s position in apparel e-commerce. 2. Most of the offline retail gaints in apparels have come up with online sales
Segmentation, Targeting and Positioning
SEGMENTATION Market Segmentation is the first basic thing required to be done by a company before launching a product or starting any business. We need to know on what basis can our market be segmented and what all people to focus on. There can be many ways of segmenting the market which a company can take up. Specifically if we talk about LimeRoad, they have segmented their market on the following basis:
Demographics – Age and Gender Geography – Cities or Countries where the products of the company are targeted. Taste & Preferences of People – What kind of product a person desires. In our case main focus is on Designer Apparels.
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TARGETING Market targeting is nothing but where exactly to reach out in the segments which a company sets for itself. In our case LimeRoad has segmented its market on the basis of the following:
Demographics Geography Taste & Preferences of People
Coming to Demographics, LimeRoad targeted majorly females in the beginning and that too majorly ladies which are more towards fashion and of the age group 24-35. The following clippings from their official website strengthen this argument.
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Both the snippets from their website show designer dresses being endorsed by Bollywood Divas which shows class, age factor i.e. early 30s and love for fashion.
Next based on Geography, LimeRoad is present only in Tier-I cities i.e. Mumbai, Delhi, Bengaluru, Ahmadabad, Jaipur, Hyderabad and Lucknow. Next LimeRoad focused on selectivity and socialism. They preferred to go zeroinventory and a social e-commerce site. They focused on people with high fashion sense and sense of exclusivity.
POSITIONING The Market positioning of LimeRoad and its products was beautifully designed and set. It was positioned as a site which provides a platform for designers to come and sell their products and also helped providing the costs low to the customer. Both the fashion houses and few new entrants can design and sell their designs by getting them registered here. Also the people who want exclusive designs to wear and monetary worth of the product is secondary were kept in mind while positioning it.
i http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=223308316 ii http://www.portal.euromonitor.com/portal/analysis/related iii http://www.portal.euromonitor.com/portal/analysis/related iv http://www.portal.euromonitor.com/portal/analysis/related v http://www.business-standard.com/article/economy-policy/haryana-to-tap-e-commercereal-estate-for-taxes-113062801089_1.html vi http://www.business-standard.com/article/economy-policy/gst-may-stifle-innovation-ine-commerce-space-iamai-116062901066_1.html vii http://www.indiastat.com/table/telecommunication/28/internet/143/395675/data.aspx viii http://www.statista.com/statistics/272394/age-distribution-of-internet-users-in-india/ ix http://www.statista.com/statistics/272438/gender-distribution-of-internet-users-in-india/ x http://www.portal.euromonitor.com/portal/analysis/related xi https://yourstory.com/2013/03/limeroad-com-an-ecom-portal-for-women-is-bullishabout-the-future/ press release xii https://www.tofler.in/companyinfo/U74140DL2012PTC237075 xiii http://www.limeroad.com/blog/limeroads-first-tv-ad-isnt-actually-commercial-suchimukherjee-ceo-limeroad/ xiv https://techcrunch.com/2015/03/30/limeroad-seriesc/ xv https://www.tofler.in/companyinfo/U74140DL2012PTC237075 xvi http://www.bloomberg.com/research/stocks/private/snapshot.asp? privcapId=223308316 xvii http://www.limeroad.com/house-of-design?f_ref=nav
xviii http://www.limeroad.com/women
