JABONG : BALANCING THE DEMANDS OF CUSTOMERS AND SUPPLIERS
Presented by,
Himanshu Chugh (18021)
Pranav Parkash (18035
About Jabong
• It is a fashion and lifestyle E-commerce portal.
• It was co-founded by Arun Chandra Mohan, Praveen Sinha, Lakshmi
Potluri.
• Its first operating year was FY2012/13.
• Its main goal was to provide high level of consumer satisfaction.
• It provided customers with a superior buying experience, timely
delivery, competitive prices and a quick resolution of problems.
JABONG : BALANCING THE DEMANDS OF CUSTOMERS AND
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In its early stage
• It recorded gross sales of over $100 million in the FY12/13.
• And by March 2013, it shipped 6,000 to 7,000 orders per day.
• This figure increased to 14,000 by September 2013.
• In October 2013 it started to add some internationals brands to its
name.
• In March 2014 Jabong launched in-house brands in apparel, shoes
and accessories.
• Industry watchers believed that Jabong was set to enter the $1 billion
club by the FY2015/16.
JABONG : BALANCING THE DEMANDS OF CUSTOMERS AND
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Marketing strategy
• Jabong followed an inventory model for high turnover products and
marketplace model for the rest of the product.
• Jabong gave huge discounts on core article products of premium
brands.
• It maintained the demand balance between customers suppliers.
• Jabong was always active on digital media from its beginnings.
• In November 2013, Jabong introduced the digital fitness campaign
“Gear Up Buddy”.
JABONG : BALANCING THE DEMANDS OF CUSTOMERS AND
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Jabong’s market share
• Jabong offered more than 1,00,000 products from more than 1,000
brands.
• It converted approximately 1% of new visitors to its website into
paying customers.
• Jabong’s sales were 37% in tier 1 cities, 35% in tier 2 cities, 28% in tier
3 cities.
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Competitor - Myntra
• Myntra has been the biggest fashion e-retailers in India since 2012.
• Jabong and Myntra combined turnover reached $154 Million for
FY2013/14.
• In that particular year Jabong jumped to $82 Million from $800,000 in
FY2012/13.
• Myntra on other hand grew from $11 Million to $72 Million during
same period.
• Myntra focused on fashion and lifestyle products.
• Jabong catered mostly to customers of premium and international
fashion brand.
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The Business With Puma
• Puma was a German multinational corporation headquarters in
Bavaria, Germany.
• It entered Indian market in 2009.
• Puma used Reebok’s downfall in India to rapidly notch up its own
sales.
• It partnered with all of the major e-commerce companies like Flipkart,
Snapdeal, Koovs, Amazon.
• Myntra and Jabong were Puma’s key strategic e-commerce partners.
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Puma – Jabong Business
• Jabong dealt with Puma using inventory model.
• Jabong bought the items from Puma, and paid Puma irrespective of
actual sales.
• Jabong was able to generate a significant gross margin from sales of
Puma products.
• Puma offered extra margins as special support to the online
companies.
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Guidelines from Puma’s management
• Puma would provide a list of styles called “core articles” that channel
partners could not discount or pair with promotional coupons or
similar campaigns.
• Puma would offer specially manufactured units (SMUs) to all e-
retailers.
• There would be an exclusive range of products that would be offered
only to some key online channel partners.
• Old season merchandise could be sold at discounted prices at the
discretion of the retailers.
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Impact of Puma’s decision on Jabong
• Jabong sold an average of 8,000 pairs of shoes per month between
July and September 2014.
• Sales declined sharply in October and November 2014 due to lack of
discount offered by Puma.
• Footwear companies grew by 50% but puma sales declined 20%.
• Online consumers needed special incentives to buy a product.
• Puma SMUs option was problematic because these products were
made for discounts.
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Options for Patnaik
• Patnaik had an option to drop Puma brand from Jabong, but he
reconsidered and didn’t drop Puma brand.
• He had three options to incorporate the new brand guidelines,
• Opting core articles plus select SMUs range.
• Opting core articles plus exclusive SMUs range.
• He didn’t consider moving Puma brand from inventory model to market place
model.
• So his motive was to setup up balance between consumers and
suppliers.
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Pros & cons
Cons
Pros
• Dependency on core articles • Aggressive pricing of SMU could
will reduce. cannibalize the sales of core
• At the same time SMU will articles.
provide sufficient gross margin. • Average selling price would also
• If he considered option 3, it will decrease.
maintain gross margin and save • Considering 3rd option Puma
operating cost. could shift its focus from Jabong
to other E-retailers.
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% OF REVENUE
others
Children's Apparel 6% Men's Apparel
5% 18%
Women's Footwear
6%
Men's Footwear Accessories
22% 20%
Women's
23%
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New customers and Jabong’s sales
60
50
40
30
20
10
0
Q2 FY2013/14 Q3 FY2013/14 Q4 FY2013/14 Q1 FY2014/15
% Increase in customer over last quarter % Increase in no. of order placed over the last quarter
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Channel sales split for Puma – 2013/14
100
90
80
70
60
50
40
30
20
10
0
Total Retail Distribution E-retail
Revenue in Million $ Growth over last year (%)
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Present
• Owner Myntra(Flipkart)
• CEO : Ananth Narayanan (Jul 2016-)
% growth Year to year Basis
60
50
% Grpwth
40
30
20
10
0
FY 16-17 FY 17-18 FY 18-19
Years
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Thank You!!!!!
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