India as a potential market for expansion of an online fashion retailer E-Book

Steven Wolf

• Herausgeber: GRIN Publishing
• Sprache: Englisch

Veröffentlichungsjahr: 2016

Beschreibung

Bachelor Thesis from the year 2016 in the subject Business economics - Business Management, Corporate Governance, grade: 1,3, The FOM University of Applied Sciences, Hamburg, language: English, abstract: Globalization and a very high competition level influence companies all around the world. In order to enlarge their businesses, they try to increase their market shares and look for new prospective markets for the further expansion. Nowadays many emerging markets, particularly India, attract solid overseas investments. The aim of this bachelor thesis is to estimate the potential attractiveness of India as a market for expansion of an online fashion retailer. In order to attain the mentioned aim, the thesis will consist of several chapters with theoretical and practical information. Chapter 2 will be focused on the principal information on this topic: market selection criteria, including evaluating market attractiveness and potential risks. Based on these criteria, the most important economical, political, demographical, geographical and administrative information about India, which is relevant to the research, will be provided in chapter 3. This will be followed by an analysis of Indian textile business, including retail market overview and its influencing factors (infrastructure, logistics, IT development, culture, legislative regulations and restrictions). According to restrictions in online business, chapter 5 will be focused on description of four market entry strategies, their advantages and disadvantages. Next the analysis of the pioneer and follower timing strategies will be provided. Based on all findings before, success factors for running online fashion retail business in India will be formulated. Then there will be given an overview about the important players in the field of online fashion retail in India, the main points of their activities in comparison. As the completion of the research, the potential Indian market entry strategy will be formulated. This includes an analysis of locations in India and a SWOT analysis, which information will be provided according to the previous findings of the thesis. All derived information and ideas formulated in the thesis will be summarized in conclusion and the main thesis question introduced in the aim will be answered.

Leseprobe

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Table of content

List of Abbreviations

List of Figures

1 Introduction

1.1 Problem

1.2 Aim

1.3 Procedural method

2 Market selection criteria

2.1 Market attractiveness

2.2 Country risks

3 India: the emerging market

3.1 India: general information

3.2 Administrative territorial division

3.3 Political aspect

3.4 Economic stage

3.5 Life standard

3.6 Perspectives

4. Textile business in India

4.1 Retail market

4.1.1 Market overview

4.1.2 Menswear

4.1.3 Womenswear

4.1.4 Childrenswear

4.2 Online retail market

4.3 Influential factors

4.3.1 Information technology

4.3.2 Foreign direct investments in online business

4.3.3 Logistics

4.3.4 Culture

5. International strategies

5.1 Market entry strategies

5.2 Timing strategies

5.3 Success factors

6. Otto GmbH & Co. KG

6.1 Company introduction

6.2 International representativeness

7. Current competitors

7.1 Myntra

7.2 Jabong

7.3 Yepme

8. Expansion attractiveness assessment

8.1 Location selection

8.2 SWOT Analysis

8.3 Expansion strategy

9. Conclusion

References

Internet References

List of Abbreviations

List of Figures

1. Preferred territories of foreign companies

2. Four broad group of states based on their performance Source: McKinsey (2014)

3. Wold economies by GDP 2014 Source: Bergmann (2014).

4. Unemployment rate 2010 - 2013 Source: Own graphic by: World Bank (2014).

5. Inflation rate 2010 - 2014 Source: Own graphic by: World Bank (2015).

6. Exchange rate USD/INR June 2010 - June 2015

7. Exchange rate EURO/INR June 2010 - June 2015

8. Combined deficits of the central and state governments as % of GDP

9. Development of India’s middle class 1985 – 2025 Source: McKinsey Global Institute (2007)

10. World’s largest economies by GDP 2020 Source: Bergmann (2014).

11. Estimated GDP,PPP in 2020 Source: Own graphic by: IMF (2015).

12. GDP, PPP per capita in USD of states in 2025 compared to middle and high income nations. Source: McKinsey

13. Share of the retail market, 2013 Source: Own graphic by: Technopak Analysis (2014)

14. Relative apparel market size of major economies Source: Wazir Advisors (2012)

15. Category growth in menswear in 2012 Source: Own graphic by: Technopak Analysis (2013)

16. Category growth in womenswear in 2012 Source: Own graphic by: Technopak Analysis (2013)

17. Category-wise breakup: boyswear/girlswear Source: Technopak Analysis (2014)

18. E-Tailing Market – Category Split

19. Caste system Source: Own picture by: Holtbrügge and Friedmann (2011): p. 34.

20. Advantages and disadvantages of export strategy

21. Advantages and disadvantages of license strategy

23. Advantages and disadvantages of distinct company strategy

24. Marketplace Model Source: Arkay & Arkay/MediaNama (2012): p. 3.

25. Advantages and disadvantages of marketplace strategy

26. Comparison of competitors

26. Advantages and disadvantages of regions in India Source: Own table (2015).

27. SWOT Analysis Source: Own table (2015).

1 Introduction

1.1 Problem

Globalization and a very high competition level influence companies all around the world. In order to enlarge their businesses, they try to increase their market shares and look for new perspective markets for the further expansion. Nowadays many emerging markets, particularly India, attract solid overseas investments. Otto GmbH & Co KG, a German online fashion retailer, considers India as a potential market for expansion. The company is already represented in many developing countries such as China, Brazil and Russia and has a 2.3 billion € turnover of its online shops established abroad.[1]

1.2 Aim

The aim of this bachelor thesis is to estimate the potential attractiveness of India as a market for expansion of the online fashion retailer Otto GmbH & Co. KG.

1.3 Procedural method

In order to attain the mentioned aim, the thesis will consist of several chapters with theoretical and practical information. Chapter 2 will be focused on the principal information on this topic: market selection criteria, including evaluating market attractiveness and potential risks. Based on these criteria, the most important economical, political, demographical, geographical and administrative information about India, which is relevant to the research, will be provided in chapter 3. This will be followed by an analysis of Indian textile business, including retail market overview and its influencing factors (infrastructure, logistics, IT development, culture, legislative regulations and restrictions). According to restrictions in online business, chapter 5 will be focused on description of four market entry strategies, their advantages and disadvantages. Next the analysis of the pioneer and follower timing strategies will be provided. Based on all findings before, success factors for running online fashion retail business in India will be formulated. Chapter 6 will include the introduction of the Otto GmbH & Co. KG and the main facts concerning its international online activities. Chapter 7 will give the overview about the important players in the field of online fashion retail in India, the main points of their activities in comparison.

As the completion of the research, the potential Indian market entry strategy for Otto will be formulated. This includes an analysis of locations in India and a SWOT analysis, which information will be provided according to the previous findings of the thesis. All derived information and ideas formulated in the thesis will be summarized in conclusion and the main thesis question introduced in the aim will be answered.

2 Market selection criteria

Before entering a new market an analysis of the market attractiveness and country risks is necessary. This chapter will be focused on the theoretical criteria and in the following chapters these criteria will be analyzed with reference to Indian market to give an answer if India is an attractive market for expansion.

2.1 Market attractiveness

The criteria to evaluate market attractiveness are the following:

 Market size;

 Market growth of last 5 years and growth projection;

 GDP per capita;

 Infrastructure;

 Competition in market;

 Limitation of FDI;

 Sales prices in market;

 Costs (workforce, taxes etc.);

 Skills and education level of workforce.[2]

With reference to the market size, the number and development of population as well as age structure is to be analyzed. The market growth of last 5 years and the growth projection will give an answer if the market has a stable growth.

GDP per capita is a representative factor to evaluate if the population has enough income to buy the goods. The infrastructure can be divided into communication and transport infrastructure. The communication infrastructure shows if all customers can be reached by internet or other communication tools. Whereas the transport infrastructure reveals if goods can be delivered in all parts of the country. The further important factor is the competition in the market segment. As in many countries there are also restrictions on foreing investments in Indian market which influence the market strategy.

However, sales prices in the market give an answer if products can be sold profitable. It is also necessary to take into account the costs e.g. for workforce and taxes. A key success factor in business is the skills and education level of the workforce.