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Tradus.in - Naspers’ Internationalization Foray in India*

CASE STUDY, STRATEGIC MANAGEMENT
ET Cases - GSMC, 12 pages

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Tradus.in – Naspers’ Internationalization Foray in India

 

Tradus.in and Naspers

Tradus.in is a part of the Naspers group, one of the biggest groups of e-commerce and Media brands in the world. In the early phase of its international operations, the company expanded pan Africa and by 1970s, the group emerged to be the biggest media group in the continent. Quite clearly, the company used an ethno-centric approach to its internationalization strategy, due to common agitation against the colonial rule of Great Britain, France, Portugal and Italy.

Although South Africa gained independence before 1945, most of the African countries gained independence between 1945 and 1990. The National Press, the then Naspers group, played an influential role in the respective independence struggles of the countries. From 1920 to 1979, the group expanded its business from just newspapers to magazine printing andand publishing operations. Being a media group, the company did not have any need to publicize itself. The eighties, however, proved to be quite an interesting scenario as various companies andand conglomerates began to invest heavily in internationalizing their product and service offering.

While, most of the companies worldwide were in search of ideal markets to enter and the nail the perfect strategy to operate, Naspers decided to increase its service offering to the broad market it was already catering to, as a media house. In 1985, Naspers group expanded its status as a print media house to a digital media service provider, by merging with a few other South African companies to form an electronic pay-tv business model, M-Net.

Naspers had made sure, since its inception to extend its service offering, as compared to carry out its portfolio restructuring at the right time, for instance the acquisition of Tencent holdings Ltd., which runs an instant messenger, QQ in China.................

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Tradus.in – Naspers’ Internationalization Foray in India

 

Synopsis

Tradus.in (Tradus) is a part of the Naspers group, one of the biggest groups of e-commerce and Media brands in the world. In the early phase of its international operations, the company expanded pan-Africa and by 1970s, the group emerged to be the biggest media group in the continent. In March 2008, Naspers acquired Tradus which was formerly QXL, a leading provider of C2C ecommerce platforms in Central and Eastern Europe. Tradus is subsequently delisted from the London Stock Exchange and the group has re-organized into Allegro and Ricardo. Once again, after having extended it service offering to Internet service providing, instant messaging, e-mail service providers, Naspers group went ahead and invested in the next biggest internet phenomenon of the time: Internet gaming. Naspers group, via mail.ru acquired Astrum online entertainment, a leading games developer in Russia. Apart from gaming, Naspers also set up property dealing and financial solution providing services on the internet.

The e-Commerce industry in India has seen a humongous growth of $3.8 billion in the year 2009 to $9.5 billion in 2012. By the year 2013, the market is expected to reach $12.6 billion, showing year-to-year growth of 34%. As the scale of e-commerce is increasing day by day, a competitive environment is created in the market. With players receiving the investments in larger scales forecasting the fair amount of business that can be done. The e-commerce market has expanded its wings in different business formats such as B2B, C2C, and B2C where it started an ecosystem and change that made people switch to novel forms of doing businesses. E-commerce in India has players such as.

Flipkart, Amazon, EBay, Snapdeal, etc. As per Forrester McKinsey report of 2013, India has 137 million internet users with penetration of 11%. Total percentage of online buyers to internet users is 18%. Compared to India, China, Brazil, Sri Lanka and Pakistan have internet population of 538 (40%), 79 (40%), 3.2 (15%) and 29 (15%) millions respectively. Therefore, lower internet density continues to remain a challenge for e-commerce.

The time of entry of Naspers into India could not have been more perfect. Naspers entered India by investing in and gradually acquiring ibibo.com, an online gaming portal and a sister concern, goibibo.com, an online travel portal. Though Naspers started investing in ibibo in 2007 itself, the acquisition was completed in 2008, the year when Goibibo emerged as the market leader in online travel portals in India. Goibibo is still the leading player in the online travel portals in India after having acquired redbus.in and yourbus in 2013 and 2014 respectively. Goibibo also has 51% stake in travelbotiqueonline.com. The website, www.tradus.com is published and maintained by Ibibo Web Pvt. Ltd., one of the ventures of the Naspers group. Tradus is funded by Naspers, a $22 billion (JSE:NPN) multinational media group headquartered in Cape Town, South Africa. In 2008, the MIH arm of Naspers acquired 100% of Tradus............

Expected Learning Outcomes

  • • Understand the web marketing mix model
  • • Understand internationalization of an e-commerce organization
  • • Understand the risk management parameters for ‘divest or invest’ decisions
  • • Comprehend the growth strategies of a MNC in an emerging market

 

Case Positioning and Setting

This case study can be suitably used in the following courses:

E-Commerce, Strategy, International Business, Emerging Market and Multinational Companies

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$4.22
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Product code: STG-1-0007, STG-1-0007A

Abstract


Tradus.in (Tradus) is a part of the Naspers Group, a $22 billion (JSE: NPN) multinational media group and one of the biggest groups of e-commerce and media brands in the world. Naspers is presently headquartered in Cape Town, South Africa. The fact that the conglomerate has acquired 17 e-commerce companies in just 4 years is an example of how focused the group is, on investing in e-commerce.

Naspers entered India by investing in and gradually acquiring ibibo.com, an online gaming portal with a well-known sister concern, goibibo.com, an online travel portal. The advent of Naspers in India has been discussed in this case, by taking an example of Tradus.in and how Naspers handled its operations in India in relation with the group's other investments in the other players( for example, Flipkart) in the e-commerce industry of India.

Tradus started its operations in India in 2009 launching primarily with B2C (Business to Consumer) and C2C (Consumer to Consumer) e-commerce models. The company had started with offering a variety of products including tablets, computer accessories, laptops, footwear, etc., among other things. Recently, it shifted its focus towards food and groceries with an online grocery - only store. But, the critical factor was that Tradus had compromised heavily on the product quality to sell at the price points that it did. Also, in order to cut down the costs, Tradus compromised heavily on its customer relationship management activities. The negative effect of all these factors led to poor consumer reviews for the site. With 33.3% of good reviews and a whopping 66.6% very bad, Tradus suffered severe damage to its image as an e-tailer. The question that loomed before Naspers was whether it should divest and exit or go in for corporate restructuring.



Pedagogical Objectives

  • To understand the web marketing mix model
  • To understand internationalization of an e-commerce organization
  • To understand the risk management parameters for 'divest or invest' decisions
  • To understand the growth strategies of a MNC in an emerging market

Case Positioning and Setting
This case study can be suitably used in the following courses:

  • E-Commerce, Strategy, International Business, Emerging Market and Multinational Companies



*GSMC 2014, IIM Raipur



This Case Pack Includes:
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- Case Study
- Teaching Note (**ONLY for Academicians)
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