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Tradus.in - Naspers’ Internationalization Foray in India*

CASE STUDY, STRATEGY
ET Cases - GSMC, 12 pages
AUTHOR(S) : Dr Abha Rishi (Chairperson, CIED and Associate Professor, Birla Institute of Management Technology), Manideep Nulu and Krishna Sai Annepu - Students, Retail Management, Birla Institute of Management Technology

Case Preview

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.................

Internationalization of Naspers

By 1993, Naspers had entered Europe via another Pay-Tv operator, FilmNet, which operated in Europe since its inception. This Pay-TV service provider wing was, in that year itself, spun-off into a separate company and listed in the Johannesburg Stock Exchange. Naspers, thus, had entered Europe via a merger with FilmNet, with the newly formed company named, Multichoice SA Holdings (Proprietary) Ltd.............

Key Objectives of Naspers

According to the Naspers group, the key objectives are to:

• Grow their e-commerce businesses
• Invest in technology
• Provide quality service
• Balance profit, people and planet

...................................

Exhibit II shows the number of ventures that Naspers made in the internet platform. The fact that the conglomerate acquired 17 e-commerce companies in just 4 years should prove to be an example of how focused the group was, on investing in e-commerce...............

E-commerce evolution of Naspers

Exhibit III represents the E-Commerce divisions that Naspers possesses. Naspers efficiently made its way into each and every vertical of e-commerce present. The whole family of e-commerce websites under the Naspers tree covers all the business models...............

The Indian e-Commerce Scenario

The e-Commerce industry in India witnessed a humongous growth of $ 3.8 billion in the year 2009 to $ 9.5 billion in 2012. By the year 2013, the market expected to reach $12.6 billion, showing year-to-year growth of 34%. The E-Com market 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 had players such as Flipkart, Amazon, EBay, Snapdeal, etc. As per Forrester McKinsey report of 2013 India is home to 137 million internet users with penetration of 11%..............

The Indian E-grocery market

Globally, e-grocery market is growing nearly 7 times faster than the on-ground format. India is the sixth largest grocery market in the world. Indian e-grocery market is growing at the rate of 19% year-on-year. 30%–40% of the business will be in the online retail according to the Technopak, Deloitte report...........

The Indian Entry of Naspers

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 which had a sister concern, goibibo.com, an online travel portal. Though Naspers started investing in ibibo in 2007 itself, the acquisition was completed in 2008, when Goibibo emerged as the market leader among the online travel portals in India.............

The Tradus Presence

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............

Tradus is a group of websites operated centrally by Naspers but having its own country flavors. Say Ricardo, QXL, etc. Going back to the origins it was first termed as Tradus when there was a merger between QXL and Ricardo QXL being a London-based company and Ricardo being a German company basically into e-Auctioning business,.................

Tradus’ New Business Model

To deliver products to customers on the ‘same day’, Tradus adopted the following changes with immediate effect:

• A logistics infrastructure was created which would pick products from select “Local Markets” and deliver products to customers on the same day
• Currently, only select local markets in Delhi, Mumbai and Bangalore came under this category
• ........................

Success in the West

Last year, e-commerce giants like eBay, Amazon and Google Shopping launched same day delivery service, which saw huge success almost instantly and especially during the holiday seasons when people tend to make last minute purchases and wanted delivery immediately. Also, once people saw and liked something, they wanted it as soon as possible...................

Indian Counterparts with Same Day Delivery Option

While eBay launched a 9-hour delivery service in Mumbai, foodpanda.com operated on the same day delivery model. Of course, being a food takeaway service they cannot falter on the delivery option. Foodpanda.com operates out of the major Indian cities.............

Opportunity for Indian Online Seller with Tradus’ Same Day Delivery Service

Seeing the success in the West, Tradus adapted to this business model in its efforts to increase profits for sellers. While the serviceable local markets are limited currently, Tradus plans to expand reach subsequently wherein more sellers can benefit from this new option.............

The Virtual Marketplace

The basis for any successful E-commerce is the full integration of the virtual activities into the company’s physical strategy, marketing plan and organisational processes. The 4Ps of Marketing Mix that were the pillar of the marketing management became the target of intense criticism. Although the 4Ps of marketing mix are the soul of every business it does not fit into virtual commerce..................

The Web-Marketing Mix Model

There is a need to solve this web strategy problem and the way to solve this is by integrating the online strategic planning into the operational marketing planning. This would bring much more flexibility into the system and can easily be adaptable into the fast changing online conditions.............

Scope

Considering the Indian market which is at an infant stage in e-commerce when compared to saturated markets like US, where the wave of e-commerce started in the late 90’s. Indian Market being an emerging market, the policies introduced by the Government of India encouraged the competition in the e-commerce market. The strategic objective of Tradus.in was to create an online market place with the products especially from the local markets..............

Site Experience

Tradus.in one of the finest shopping sites revamped its website to create a great shopping experience to customers in categories like home, personal care, baby care and food also at the same time making sure that it provides full transparency to its customers. The website has created a friendly user interface which is the prime source for customer experience..............

 

Exhibits

Exhibit I: Naspers’ E-Commerce Acquisitions (2008–2014)

Exhibit II: Key Internet Assets of Naspers

Exhibit III: E-commerce Value Chain

Exhibit IV: E-Commerce Evolution: The Two Waves

Exhibit V (a): Who is Buying?

Exhibit V (b): Who is Buying?

Exhibit VI: Web-Marketing Mix Model

Teaching Note Preview

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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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:
- Abstract
- Case Study
- Teaching Note (**ONLY for Academicians)
$7.31
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