1. Wish|Real
By:
Rohit Kuthiala
Veeresh Novli
AMPM (Cycle III)
Project Guide: Prof. Dr. Brian TO

2. Guanxi – Mianza – Yenting

3.  Have you ever been in a conversation with
friends’, where they tell you about their latest
shopping conquest?
 Did you want yourself to be in their position
more often?
 Well, we at WISH|REAL have a Solution!!!
3

4. Index
1. BUSINESS PLANNING
4

5. Index
i. The Need
An Extract from an article in the China Newsweek on Jan 23rd 2010
Who are China's middle class?
“Therefore, Zhou gives his three standards. Firstly, they should have a monthly income at least
5000 yuan. Secondly, they should work as the owner, manager or technician in companies or
public institutions. Thirdly, they have received university education. The middle class is a group of
common people and they are a large group between the rich and the poor.
According to Pei Zhenhua, the term middle class also refers to a distinct state of mind. Their
knowledge and economic status make their value and their attitude towards life more recognized
by the society.
Zhou concluded that Chinese society does not provide adequate opportunities for people to
realize their dreams. A fast-changing society will reduce people's happiness. People keep
raising their expectations and once the reality does not live up to their anticipations,
they feel frustrated. That's why most of the "middle class" are not happy and do not agree
with the term.”
http://www.china.org.cn/china/2010-01/23/content_19293900.htm
5

6. Index
ii. The Team
 Prof. Dr. Brian TO – The Backer (Mentor & Guide)
With over 25 years of professional experience in private management consultancy for Fortune 500
and venture/growth firms. Strong track record in both strategy formulation and execution,
corporate and business development, asset management strategy, business architecture,
innovation of products and services, organization development, design and managing complex
change, turnaround management and value creation. He has considerable experience in
advertising and advancing family owned enterprises and corporations in Asia.
 Rohit Kuthiala – The Doer
Driven by a venturesome spirit and the need to charter my own path, most often in unstructured
environments. Having handled the complete life-cycle of product development and
communication in telecom Value Added Services (VAS), Including inception, market analysis,
promotions and revenue generation.
 Veeresh Novli – The Pillar
Over 18 years of experience spread across Project Management, Software development,
Customer relationship management, Team management, and Quality management. Expert in
establishing/mentoring teams and managing projects from the inception. Strong experience in
project management processes. Well versed in working with global customers/teams, in cross-
cultural environments.
6

7. Index
iii. The Deal
Affordable access to materialistic expectations
To make available latest / best Luxury products at 90% +(plus) discount
 Through Proffer
 Register/create an account (get ‘proffer’/‘wish’)
 ‘Wish’ for a product from catalogue
 Top ‘Wished’ product goes on auction at token 1 Yuan
 Each proffer increases the price by .01 Yuan
 Every product has a timer
 When the timer reaches zero, the last proffer wins (‘WISH’ becomes ‘REAL’)
 If another user proffer before the timer expires, the timer restarts – keeping
the auction alive
7

8. Index
iv. Online Business Models Employed
Back-end Front-end
• Market Concentrator – B2B • Virtual storefront – B2C Sells
Concentrates information from several goods, services on-line
providers
• Information broker – B2C • On-line exchange – B2C Bid-ask
system, multiple buyers, sellers
Provide info on various products, pricing
• Content provider – B2B Creates
revenue by providing advertising space
• Virtual community – C2C Chat
room, meeting place
8

9. Index
v. The Revenue Model
Sourcing Cloud Delivery
Vendor 1 Vendor 2 Vendor 3 Vendor 4 Shipping & Handling Costs
Wish|Real By Vendor
Vendor B2B Hub
Catalogue WISH / BUY
WISH Real Loyal BUY Advt. Space By Purchaser
B2B Hub Purchaser
Live Auction
WISH PROFFER Wish Real Advt. Space
Auction End
WISH BUY Wish Real Advt. Space Color Legend
Income Generators
Purchaser
Business Process
Purchaser 1 Purchaser 2 Purchaser 3 Purchaser 4
Self financing cost
9

10. Index
vi. The Opportunity
 Internet Opportunity Support
CNNIC The 26th Statistical Report
Total Netizens – 420 million
 Luxury Goods Opportunity Support
$ 9.6 Billion Billion RMB in 2009 which is 27% of the global consumption
10

11. Index
The Opportunity
 E-commerce Opportunity Support
CNNIC The 26th Statistical Report
Highest
increase rate is
in Commercial
exchange
industries in
the usage of
WEB
11

12. Index
The Opportunity
 Online Opportunity Support
CNNIC The 26th Statistical Report
Very High usage
of WEB for
Entertainment
&
Communication
12

13. Index
The Opportunity
 ‘Mobile’ Opportunity Support
CNNIC The 26th Statistical Report
Sizeable usage
of mobile for
Entertainment
& M Payment
13

14. Index
vii. The Opportunity SWOT
 Core strength
 Very stable government structure
 Commitment to economic development
 Huge domestic markets
 Potential benefits
 Well Developed Infrastructure (Power / water / Telecom)
 Technical skills and education
 Improving English language skills
 Potential risks
 Legal regulatory frameworks
 No IPR protection
 Less flexible labor laws
 Freedom of info exchange
 Raising salaries and staff turnover
 Difficult to attract right talent
14

15. Index
viii. The Financials
 Normalized Distribution Curve for Assimilated Bids Data
Statistical measurement across 99 data points
Incident Count
18
Majority Traffic Inflection Point
16
14
No. Of Auction Ends
12
10
8
6
4
Break Windfall Profit
2
Even
0
Percentile of bids per Product 15

16. Index
The Financials
 Average Profit Percentage on Price Distribution overlay
Statistical measurement across 99 data points
250% Price Distribution VS Profit %
25
Averages based Target for Luxury Auctions
200% revenue projection High MRP + High Profit %
20
Avg. % of Profit 150%
15
100%
Count of Products 10
50%
5
0%
0
7 - 15
257 - 2281
15 - 22
22 - 44
44 - 66
66 - 88
132 - 154
110 - 132
154 - 257
0-7
88 - 110
Count of Products
MRP of Products on Auction 16
Avg. % of Profit

17. The Financials
 Balanced Revenue Case
S# Units Failed Below Par At Par Above Par Best Remarks
1 Bid Item Cost USD 73.00 73.00 73.00 73.00 73.00
2 Initial Start Price USD 1.00 1.00 1.00 1.00 1.00
Penny Auctions Watch data, avg.95% discounting
3 Expected End Price USD 1.14 1.71 2.41 3.12 5.94
on list prices. Breakeven Discounting arrives at 110
4 Increment Per Bid USD 0.01 0.01 0.01 0.01 0.01
Based on available data, average number of bids
5 Number of Bids No.s 14 71 141 212 494
per auction is coming out to be 141
6 End User Cost Per Bid USD 0.72 0.72 0.72 0.72 0.72
7 Gross Seller Earnings USD 11.29 52.47 103.93 155.40 361.26
8 Net Seller Earnings USD -61.71 -20.54 30.93 82.40 288.26
10 Unique Users Per Day No.s 1,425 1,425 1,425 1,425 1,425 Only Needed For System Sizing
11 Active Bidders Per Day No.s 143 143 143 143 143 Only Needed For System Sizing
12 Unique Bidders Per Item No.s 37 37 37 37 37 Only Needed For System Sizing
13 Bids Per Unique User No.s 0.38 1.88 3.77 4.15 4.71 Only Needed For System Sizing
14 No. of Bids (Derived) No.s 14.10 70.50 141.00 155.10 176.25 Cross Check For No. of Bids S# 5
Avg. No. of Concurrent
15 No.s 16.00 16.00 16.00 16.00 16.00
Auctions
Active Hours Per Day For
16 No.s 8.00 8.00 8.00 8.00 8.00
New Auction Launches
17 New Auctions Per Hour No.s 2.00 2.00 2.00 2.00 2.00
Avg. No. of Daily New
18 No.s 16.00 16.00 16.00 16.00 16.00
Auctions
19 Hold Time Per Auction Hrs 60.00 60.00 60.00 60.00 60.00
Actual Avg Auction Time At
20 Hrs 0.59 0.59 0.59 0.59 0.59 Assuming 15 seconds counter to every bid
Start of Auction (Hrs)
No. of Auctions Closing Per Dividing 480 Auctions Per Month into
21 No.s 48.5 145.4 87 34.1 140.6
Month Failed/BP/P/AB/B in the defined ratios.
22 Avg. Net Rev Per Month USD -2,992 -2,987 2,702 2,808 40,540
Balanced Total Across All Auctions, With No
Total Net Rev Per Month USD 40,072
Variation in Product Retail Price
* Actual Costs can only be indicated after the Operation plan is decided 17

18. The Financials
 One Year Costing (1st year)
Cost Scenario Option 1 USD
Development team India 103,700
Management team Hong Kong 232,600
Customer support team China 98,500
Logistics team Hong Kong 49,200
Hong Kong -
Purchase Team
US 65,750
Web site 500
Marketing 828,000
Common Expenses
Travel/Accommodation 346,800
Negetive cash flow 300,000
Total Operating Expenses 2,025,050
Budget Provision 50%
Funding required 3,037,575
18

19. ix. The Finance
 Capital Structure (equity vs debt)
I am looking to get majority family funding for this project and would like to keep 'debt' as low as
possible. My uncle, a founder/CEO of a Investment company in Australia is expected to be the primary
financier. I have spoken to him on a very macro level of my AMPM final project that I wish to take live in
greater China region and he has shown interest and offered all help required. The fact he already has
business interests in China, I am sure we can leverage to our advantage.
 Shareholders (+ agreement)
For academic purpose ONLY this is a combined effort by me and Veeresh Novli. This is my concept which
he has contributed in for submission as our final project in AMPM. Beyond academic, Veeresh does not
have any stake in the business concept, if he does get involved at a later stage it will be a fixed
remuneration based relationship. I am hoping for Prof. Dr. Brian TO’s longer term involvement in the
project as a mentor / guide / director depending on how he would like to get associated. The only other
person getting at the helm of things is my Uncle who will be the principal financer. I would like to initiate
discussion with my financer after we have clarity on association with Prof Brian TO.
 Phases of Development / Deployment / Gannt Chart
After submitting this project with AMPM, I am self-financing a working prototype of the proposed site.
Upon clarity of association with Prof TO, I would approach for funding. And depending on funding and
guidance by Prof TO, I hope to deploy the site in real time.
19

20. The Finance
Phases of Funding
 Prototype is self-funded
 Seed Capital
 For research / consultation
 On market entry / promotions strategy finalization
 On operations strategy finalization through PEST analysis
 To cover administrative / purchase / distribution set-up costs
 Start-up Capital
 For recruitment of Key Management
 For operation set-up as per strategy finalized
 For sustained marketing / promotion of the site
 To cover operational / running costs for 12 months (minimum)
 Expense account - in case of any regulation change
 Expansion Capital
 For consulting to Luxury Brands on marketing & distribution based on local demand
20

21. The Finance
 Valuation
 Standard Discounted Cash Flow technique will not work because the cash is intended to cover near-
term, negative free cash flows and it does not take into consideration the multiple financing rounds
at different required rates of return
 Startups have no current revenue, hence no way to calculate valuation based on revenue multipliers.
VC method builds current valuation based on expected "terminal value" which is value at which the
company will exit in Y years
 The Expected yearly revenue has been calculated on the targeted market penetration based on
current market size and projected market growth extrapolated over the years
 This exit value has been approximated by multiplying expected yearly revenue in the Yth year of
existence with P/E ratio adequate to industry, expected growth rate
 Investor expects yearly margin on his investment, meaning if he puts in 1M$ today, he may expect
3M$ in year Y. This margin is calculated based on discount rate that is arbitrated based on risk and
compensation expectations (25%-80%)
 In multi stage Investment, each round of investment will be diluted by the ones that come after it
and this dilution rate should also be used to calculate the final share of the company for the investor
in each round of funding
21

22. The Finance
 5yr & 10yr Revenue Projection based on Targeted Market penetration
Inputs
= Balanced Revenue per month calculated at
Projected Earning in 1st year $100,000
$40,000 approx
= Source: China Business Development Report 2009 -
Overall Luxury market in 2009 year $9,400,000,000
2010
= Source: China Business Development Report 2009 -
Growth rate over 2008 in luxury market 10%
2010
Expected market share in 5 years 0.10% = Conservative Projected Estimate
Expected market share in 10 years 0.25% = Conservative Projected Estimate
Output
= Overall Market x (1 + Market Growth Rate) ^ 5 x
Expected earning in year 5 $15,138,794
Expected Market Share in 5 yrs
= (5 Yrs Expected Revenue / Projected Revenue in
Expected compounded growth rate; Yr 1-5 172.91%
1st year) ^ (1 / 5) -1
= Overall Market x (1 + Market Growth Rate) ^ 10 x
Expected earning in year 10 $60,952,948
Expected Market Share in 10 yrs
= (10yr Expected Revenue / 5yr expected Revenue)
Expected compounded growth rate: Yr 6-10 32.12%
^ (1 / 5) -1
= (10yr Expected Revenue / Projected Revenue in
Expected compounded growth rate: Yr 1-10: 89.89%
1st year) ^ (1 / 10) -1 22

23. The Finance
 Pre-revenue Valuation through VC Method Support
Investment Year Y1 Y2 Y3 Y4 Y5 Exit
Years rem aining before exit 5 4 3 2 1
Total Earning per year $113,541 $1,135,410 $5,677,048 $11,354,096 $15,138,794
P/E ratio 10 10 10 10 10
Pre-Money Valuation (P/E method) $1,135,410 $11,354,096 $56,770,478 $113,540,955 $151,387,940 $151,387,940
Investment per round $3,000,000 $1,000,000 $1,000,000 $1,000,000
Discount Rate (RR) per round 60% 50% 40% 30% 20%
% of return over total return on exit 76.81% 12.36% 6.70% 4.13% 0.00%
% of return over total valuation 20.78% 3.34% 1.81% 1.12% 0.00% 27.05%
Retention Rate for investor (100% - dilution rate) 93.73% 97.07% 98.88% 100.00% 100.00%
Total return on exit for round of investment $31,457,280 $5,062,500 $2,744,000 $1,690,000 $0 $40,953,780
Postmoney ownership % for investor per round 22.17% 3.44% 1.83% 1.12% 0.00%
Post Money Valuation (VC method) $13,531,822 $29,027,939 $54,554,643 $89,578,663 $0
Assumptions
Investments happen at the beginning of a year
Exit happens at the end of Y5
23

24. Index
x. The Recap
 Key Products
 Branded ‘luxury’ products and services
 Value added by WISH|REAL
 Market contractor / Information Broker
 Multi brand luxury e-tailer
 Competitive gaming
 Target customers
 Higher middle class with rising disposable income
 Aspirational middle class looking for good deals
 Needs Served
 High priced products at 90% +(plus) discount
24

25. Index
2. FUNCTIONAL STRATEGY PLANNING
25

26. Strategy Planning Guidelines
 Most Important Pieces of strategy of doing Business in China
 Guanxi - Relationship (I C A Model)
 Mianza / Mianxi - Face / Dignity
 Yentine - Exchange of Favours (Goodwill)
 Build business context with social context
 If we gel well, whatever we do together is beneficial for both
 Shanghai replacing HongKong as the financial capital
 Don't Talk about
 Tibet / Sensitive Issues
 Take care of Mianxi
26

27. Index
i. The Marketing Strategy
To Satisfy the customer Wish / Want / Need
The 4 P’s of marketing
 ‘Price’ Strategy
 End price paid by customer is upto 97% discounted
 Initial ‘unit’ pricing including fixed incremental end price for all products
 ‘Product’ Strategy
 Branded original luxury items off the shelf unaffordable on routine
 Product for sale through customer choice from product catalogue
 Channel or ‘Place’ Strategy
 Directly to end customers through Internet on
 WEB and Mobile
 ‘Promotion’ Strategy
 Social media seeding on big 4 with focus on Ren Ren / 51cent
 Referral discount to promote viral
27

28. The Marketing Strategy
Segmented Market Approach Support
 Market is segmented on the basis of Geographic Regions / Values /
Behavior / Attitude
 Northern region is
 more social
 family oriented
 conservative
 Southern region
 more brand aware
 Cultural difference in terms of collectivism and Long term orientation
28

29. Index
The Marketing Strategy
Business Facilitation
 Market penetration strategy
 Beta membership by invitation ONLY
 Full launch after feedback & subsequent changes
 Market development strategy
 Luxury for masses online / offline campaign
 ‘Winners’ only to participate in monthly big ticket product sale
 Market expansion strategy
 Have local / regional offices for market trend capture and feedback collection
 Add other non-English speaking countries into the service fold
 Market diversification strategy
 Create a cross brand Luxury product showcase/selling platform
 Luxury Brand consultancy for marketing/distribution network set-up
29

30. ii. Communication Strategy
"Put our heart into their heart" and NOT "put yourself in their shoes"
Advertising Online Promotion Public Relations
Print ads Pay per click Press relations
Online ads Banner / Sponsorship Publicity
Banner exchange SEO (Search Optimize) Investor relations
The Communication Mix
Social Media Marketing Direct Marketing
Social Media Strategy Direct mail
SM Networking Catalogs
Blogs / Testimonials E-mail
30

31. Index
iii. The Financial Strategy
Profit Model – Margin Management
Sale of Goods
and utilized
Proffer + Wish
Gross Margin
Cost of
products sold Net Profit
Total Expenses Net Profit
Margin %
Sale of Goods
and utilized
Proffer + Wish
31

32. Index
The Financial Strategy
Long Term Revenue Plan
E-tailer
wish now & real loyal
Procurement Online Exchange
Expense Bids & Wish
Business
Sale / Promotion Revenue Content Provider
Expense Ad space selling
Opportunity
Operating Virtual Community
Expense Targeted Ads
Virtual Storefront
Multi brand e-store
32

33. Index
iv. The Operations Strategy
• Office Deployment Scenario
Activity Scenario 1 Scenario 2 Scenario 3
Development team India India India
Management team Hong Kong Hong Kong China
Customer support team China China China
Logistics team Hong Kong China China
Purchase Team US & HK US & HK US & HK
– Figure best case scenario based on PEST analysis
• Currently planning to operate from Hong Kong;
– Either through Joint venture or setup a WOFE/FICE in Hong Kong
– Other alternatives: Set up a Joint venture or setup a WOFE/FICE in China
33

34. Index
The Operations Strategy
 PEST analysis
Political (Incl. Legal) Economic Social Technological
Environment regulation & Economic Growth Economic distribution Govt. research spending
Protection
Tax Policies Interest rate & monetary Demographics, population Industry focus on
policies growth rate, age distribution technological effort
International trade Govt. spending Labor / social mobility New inventions and
regulations and restrictions development
Contract enforcement law, Unemployment policy Lifestyle changes Rate of technology transfer
Consumer protection
Employment laws Taxation Work/career and leisure Life cycle and speed of
activities, Entrepreneurial spirit technological obsolescence
Govt. organization/attitude Exchange rate Education Energy use and costs
Competition regulation Inflation rates Fashion, hypes (Changes in) Information
Technology
Political stability Stage of business cycle Health consciousness & (Changes in) Internet
welfare, feelings on safety
Safety regulation Consumer confidence Living conditions (Changes in) Mobile
Technology
34

35. Index
v. The Purchasing Strategy
 ‘Just in time’ product delivery
 Product blocked when it goes for Sale
 Product purchased after payment received from buyer
 Digital Products
 Digital supply chain
 Youth internet savvy market
 Parallel sourcing with multiple vendors
 Sustain quality
 Business protection
 Backward integration with luxury brands
 For exclusive offers
 Post sale customer care
35

36. Index
vi. The Logistics Strategy
Deliver right product at lowest price, in shortest time and in right place for end customer
 For ‘Physical’ products
Physical Product Bulk Shipping B2B Hub Individual Shipping
End Customer
Vendor Cost to Vendor China/HK Cost to Customer
 For ‘Digital’ products
Digital Product Digital Shipping Wish|Real Digital Shipping End Customer
Vendor Application Mail Account
 For ‘Currency’ products
Wish|Real Electronic Transfer End Customer
Bank Account Bank Account
Finding the right channel is easier than breaking into the right channel
36

37. Index
vii. Human Resource Strategy
Dual phased approach “Contract External” while “Developing Internal” resources
 Set-up a working advisory and not a political advisory
 Stretch the budget to get best out of this
 Hire external experts (consultants)
 Pre Launch – Legal, accounting, govt. liaison, logistics
 Post Launch – Market acceptability analysis
 Develop internal talent
 Top management – local
 Middle management – multi cultural
 Work force – local
 Key Advisors
 Management Strategy advisory board
 Technical advisory board
37

38. Index
viii. The Management Strategy
 Chinese diaspora went to various places and their typical stereotypes:
 Malaysia (Put an MDC like Bill Gates Example here)
 Philippines (neutral)
 Singapore (very good)
 Taiwan (Not good to have a CEO here)
 Thailand (Tourism & Natural Recourses / Given up the Chinese culture so not really accepted)
 Honk Kong (very good)
 Most inbound capital into China
 A spring board to China
 Any mistake in China will cost you millions.. !!!
 Chinese agenda is Re-unification
 How many Chinese are there in the World
 Mainlanders - Maybe Not - because his loyalty will be towards Mainland and not you
 Hong Kong - Maybe
 Taiwanese - Is a rebel as her does not even call himself a Chinese
 Off-shore - Children of the diaspora - Very loyal with fast acceptance specially with good
education / work branding Support
38

39. Index
ix. Information System Strategy
 Worker Connectivity
 Employee global network
 Translations for multi-lingual information sharing
 Information Tracking
 Geographic area, product, time wise product interest and sale mapping
 User behavioral pattern marking and identification
 Shipping & Goods Tracking
 Individual tracking by Winner & Us
 From Vendor to LO to end customer
 Suggestion, Feedback and Testimonial
 Transparent lifecycle management
 Incentivize with offers and discounts
39

40. Index
3. PRODUCT PLANNING
40

41. Registration
i. Wish|Real Complete Flow
User Account
Get Free Bids/Wish Purchase Bids/Wish
Product Catalogue Live Auction
‘Wish Product for Auction’ ‘Wish to Reset Timer’ Bid on Product
No Apologize, Wish No
‘x’ for success Yes
Yes
Congratulation for Congratulation for
Win Not Win
successful Wish successful Wish
‘Real
Auction Start Conditions to Urge to win ‘Wish Now’
Loyal’
Reminder be defined auction (Buy-out)
(Purchase)
Payment
Product
Win-Limit
Shippe
Reached
d
No
Yes
Freeze Freeze
Account Period Expiry

42. Index
ii. Consumer Touch-points
 On Mobile
 SMS
 WAP
 Voice
 Application
 On Internet
 Web
 Toolbar
 Language
 English
 Simplified Chinese
 Mandarin
 Cantonese
42

43. Index
iii. Competition SWOT
 Top Selling Items
 Bids & Packs
 Consoles & Games
 Computer & Accessories
 Gift Cards & Vouchers
 Strengths
 Product Delivery
 Transparency
 Loyalty Bucks
 Loads of deals
 Weaknesses
 The auction ending can be long and boring
 Little restrictions to prevent resellers from bidding over « real » people
 Lack of product diversity
 Nothing innovating and fun
43

44. Index
Competition SWOT
Feature Analysis
 Losing Bid Credit - 19.23%
 Limits on Wins - 65.67%
 Avg bid Price - $ 0.71
 Auto Bid - 66.67%
 Bid Pack - 100%
 Avg Bid Increment - $ 0.07
 Avg Timer Increment - 22.12 sec
 Operating Time 24/7 - 82.05%
 Addl. Shipping Cost - 79.49%
 Countries served % - US 79.5%, Alaska 33.3%, Hawaii 23.1%, Canada 10.3%, World 12.8%
 Product Refund period - 11.24 days for 82.05%
 Support
 Email - 97.44%
 Chat - 20.51%
 Phone - 33.33%
 On Social Network - 84.62%
44

45. Index
iv. Product Feature Detail
Losing Proffer Credit - Yes (Product buy-out / Loyalty Reward points)
Limits on Wins - Yes (2 wins a day, 20 wins in 30 days)
Average Proffer Price - 5 RBM (variable - not finalized yet)
Auto Proffer - Yes (Schedule for time and/or auction start)
Proffer Pack on Auction - Yes
Proffer Increment - 0.01 Yuan
Timer Increment - 10 sec start (variable on ‘wish’ (voting) during auction)
Operating Time 24/7 - No (not initially, may happen later)
Addl. Shipping Cost - Yes (based on product, with min for every article)
Countries served - China, HK, Macau
Product Refund period - 14 days (on basis of ‘final auction price’)
Support
Email - Yes
Chat - Yes (automated)
Phone - Yes (automated)
On Social Network - Yes (3 to begin)
45

46. Index
Product Feature Detail
Value Added Feature Details
 Web Toolbar - Yes
 Web / Mobile site - Yes
 Application + Widget - Yes
 Alert on mail / mobile - Yes (of preferred product auction start)
 Proffer lock - Yes (if total product amount proffer; auto eligible for purchase)
 Account Limit - Yes (one per household)
 Proffer on cash - Yes
 Achievement Tracking - Yes (similar to online gaming)
 Wish (Voting) - Yes (To wish for products to be put on auction
To change (increase/decrease) the clock re-set timer of 15 sec)
 Multi-lingual - Yes (English, Chinese, Simplified Chinese, Mandarin, Cantonese)
 Live Chat (among proffers) - Yes (Discussion board for all active bidders to see and participate)
 Live Proffer Map - Yes (to ‘Flag’ the location of active bidders on a map)
 Multiple Auction Types - Yes (Rookie – For people who have not won anything
Normal – Open for all)
46

47. Index
v. Product Placement
 Culture Connect
 Be a part of the rich and ancient heritage of China
 Be with the old traditions and have the latest
 Mianza / Mianxi with family and friends
 Sample Richness
 In Lifestyle
 Pamper yourself
 Little Emperors
 Spoil your loved ones ‘silly’
 Luxury for your little one
47

48. Index
vi. Technical Details
• Criteria For Solution Design
– Understanding of functional & non-functional requirements
 Scalability, Reliability & Operational Efficiencies
 All anticipated business use cases must be covered at the application level, & the application needs to be secure, &
protected against malicious users.
 Large variations expected in volume, resources to be provisioned in real-time on the basis of actual numbers
 High Availability Architecture, Disaster Recovery
• Solution Components
– Integrated IAAS & PAAS Cloud ecosystem to host the application , Providing pre-built, optimized,
management-enabled, ready-to-use application templates (virtual solutions)
 Resources on a pay-as-you-go model
 Solution Provisioning >> Solution Instance Monitoring >> Resource Optimization
 Ensuring immediate provisioning of robust, industry-grade IT infrastructure , platform & network resources for a start-up
operation with auto-scaling of hardware resources or deployment instances.
 Make available not just hardware resources, but also platform services like Business Analytics tools, Databases, Reporting,
Topology Management, User & Role Management, Activation, Monitoring & Alarms, Cost Analytics & Application Server
for Application deployment – removing the need to build a complete platform for the same.
 Will allow teams to understand actual resource requirements & build NFRs in real-time. Optimal solution till scale is
achieved, when it is planned to move to a private cloud, using learning from the cloud deployment.
 Allows for Unified Remote Management of resources via the service providers’ management centre while reducing
operational costs, & carry a simple cost component in the business case
– Application Deployment on Cloud
 Ensuring application stability & scalability, standards based deployment on .Net/ WAS.
 Security, & Application Integrity on High Loads
48

49. Index
Technical Details
High Level Architecture
Deployment Cloud
Cloud IAAS Admin Portal Cloud PAAS Admin Portal
Cloud IAAS Cloud PAAS
Rest API Rest API
User & Role
Resource Pool Mgt Template Mgt Topology Management Activation Adaption
Mgt
Deployment Consolidation Reporting
Start/ Stop Monitoring User Extended Operations
IaaS Adaptor
Invoke Manage Monitor
Auction App
Deploy
Application
Application
Application
Instance III
Instance II
Web Services
Instance I
Environment
Image Library Workflows Resource Pool .Net Oracle
VM 1 VM 2
Register Manage
Use
IT Infrastructure On-Demand
Servers Storage Network
49

50. Index
Technical Details
Data Model
PAYMENT METHOD SELLER
Method Code Purchaser AUCTION ITEM ID
Method Description Name
ID Auction ID Address
Name Auction Type E-mail
Address Item ID Phone
E-mail Item Description Product Genre
Phone Start Date n Time Product List
Payment Details Planned Close Date/Time Product Description
Proffer Language Actual Close Date/Time MRP
Bid History Total Auction Time CTC
Paid Win History Actual Selling Price Rating Product / Seller
Free Loyalty Points Shipping Cost/Method Feedback
Individuals Redeemed Points Payment Amount/Method
Autobid Testimonial Payment Date
Rating Total/Avg Bids Paid/‘Free’
Feedback Bids by Individuals/‘Autobid’ AUCTION TYPE
Successful Bidder/History (20)
Comments Type Code
Type Description
SHIPPING METHOD
ACCESS
Method Code
Code AUCTION ITEM CATEGORIES
Method Description SHIPPING Description
Planned Date AUCTION ITEM STATUS CODES Category Code
Actual Date Category Description
Cost Status Code
Comments 50
Status Description

51. Q&A
51

52. Thank You
52

53. Supporting
53

54. Index
1. Business Planning
i. The Need
ii. The Team
iii. The Deal
iv. Online Business Models Deployed
v. The Revenue Model
vi. The Opportunity
vii. The Opportunity SWOT
viii. The Financials
ix. The Finance
x. The Recap
2. Functional Strategy Planning
i. Marketing strategy
ii. Communication Strategy
iii. Financial strategy
iv. Operations strategy
v. Purchasing strategy
vi. Logistics strategy
vii. Human resources strategy
viii. Management strategy
ix. Information system strategy
3. Product Planning
i. Complete Flow
ii. Consumer Touch Points
iii. Competition SWOT
iv. Product Feature Details
v. Product Placement
vi. Technical Details
54

55. The Assumptions
 A Technologically conscious and brand aware growing middle class
 China to become world’s #1 Luxury market
 Largest Online & Mobile Internet population worldwide
 E-Commerce and online payment increased acceptance and use
55

56. Back
Internet Trends
 420 mil internet users by June 2010(source: CNNIC), up 36 mil users from Dec
2009, at a 31.8% penetration rate.
 Broadband internet users at 363.81 million
 Rural internet users are at 115.08 million, which is 27.4% of all internet
users, up from 7.7% in beginning 2009
56

57. Back
The luxury market trends
 Sales of luxury goods grew by 12% in 2009, to $9.4 Billion, which is 27.5%
of global market (source: Commercial Blue Book: China Business Development Report (2009-10))
 In 2009, China overtook the U.S. to become the world’s second-largest
luxury-goods market, behind Japan
 Approximately half the luxury goods purchased in China are bought as
gifts (source: AdAge)
 China’s spend on luxury will increase to $14.6 Billion in the next five years,
thus making it the No. 1 luxury goods consuming market in the world
57

58. Back
E-commerce Trends
 E-commerce users in China have reached 142 Mil in June 2010, up by 31.4%
since December 2009
 Online retail sales:
 In 2009 are @ $35 billion
 In 2010 will reach @ $65.9 Billion (source: alibaba)
 In 2011 will reach @ $84 Billion (Source: CNNIC)
 Clothing is the No. 1 category in online retail sales (source: Alibaba)
 In 2009, Taobao (by Alibaba) commanded 77% of B-to-C & C-to-C market
 C-to-C transactions dominated the market at 93% of total transactions
 Taobao’s share @ 82%
 Tencent’s paipai share @ 10%
 Tom-Ebay’s share was @ 8%
58

59. Back
Online Gaming and Social Networking Trends
 Driven by social networks, Casual / Online gaming is growing fast:
 Was at $3 Billion in 2009
 Expected to grow @ 30% in 2010
 Social networking is dominated by local players
 Tencent’s QQ, Kaixin001, RenRen, 51.com etc.
 Weibo (a local Twitter) by Sina reached 56 million subs in Aug 2010
 Facebook, twitter are blocked in China
 Kaixin001 is the fastest growing SNS reaching RMB 100 Million revenue in
2010 with advertising contributing 80%
 It has 86 million registered users with 25 million unique users per day
59

60. Back
Mobile Telecom Trends
 805.35 mil mobile subscribers in June 2010 (source MIIT)
 Growing @ 15.85% on year
 60.5% penetration
 In June 2010 Mobile internet users reached (source CNNIC)
 277 million up by 43.34 million 6 months earlier, a growth rate of 18.6%
 Of total mobile internet users 11.7% accessed internet only on their mobiles (source CNNIC)
 32.4 million only mobile internet users
 There are 3 major mobile telecom operators in China:
 China Mobile 70% Market share
 China Unicom 25% Market share
 China Telecom 5% Market share
 20 million 3G users as of August 2010 (source CNNIC)
60

61. Total Ad Spend Trends
 Total Ad spend in 2009 (source: DCCI)
 Newspapers rose @ 22% to $5 billion
 Outdoor rose @ 23% to $2.02 billion
 Magazines rose @ 21% to $1.05 billion
 Radio rose @ 35% to $960 million
 Digital / Online ad spend projected (source: DCCI)
 In 2010 to reach @ RMB 25.27 bilion or $3.7 billion
 In 2012 to reach @ RMB 42.31 billion or $6.3 Billion
61

62. Back
Venture Capital Method
Most private equity investments are characterized by negative cash flows and earnings in early stages and
highly uncertain but potentially substantial future rewards. VC method accounts for this by valuing a company
using a multiple, at a time in future when it is projected to have achieved positive cash flows and earnings. This
terminal value is then discounted back to the present value at a typically very high discount rate 25% to 70%.
 Following formulas are used to calculate the value of the firm and shares issued:
 Total Terminal Value = PER x Terminal Net Income
 Final Ownership Required = Required future ownership / Total terminal value = (( 1 + IRR ) years X
Investment ) / (PER x Terminal Net Income) % ownership acquired = new shares / (old shares + new shares)
 Or, new shares issued = (% ownership / (1 - %ownership)) x old shares
 PER = price-earnings ratio
 IRR = internal rate of return aka discount rate
 Pre-money and post-money valuation
 Pre-money valuation: Price paid per share in financing round multiplied by number of shares outstanding
before financing event
 Post-money valuation: Price paid per share in financing round times the number of shares outstanding after
financing event
 Following formulae are used to calculate the pre-money and post-money valuations:
 Post-money valuation = investment / % ownership acquired
 Pre-money valuation = post-money valuation – new investment
62

63. Back
China Regional Behavioral Mapping
63

64. Back
Team Profiling
64

65.  Factors creating favorable climates for venture capital Source: Deloitte
Squares highlighted in yellow: = over 50% of respondents said YES 65

66.  Factors creating non-favorable climates for venture capital Source: Deloitte
Squares highlighted in yellow: = over 50% of respondents said YES 66