ENTREPRENEURSHIP

MANAGEMENT

PROJECT PRE-FEASIBILITY REPORT (PFR)

FOR
E-BOOKSTORE

Prepared and Submitted by-

Akriti Sharma (03)

 E-bookstore

Ashish Kumar Annepu (07)

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CONTENTS

1. Project Background and Description

2. Market Demand and Analysis

3. Strategic Marketing Plan

4. Leadership and Organisation

5. Location and site

6. Process/Technology and Equipments

7. Financial Analysis

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PROJECT BACKGROUND AND DESCRIPTION

Project Aim: - To setup an E-Book Bookstore (E-Bookstore).

Project Scope: - The Project shall be concentrated upon various types of EBooks
like textbooks, magazines, Novels etc

Project Introduction
• The E-bookstore project emphasises upon the use of technology as a means
of learning resource. Since, the time, digitally readable books or eBooks have
been developed there has been a great surge in their demand till recent times.

• Their characteristics of being flexible, economic and portable have significantly

contributed to the success of these digital editions of books.

• The concept of E-book store is also established on the popularity that e-Books
have gained in recent times.

• The project would upon the sale and distribution of a variety of EBooks
through the Internet.

• In Initial phases it has been proposed to concentrate on academically

prescribed books for various Professional courses /colleges.

• The project also proposes to place in the market the eBook product which may
be already present in various forms and formats in the market.

• Even though the product may have its presence in the market but the volume
in demand still exist to make the project successful.

• The economic nature of the product in comparison to the print published

books also serves as a great advantage to the sales and distribution.

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Nature of market demand

• Demand for books has always been an un-exhaustive and an expansive one.

• EBooks in recent times have been in popular use around the globe in
comparison to the printed versions of the books.

• Thus ,for an EBook based venture its quiet evident that with the composite
benefits that these electronic versions of books carry, the market demand can
be estimated to be equivalent or even more.

• Thus, the above trend marks an evident shift in choice of the masses for
EBooks over printed versions.

Nature of the business

• The E-bookstore business concept is based on internet based e-business.

• A website based business model shall be followed.

• A virtual bookstore shall be created wherein the customers can do e- shopping

via internet.

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MARKET- DEMAND AND ANALYSIS

Target market/Market
Domestic market

• The target market in general sense would be all ages and a variety of
categories.

• A specific target market where the project shall be concentrated upon in initial
phases would be students from professional courses/colleges in India.

• The professional student segment is proposed to be initially targeted since the

reference books required by various courses are not easily available,
especially for the offbeat courses like fashion, apparel, catering, nursing etc.

• The scope of the market targeted shall be expanded as per the potential seen
in other areas as well as demand. A staged progression shall be into
expanding market focus.

• It is difficult to come out with an exact or a close approximate figure for

turnover of the eBook market in India.

• The demand for eBooks in India at present is lower than the other
ePublications such as eJournals and certainly behind its print counterpart.

• The reasons are varied and can range from psychological factors to lack of
availability or limited circulation of economically priced eBook readers.

• A report by Forrester indicates that the US will lead the demand for eBooks
content with sales over US $500 million and for e-text books through 2010 but
acknowledges that the dynamics for higher growths vests with consumer
markets like India.

• Advantage India lies in its high quality and low cost of output.

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Product /Service description and category

• The product on offer at the E bookstore would be the digital editions or
versions of books Known as EBooks.

• These EBooks shall be protected with the DRM (Digital Rights Management)
Technology for protecting the copyrights of the author as well as the publisher.

• An EBook reading assistance application shall also be developed, using which

the consumer may read the contents of the eBook.

• EBooks shall be available in various popular formats ranging from Adobe pdf
compatible with Adobe digital edition to Microsoft, Mac, Ipad and I-phone
compatible versions.

• Along with sale, eBooks can also be taken on a rental basis for a required
period of time.

• As a special offer for students, EBooks comprising of only the required

chapters can also be rented.

• These flexible customizated eBooks will be accompanied with another reader

application with a timer to count down the rental period.

• These products shall be delivered to the customer over the internet.

• The pricing shall be done at a lower price than the printed copies of the book.

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Potential customers

• The characteristics of potential customer for E-Book store initial target market
would be as follows:

• Age group- all age’s above10.

• Education status- basic computer literate

• Location :- colleges,universities,schools

• The characteristic of the potential customer will change as the market focus of
the business gradually changes.

• Indian consumers are becoming accustomed to reading eNewsletters,

newspapers, eCoursewares, eJournals issued by business entities and
academic institutions etc but not eBooks to the same extent.
• It is probably the reading habits and the lack of the feeling of a “book in hand”
which is hindering the growth of the medium.
• Still, eBooks of the non-text, reference reading variety are more readily
accepted for digital reading. The availability, price, convenience, coverage
and internet access charges of eBook reading devices are also standing in
the way of growth.
• Although free eBook sites exists which provide zero cost download for the
content, Indians have a withdrawal symptom when they are asked to pay for
the content they download.
• This mental block will however cease to exist over a period of time when the
newer generation especially the student community with its keenness for the
electronic media and conscious upbringing by embracing eLearning methods
takes more readily to “pay as you use” mode of transacting.

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Competition and Competitor Analysis

• The market of eBooks in India as a whole has taken off with quite a bang in
India over the last year.

• Some of the main vendors that deal in eBooks in India are as follows:

• Pothi.com

• Infibeam.com

• A1 books India

• The above said vendors are all internet based eBooks sellers.

• These vendors follow the same model of eBooks retailing.

• The model followed by them is simple which starts with procuring or

developing digitized editions from print and apply security layers to the eBooks
using DRM and encryption before their sale and distribution.

• These provide the EBooks in almost the same formats.

Competitor Comparative analysis

• Vendor sorting in terms of pricing range of eBooks :

• Pothi.com - Economical

• Infibeam.com - Average

• A1 book India - Higher

• Vendor sorting In terms of consumer reach , popularity and volumes:

• Pothi.com - low to medium

• Infibeam - medium-high

• A1 Book India- medium to high

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• Vendor sorting in terms of number of category covered in eBooks category

• Pothi.com – 25

• Infibeam - 48

• A1 Book India- 43

• Other than the domestic vendors mentioned above there are various other
foreign vendors providing similar services.

Competitor Pricing

The pricing for the eBooks doesn’t follow a pre-determined pattern thus its upon the
vendors costing practices that decide upon the cost of the product .The pricing
strategy for books of different categories are different thus ,there isn’t any particular
strategy for pricing. The common trend observed in the product pricing of the vendors
is that the price has been kept less than that of the printed version.

Comparable Market strategy

Pricing

• The Pricing of the EBooks in the project shall be determined by a pre-

determined pattern to avoid unregulated fluctuations.

• The price of the eBooks on sale shall be 30-10 % less than that of the Printed
edition of the book.

• The discount percentage on EBooks price shall be determined upon the type
of book, sales forecast, and publisher contract.

• The pricing for rented eBooks shall be based upon per page computed as the
ratio of the cost of the eBook to that of the number of pages or Rs 2 per page
whichever is less.

• This costing shall be justified as it meets the profit needs of the project as is
comparably structured to that of the competitors.

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Services

• The project venture planned would be placed on the same market platform as
the above vendors.

• To cope with the competition and provide a step ahead solution to the market,
it is proposed to rental services in addition with the sales services.

• Rental service shall act as a short time buying wherein the buyer can buy the
book required for temporary purpose and time limit without having pay for the
book as a whole.

• Further customizing the rental process for the consumers, chapters of books
instead of the books as a whole can be taken for rent at lesser prices and as
per exact requirement.

• The competing vendors only provide service of sales and distribution of eBook
whereas the rental service proposed shall hand over the product
customization power to the customer, thus carrying the potential power to
attract more consumer volumes

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STRATEGIC MARKETING PLAN

The Marketing plan for the E-Bookstore is very simple to identify primary niches for
bulk sales.- domestic markets.

Marketing Objective

The marketing objective is to promote as well as sell Ebooks in the

dynamic potential domestic markets.

Pricing

• The Pricing strategy has been already delineated in the previous

section where in the products would be priced at lower cost than
the printed version.

• The discounted price of EBooks will range anywhere from 30-10 %

on the printed book list price.

• The Rented copies of these EBooks shall be rated upon either the
cost of book to number of pages ratio or Rs 2/- per page per day
whichever is less.

• Discounts on sale shall be provided for purchases starting from Rs

1000/-.

Promotion Plan

• We have developed 4 colored brochures with product lists for

physical promotion as well as through the internet.

• It is also proposed that there would be scheduled promotion

presentations at major book fairs across India.

• Promotion via Internet advertisements on major educational sites.

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Sales staging

There are 4 stages of sales that have been planned depending upon the venture’s
success and growth.

Stage 1

• At this stage, concentration will be upon promotion of the product and services
in order to create awareness in the market.

• The various channels of promotion delineated shall be used.

• The mainstay objective shall be of creating awareness and consolidating

consumer base.

Stage 2

• At this stage concentration shall be upon market development.

• Stage 2 shall be actual launch of efforts for organized sales.

• There shall be definite sales objective and budgeted expenses for the sales
activities.

Stage 3

• The growth in sales is expected during the stage 2 itself.

• This shall also be the period where in there will be clear profitability.

Stage 4

• The fourth stage shall be the maturity stage where in the company shall evolve
in a professional manner and writing with a view of a public offering.

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LEADERSHIP AND ORGANISATION

• The organisation is planned to be like a common corporation.

Human Resource Requirements

Sl no. Job Description Number of Per personnel

personnel Salary (Rs.)

1 Software engineer 3 30,000/-

2 Service personnel 10 20,000/-

3 Marketing manager 3 30,000/-

4 Product merchandiser 5 35,000/-

5 President 1 45,000/-

6 CEO/Chairman 1 50,000/-

7 Service staff 5 5,000/-

8 Receptionist 1 10,000/-

9 Digitizing 5 Scanners- 10000/-

Team(2scanner,1editor,
Editor- 10,000/-
2 formatter)
Formatter- 10,000/-

Total personnel and compensation 34 7,35,000

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LOCATION/SITE

Office location

• The project requires a office space location where in various services related
to the project shall be setup.

• There shall be initially one site office which shall also act as the headquarters
of the business.

• Office space of around 30-35 people is required for the initial start-up.

• The office shall also have various other facilities other than workspaces such
as toilets, conference room, reception

• A total of 3000 sft office space is proposed for initial setup of the business

Sno Purpose Area covered(sft.)

Work station/places for 28 employees with 25ft

1 700
each

2 Conference meeting room 625

3 Marketing dept 100

4 Merchandising department 125

5 Presidents cabin 200

6 CEO/Chairman Cabin 400

7 Toilets(200sft each gents and ladies) 400

8 Reception 225

9 Free space and allowance 555

10 total 3330

PROCESS /TECHNOLOGY AND EQUIPMENT

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• The project requires mainly equipments relating to networking( router

and network cables) , storage, office requirements and auxiliary
equipments

Sl no Equipment type Quantity Total

and name Cost
1 Data Server 1 of capacity 3 terabytes Rs
288000

2 Network equipment- 1 router, Rs

Router, network 900000
Network cables and auxiliary
cables
network equipment

3 Desktops 32 Rs
1280000
4 Air Conditioners 7 Rs
280000
5 Book Scanner 1 Rs
816000
6 Office laser printer 1 Rs 27500
cum fax
7 Office furniture 32 computer tables , 35 Rs
chairs, 3sofa sets , 1 800000
conference table ,1 reception
table ,1 coffee machine

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FINANCIAL ANALYSIS

Working capital requirement and Finance

The total working capital requirements for the project as per the banks prescribed
norms shall be applied while submitting the detailed proposal for the company for
enhancement in our working capital limits on the basis of audited balance sheet.
However, as per estimates, the working capital limits for the venture may be around
Rs with the details of the investment as follows

Cost of project

Fixed Cost

Sr.no Factors Cost (in Indian rupees)

1 Full analysis of requirements 195,000

2 Design based on 3rd party branding 390,000

3 Navigation and site architecture 195,000

4 Search engine optimization planning 195,000

5 Database design 156,000

6 XHTML/CSS templates 195,000

7 Shop development 195,000

8 Technical integration 390,000

9 Store management, CMS and reporting 390,000

10 Email signup 39,000

11 Accessibility testing 117,000

12 Promotions design and logic 117,000

13 Land cost 6,000,000

14 Machinery and equipment cost 4,391,500

15 Software licensing Cost 150,000

16 Contingency (10%) 273,000

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Total Fixed Cost 13,388,500

Working Capital

Sr Factor Yearly Cost(in Indian

no Rupees)

1 Personnel compensation cost 88,20,000

2 Electricity cost 1,200,000

3 Water 90,000

4 Travel and transportation 500,000

5 Maintenance 100,000

6 Contingency cost (10%) 1,071,000

Total working capital cost 11,781,000

Total investment for 1st year/ start up = Rs 25,169,500

Project financing arrangements- Loans and liabilities

Sr no Means of finance Finance

1 Promoter contribution 18,877,125

2 Bank loans (at the rate of 12.50%) 6,292,375

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Total investment 25,169,500

The payback period for the loan in 3 years.

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Sales projection

Assuming for the start-up year

Sr no Cash inflow Cash inflow

1 Average sales value/ month 1,500,000

2 Average revenue for rental/month 500,000

3 Average revenue generated by 500,000

advertisements/ month

4 Total cash inflow / month 2,500,000

Total cash inflow in first year 30,000,000

Sr no Year Cash inflow

1 1st year 30,000,000

2 2nd year 36,000,000

3 3rd year 43,200,000

Variable cost for 1st year

Sr no Factor Yearly Cost(in Indian

Rupees)

1 Personnel compensation cost 88,20,000

2 Electricity cost 1,200,000

3 Water 90,000

4 Travel and transportation 500,000

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5 Maintenance 100,000

6 Contingency cost (10%) 1,071,000

Total working capital cost 11,781,000

Profit-Loss table

Cash Inflow (Sales) 30,000,000 36000000 43200000

Fixed Cost 13,388,500 1,116,277 0

Variable Cost 11781000 14137200 16964640

Interest paid 2,946,777 2946777 2946777

Other Expenses 3,000,000 3600000 4320000

Profit/loss -1,116,277 14,199,746 18,968,583

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Break – even analysis

Since the profit or contribution exceeds the fixed expenses in the third year, the
breakeven point is reached in third year, the profit-volume ratio percentage is
calculated as follows :

Contribution = 30,000,000 - 11,781,000 = Rs. 18,219,000

Fixed expenses = Rs. 13,388,500

P.V. Ratio = (fixed expenses/Contribution)*100

= (13,388,500/ 18,219,000) *100

= 73.48%

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