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E-grocery model

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Information about E-grocery model
Business & Mgmt

Published on March 7, 2014

Author: TeamPramkaew

Source: slideshare.net

Description

New e-grocery model in Dubai
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1995: COMMERCIALIZATION OF THE INTERNET

2000: DOT.COM BUBBLE BURST

2012: E-COMMERCE TOPS $1 TRILLION

BUT E-GROCERY BUSINESSES NEVER TOOK OFF…

“IT’S WHEN THE SCARED RATS START RUNNING AWAY FROM THE SINKING MARKET THAT THE TRUE ENTREPRENEURS COME IN. A TRUE VISIONARY.”

FEASIBILITY ANALYSIS OF AN E-GROCERY MODEL IN DUBAI GAURAV – RAHUL - TEAM

OBJECTIVES:  E-grocery  problems with current e-grocery models  4-step model  SWOT  Feasibility analysis  Learning from the experts  Conclusion

E-GROCERY Online grocery shopping has continued to rapidly evolve in recent years, facilitated by ongoing development of internet and mobile communications. Grocery shopping has been described as the next star performer of online retailing.

TYPICAL ONLINE E-GROCERY MODEL E-grocer website People place order on the website . Order is received by the egrocer Order gets dispatched from a single hub area to different places. The order is received typically 3-4 hours after placing the order. Customer dissatisfaction due to long waiting time.

PROBLEMS WITH CURRENT E-GROCERY MODELS

E-GROCERS VS CONSUMERS

• HIGH OPERATING COST • HIGH INVENTORY MANAGEMENT AND HOLDING COST • LONG DELIVERY TIME • DELIVERY CHARGE APPLICABLE • NO PRICE ADVANTAGE

TRANSFORMING ADVERSITIES INTO OPPORTUNITY

THE 4-STEP MODEL

HOW IT WORKS…

WIN-WIN-WIN E-grocers • Low investment • Low operating cost • Quick response time Grocery stores • Boost sales • More profit Consumers • Fast delivery • Competitive pricing • No delivery charge

ASSUMPTIONS - Successful tie-up with grocer stores & supermarket - Smooth flow of real time network for distribution of the order - Uniform pricing structure - Sharing of commission for order generated - Deliver within agreed time

Strengths opportunity 4-step model Threats Weakness

STRENGTH WEAKNESS - Fast delivery time - Reliance on grocery stores - Quick response time - Product range - Meeting customers' demand - Maintaining the software network - Low operating cost - Easily replicate - Low investment - High market penetration

OPPORTUNITY THREATS - E-grocery gaining popularity - Competitions from big supermarkets - High disposable income - Lack of common fixed price - High internet penetration - Cultural diversity

FEASIBILITY ANALYSIS

FUNNEL APPROACH Target Market Target customers Profit generation model $$$

DUBAI

DUBAI 130 residential areas (2,063,908) 15 potential sectors (397,767) Target customers (303,814) 2% conversion (6,076) No. of local grocery stores = 55 No. of Supermarkets = 18

1.27 km² Al Quoz Third 16,861.4/km² Al Bada 0.82 km² 28600.32 22946/km² Al Baraha 1.104 km² 11890.96 7,086/km² Al Buteen 0.07 km² 3593.28 0.125 km² 16561.92 21,451/km² Al Garhoud 4 km² 6788.32 1,116.5/km² 0.20 km² 10354.24 34,060/km² 4.41 km² 33935.52 5,062 /km² Al Rigga 0.89 km² 8639.68 6,386/km² 4.5 km² 9562.32 1,398/km² 4.5 km² 9562.32 1,398/km² 7.6 km² 5072.24 439/km² 7.6 km² 5072.24 439/km² 2.87 km² 45823.44 10504/km² Small grocery stores Supermarkets 22958.08 3 1 4 13 km² 138122.4 6,990/km² Muhaisanah Third 13 km² 138122.4 6,990/km² 13 km² 138122.4 6,990/km² 3895.76 6.16/km² 8.4 km² 3895.76 6.16/km² Nadd Al Shiba Second 8.4 km² 3895.76 6.16/km² Nadd Al Shiba Third 60 km² 1033.6 Small grocery stores Supermarket s 11.3/km² Al Hamriya, Dubai 0.72 km² Al Hamriya Port 0.89 km² Al Hudaiba 0.84 km² 11702.48 9,165/km² Al Shindagha 0.26 km² 24.32 70/km² Al Jaddaf 7.3 km² 4544.8 409.5/km² Al Twar First 6.8 km² 28054.64 2,714/km² Al Jafiliya 1.63 km² 17660.88 7,128/km² Al Twar Second 6.8km² 28054.64 2,714/km² Nad Shamma 1.36 km² 1836.16 888.34/km² Al Karama 1.509 km2 69424.48 30,267/km2 Al Twar Third 6.8 km² 28054.64 2,714/km² Naif 0.561 km² 43427.92 50,928/km² 4 1 Al Khabisi 1.255 km² 10240.24 5,368/km² Al Warqa'a Fifth 21.6 km² 760 0.23/km² 27502.88 16,155/km² 4 1 0.8 km² 53.2 44/km² Al Muteena First 1.12 km² Al Kifaf Al Warqa'a First 21.6 km² 760 0.23/km² Al Mamzar 3.35 km² 3435.2 674.6 /km² 21.6 km² 760 0.23/km² 27502.88 16,155/km² 4 1 2.1 km² 3263.44 1,022/km² Al Muteena Second 1.12 km² Al Manara Al Warqa'a Fourth Al Mina 3.10 km² 6358.16 1,350/km² Al Nasr, Dubai 1.5 km² 3752.88 1646/km² Al Mizhar First 11.2 km² 6575.52 386.25/km² Al Warqa'a Second 21.6 km² 760 0.23/km² Port Saeed 1.84 km² 680.96 243.4/km² Al Mizhar Second 11.2 km² 6575.52 386.25/km² Rigga Al Buteen 0.684 km² 2118.88 2,038/km² Trade Centre 1 0.90 km² 6624.16 4,842/km² 4 1 Al Muraqqabat 0.78 km² 49240.4 41,532/km² Trade Centre 2 1.91 km² 5096.56 1,755.5/km² 4 1 Al Murar 0.41 km² 30143.12 48,368/km² Al Wasl 4.76km² 33672.56 4,654/km² Umm Al Sheif 1.87 km² 9519.76 3,350/km² Al Sabkha 0.13 km² 3993.04 20,207/km² Al Waheda 1.41 km² 14981.12 6,990/km² 6730.56 1926/km2 1.12 km² 27502.88 16,155/km² Ayal Nasir 0.17 km² 19877.04 76,923/km² Umm Hurair First 2.3 km2 Al Muteena Al Nahda First 3.18 km² 912 188.67/km² Bu Kadra 1.7 km² 296.4 115/km² 6730.56 1926/km2 3.18 km² 912 188.67/km² Hor Al Anz 4.18 km² 61319.84 9,651/km² Umm Hurair Second 2.3 km2 Al Nahda Second Hor Al Anz East 4.18 km² 61319.84 9,651/km² Umm Ramool 3.61 km² 7036.08 1,282/km² Umm Suqeim First 7.2 km² 25017.68 2,286/km² 4 2 126.16 20,890/km² Population density(/km2) Nadd Al Shiba Fourth 1 Population(2012 ) Nad Al Hammar 8.4 km² 2 Area(km2 ) Muhaisnah First 4 Area Name Muhaisanah Fourth 33,771/km² Al Dhagaya 617/km² Al Safouh First 32549.28 25412.88 Al Safa Second Supermarkets 27.1 km² Al Rashidiya Small grocery stores Population density(/km2) Al Satwa Abu Hail Population density(/km2) Population(2012) Al Safouh Second Population(2012 ) Area(km2) Al Safa First Area(km2 ) Area Name Al Ras Area Name 93.25/km² 3 1 Al Warqa'a Third 21.6 km² Al Quoz First 27.1 km² 25412.88 617/km² Al Quoz Industrial First 27.1 km² 25412.88 617/km² 3 760 4 1 0.23/km² 1 4 1 27.1 km² Al Quoz Industrial Second 27.1 km² Al Quoz Second 27.1 km² 25412.88 617/km² 617/km² 672/km² Jebel Ali 2 47.1 km² 48083.68 672/km² Jebel Ali Industrial 47.1 km² 48083.68 672/km² Umm Suqeim Second 7.2 km² 25017.68 2,286/km² 4 2 25017.68 2,286/km² 4 2 40278.48 3,840/km2 Umm Suqeim Third 7.2 km² 6.9 km2 Jumeira Second 6.9 km2 40278.48 3,840/km2 Warsan First 17.1 km² 2159.92 83/km² 6.9 km2 40278.48 3,840/km2 Warsan Second 17.1 km² 2159.92 83/km² Al Mankhool 25412.88 617/km² 48083.68 Jumeira Third 25412.88 47.1 km² Jumeira First Al Quoz Industrial Fourth Jebel Ali 1 1 km2 24339.76 16,013/km2 Za'abeel First 10 km² 8030.16 528.3/km² Mirdif 9.2 km² 12334.8 882/km² 55 18 2,063,908

DUBAI 130 residential areas (2,063,908) 15 potential sectors (397,767) Target customers (303,814) 2% conversion (6,076) No. of local grocery stores = 55 No. of Supermarkets = 18

ILLUSTRATIONS

PROFIT GENERATION MODEL Total Serving population 379,767 80% targeted customers 303,814 2% customer conversion rate 6,076 Monthly average expense on food and other $190.58 items Monthly revenue (6,076*190.58) $1,157,964.08 Profit of shops (10% of revenue) $115,796.41 e-grocer’s revenue (3% of revenue) $34,738.92 Expected expense $7,000.00 e-grocer’s profit (revenue - expense) $27,738.92 *monthly average expense on food and other items information is from Dubai Statistical Centre

REVENUES – EXPENSES = $$$

REVENUES • Commissions from the grocery stores and supermarkets. • Sale of virtual shelf space & web advertisements of products • Production of n-house branded products in the long term. • Revenue realization from big data management

EXPENSES • One time investment of setting up a website and developing the network with all the stores and supermarkets. • Maintaining the website/software network and distribution network. • Advertising and marketing of the websites on a regular basis.

UNDERSTANDING THE CONSUMERS

THE GROCERY SHOPPING EXPERIENCE How do you find your grocery shopping experience? Hate it Neutral Enjoy it 10% 25% 65%

DELIVERING BENEFITS Major benefits of shopping online Time-saving More products variety Convenience 0 5 10 15 20 25 30 35 40 45

IDENTIFYING THE RIGHT PRODUCTS 30 Grocery products intrested to buy online 25 20 15 10 5 0 All of the above Bul grocery items Daily need items personal hygine products Speciality items

LEARNING FROM THE EXPERTS

Technology Grocery 100% success Consumers Business Consultant

LISTENING TO THE GENIUS

MR. SANIT JAIN CEO OF DIGITIZE PORTFOLIO A website designing and maintenance firm

TECHNOLOGY ASPECTS Domain name and online space $6,000 USD Yearly maintenan ce cost $2,000 USD Web designing $4,000 USD Initial website cost $23,000 USD Staffs for managing $6,000 USD Mobile app $4,000 USD Mobile messagin g system $1,000 USD

ACCORDING TO THE GROCERY’S EXPERT

FAST DELIVERY IS THE BIGGEST CHALLENGE OF E-GROCERY

CHOITHRAM & SONS LLC.’S EXPERTS Giant retail with 37 supermarkets across UAE Suresh S. Raja, Deputy Group Procurement Manager

FUTURE OUTLOOK “Positive about growth potential of e-grocery in Dubai” Choitram entering e-grocery market by year end.

RIGHT TRAIN ON THE WRONG TRACK NO! Quality is our priority! Quality of products vary from store to store. This model compromise our brand value.

THE MORADIAN WAY

BOMAN MORADIAN FREELANCE CONSULTANT Experts in:  Productivity  Mathematical Programming  Marketing

“CUSTOMER IS MY CEO ,WHO PAYS MY SALARY.” Quality is not negotiable!

SHORT TERM SUCCESS BUT UNSUSTAINABLE IN THE LONG RUN • Backward integration is they key to success • Transforming into a… HYBRID MODEL

UNDERSTANDING THE CONSUMER’S MIND

DIFFERENT PEOPLE DIFFERENT PERCEPTIONS “Long delivery time disappoints me” “I’m young. I embraced this idea!”

CONCLUSION DONE BUT NOT FINISH GOOD BUT NOT GREAT COMPLETE BUT NOT PERFECT There is always room for improvement!

TIME IS TOO PRECIOUS TO BE WASTED ON SLEEPING…

TIME IS TOO PRECIOUS TO BE WASTED ON SLEEPING… GROCERY SHOPPING

THANK YOU Q&A

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