Online GroceryPartnership ProposalMohamed Al-Amoodi July 24 2013

Online Grocery• Introduction– We want to offer a shop/delivery

service for groceries in Edmonton

– Customers buy your products from our website

– We shop in-store/deliver using a system

– To make the service fast/cheap for customers we need to form a partnership

Customers• Usual customers– busy young professionals

– value saving 50 mins trip and queue• 60% of customers

– physically unfit (eg: seniors, pregnant mothers, injured people, etc)• 15% of customers

• Usual products– dry/frozen food and

housekeeping products* (PR-Newswire, 2013) (Evolution Insight, 2010)

Customers• Demands– low service fee (90% demanded)

– personalized/online-only offers (60% demanded)

– membership/loyalty cards (57% demanded)

– new products requests (50% demanded)

– small delivery slots (50% demanded)

– clear food quality/refund policies

– good website (stable, easy search, fast checkout)

– good customer service

* (ATKearney, 2012) (Poulter, 2011) (Symphony-EYC, 2013) (ePerformance Observatory, 2012) (Mélanie, 2011)

Market Demand• Summary– The trend in customer behaviour since

2000 has been an increasingly rapid migration towards online shopping - the grocery retail sector is no exception

– Online grocery shopping was in it’s infancy in 2004 in the UK, but spiked in popularity around 2008, and has risen every year since

Revenue Market Share

Trend

Customer Market Share

TrendMiscColor

Description

Market Demand

2004 2004 2005 2006 2007 2008 2009 2010 2011 2012 2012

Internationally - population planning to shop for groceries online = 26% compared to computer software = 29%, travel reservation = 30%, entertainment = 45% (Nielsen’s, 2012)

UK - population shopping for groceries online at least once a year = 20%, at least once a week = 5.9% (Key Note, 2013)

US - online ($13B) to physical grocery shopping market share = 1.2% (Hartman Group, 2012)

US - population shopping for groceries online 1-3 times per month = 4%, at least once a week = 2% (Demery, 2011)

UK – top online grocery firms annual increase in sales = 35% (Research Methodology, 2012)

US - online to physical grocery shopping market share = 1% (Empower Research, 2009)

UK - online to physical grocery shopping market share = 0.8% (Yousept & Li, 2004)

Market Demand

Revenue Market Share

Trend

Customer Market Share

TrendMiscColor

Description

2013 2013 2014 2015 2016 2017 2018 2018

Today

UK - online grocery shopping = GBP 11.1B (predicted to be double 2013 sales) (Neville, 2013)

UK - online (GBP 5.6B) to physical grocery shopping market share = 3.5% (Neville, 2013)

US - population shopping for groceries online = 30% (Trassard, 2013)

Market Demand• Some established companies

FirmRevenue from online

grocery salesDelivery cost

Tesco (UK) GBP 3.2B GBP 3-7

Ocado (UK) GBP 0.7B GBP 3-7 (free certain times)

Walmart (US) USD 5-7

Safeway (US) USD 10-13 (free first time)

Grocery Gateway (Longo’s CA)

CAD 10

Thrifty Foods (Sobeys CA) CAD 8-10

Business Solution• Website/mobile Design

Front Page

• Login/guest• Delivery slot

reservation• FAQ• Guarantees• Policies

Filling Cart

• Favorites• Department

navigation• Keyword

search• Special

offers

Checkout

• Review/save cart

• Upsell (“did you forget?”, personalized deals)

• Payment

Business Solution• Website/mobile Design

Business Solution• Server Design

Business Solution• Service fee (breakdown)

* Calculations available

Average Amount of Customer Purchase by Online Grocery FirmPeapod average basket price 100CAD per customerStreamline average basket price 102CAD per customerTeso average basket price 100CAD per customerWebVan average basket price 71CAD per customerHomeGrocer average basket price 102CAD per customerAverage basket price 95CAD per customer

Average Service Fee based on an Average Basket PriceCOST – To have a shopper pick up the items from the shelves (26.3 mins per customer) 4.36CAD per customerCOST – For gas spent on the delivery (8.2 km per customer) 0.94CAD per customerCOST – To have the items delivered to the customer (31.2 mins per customer) 5.18CAD per customerCOST – Transaction fee charged by credit card companies (online credit CAD 2.36 per customer) 2.36CAD per customerCOST – Admin cost, food/business license renewals, truck maintenance (CAD 2.38 per customer) 2.38CAD per customerOverall service fee 15.22CAD per customer

Business Solution• Service fee (impact on sales)

Service Fee ($) People who would be interested (%)

0 100%

1-5 48%

5-10 18%

10-20 5%

20+ 1%

* 857 people surveyed (Site, 2011)

0.00 5.00 10.00 15.00 20.00 25.000%

20%

40%

60%

80%

100%

Service Fee Impact on Sales

Service Fee ($)

People

Inte

rest

ed (

%)

Min 1.5% discount (as we eliminated credit card fees)

Will bring service fee to $13.75 and 5% market share

1.5% discount + 2.5% commission

Will bring service fee to $11.25 and 10% market

share (double sales)

Partnership• Requirements– Commission

• for reduction of service fee

– Database connection• for items, quantity, department/location in

shop

– Return policy• for unsatisfied customers

– Skip checkout• for increasing speed • for eliminating 1.5% credit transactions fees

• items will be invoiced and paid at an agreed time with an agreed payment method

Partnership• Benefits– First-mover competitive edge

• Because Edmonton has no good online grocery firm

• Increase in customer loyalty

– Increase in sales and customers• No investment needed• Estimated $22.5M revenue and 160,000

customers in long term in Edmonton

– Free continuous feedback to improve products• Because we collect data, reviews, forum

information

Management Team• Mohamed Al-Amoodi– Head Programmer and CEO

– Education: BSc Chemical Engineer, 2011

– Experience:• Engineer/designer with Pentair (Tyco)• Programmer/manager with Rehabtronics

(Bioness)

* Endorsements available

Management Team• Khaled Al-Amoodi– Programmer and CFO

– Education: BSc Electrical Engineer, 2013

– Experience:• Researcher (on multi-ferric material) with Dr

Kim Chow (University of Alberta)

* Endorsements available

Next Step• Partnership contract– Commission

– Database connection

– Return policy

– Skip checkout

• Complete business solution (web/server)– Obtain license (business/food)

– Advertise to target market• Flyers/news, email/forum/Facebook, truck

paintjob, etc

• Expand(warehouse model/pick-up option)

Questions?

Contact Info• Name: Mohamed Al-Amoodi

• Email: alamoodi@ualberta.ca

• Phone: +1-587-708-6666

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shopping-online-Were-fed-shops.html19. PR-Newswire. (2013, February 13). More Than One-Third of U.S. Adults Currently or Plan to Shop for Groceries Online, Reveals New CouponCabin.com Survey. Retrieved 07 08, 2013, from PR-Newswire:

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