E-grocery model
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1995: COMMERCIALIZATION OF THE INTERNET
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2000:DOT.COM BUBBLE BURST
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2012: E-COMMERCE TOPS $1 TRILLION
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BUT
E-GROCERYBUSINESSESNEVER
TOOK OFF…
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“IT’S WHEN THE SCARED RATS START RUNNING AWAY FROM THE SINKING MARKET THAT THE TRUE ENTREPRENEURS COME IN.
A TRUE VISIONARY.”
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FEASIBILITY ANALYSIS OF AN E-GROCERY MODEL IN
DUBAI
GAURAV – RAHUL - TEAM
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OBJECTIVES: E-grocery
problems with current e-grocery models
4-step model
SWOT
Feasibility analysis
Learning from the experts
Conclusion
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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.
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TYPICAL ONLINE E-GROCERY MODEL
People place order on the
website .
E-grocer websit
e
Order gets dispatched
from a single hub area to
different places.
Order is received by the
e-grocer
Customer dissatisfacti
on due to long waiting
time.
The order is received
typically 3-4 hours after placing the
order.
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PROBLEMSWITH CURRENT E-GROCERY MODELS
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E-GROCERS
VS
CONSUMERS
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E-GROCERS’ PERSPECTIVES
CONSUMERS’ PERSPECTIVES
• LONG DELIVERY TIME
• DELIVERY CHARGE APPLICABLE
• NO PRICE ADVANTAGE
• HIGH OPERATING COST
• HIGH INVENTORY MANAGEMENT AND HOLDING COST
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TRANSFORMING ADVERSITIES INTO
OPPORTUNITY
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THE 4-STEP MODEL
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HOW IT WORKS…
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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
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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
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Strengths
Weakness
Threats
opportunity 4-step model
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STRENGTH
- Fast delivery time
- Quick response time
- Meeting customers' demand
- Low operating cost
- Low investment
- High market penetration
WEAKNESS
- Reliance on grocery stores
- Product range
- Maintaining the software network
- Easily replicate
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OPPORTUNITY THREATS
- E-grocery gaining popularity
- High disposable income
- High internet penetration
- Cultural diversity
- Competitions from big supermarkets
- Lack of common fixed price
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FEASIBILITY ANALYSIS
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FUNNEL APPROACH
Target Market
Target customers
Profit generation
model
$$$
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DUBAI
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DUBAI130
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
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Area Name Area(km2)
Population(2012)
Population density(/km2)
Small grocery stores
Supermarkets
Abu Hail 1.27 km² 32549.28 16,861.4/km²
Al Bada 0.82 km² 28600.32 22946/km²
Al Baraha 1.104 km² 11890.96 7,086/km² 3 1
Al Buteen 0.07 km² 3593.28 33,771/km²
Al Dhagaya 0.125 km² 16561.92 21,451/km² 4 1
Al Garhoud 4 km² 6788.32 1,116.5/km²
Al Hamriya, Dubai
0.72 km² 22958.08 20,890/km²
Al Hamriya Port 0.89 km² 126.16 93.25/km²
Al Hudaiba 0.84 km² 11702.48 9,165/km²
Al Jaddaf 7.3 km² 4544.8 409.5/km²
Al Jafiliya 1.63 km² 17660.88 7,128/km²
Al Karama 1.509 km2 69424.48 30,267/km2
Al Khabisi 1.255 km² 10240.24 5,368/km²
Al Kifaf 0.8 km² 53.2 44/km²
Al Mamzar 3.35 km² 3435.2 674.6 /km² 3 1
Al Manara 2.1 km² 3263.44 1,022/km²
Al Mina 3.10 km² 6358.16 1,350/km²
Al Mizhar First 11.2 km² 6575.52 386.25/km²
Al Mizhar Second
11.2 km² 6575.52 386.25/km²
Al Muraqqabat 0.78 km² 49240.4 41,532/km² 3 1
Al Murar 0.41 km² 30143.12 48,368/km²
Al Sabkha 0.13 km² 3993.04 20,207/km²
Al Muteena 1.12 km² 27502.88 16,155/km²
Al Nahda First 3.18 km² 912 188.67/km²
Al Nahda Second
3.18 km² 912 188.67/km²
Al Quoz First 27.1 km² 25412.88 617/km²
Al Quoz Industrial First
27.1 km² 25412.88 617/km²
Al Quoz Industrial Fourth
27.1 km² 25412.88 617/km²
Al Quoz Industrial Second
27.1 km² 25412.88 617/km²
Al Quoz Second 27.1 km² 25412.88 617/km²
Area Name Area(km2) Population(2012) Population density(/km2)
Small grocery stores
Supermarkets
Al Quoz Third 27.1 km² 25412.88 617/km²
Al Ras 0.20 km² 10354.24 34,060/km²
Al Rashidiya 4.41 km² 33935.52 5,062 /km² 4 2
Al Rigga 0.89 km² 8639.68 6,386/km²
Al Safa First 4.5 km² 9562.32 1,398/km²
Al Safa Second 4.5 km² 9562.32 1,398/km²
Al Safouh First 7.6 km² 5072.24 439/km²
Al Safouh Second
7.6 km² 5072.24 439/km²
Al Satwa 2.87 km² 45823.44 10504/km² 4 1
Al Shindagha 0.26 km² 24.32 70/km²
Al Twar First 6.8 km² 28054.64 2,714/km²
Al Twar Second 6.8km² 28054.64 2,714/km²
Al Twar Third 6.8 km² 28054.64 2,714/km²
Al Warqa'a Fifth 21.6 km² 760 0.23/km²
Al Warqa'a First 21.6 km² 760 0.23/km²
Al Warqa'a Fourth
21.6 km² 760 0.23/km²
Al Warqa'a Second
21.6 km² 760 0.23/km²
Al Warqa'a Third 21.6 km² 760 0.23/km²
Al Wasl 4.76km² 33672.56 4,654/km² 4 1
Al Waheda 1.41 km² 14981.12 6,990/km²
Ayal Nasir 0.17 km² 19877.04 76,923/km²
Bu Kadra 1.7 km² 296.4 115/km²
Hor Al Anz 4.18 km² 61319.84 9,651/km²
Hor Al Anz East 4.18 km² 61319.84 9,651/km²
Jebel Ali 1 47.1 km² 48083.68 672/km²
Jebel Ali 2 47.1 km² 48083.68 672/km²
Jebel Ali Industrial
47.1 km² 48083.68 672/km²
Jumeira First 6.9 km2 40278.48 3,840/km2
Jumeira Second 6.9 km2 40278.48 3,840/km2
Jumeira Third 6.9 km2 40278.48 3,840/km2
Al Mankhool 1 km2 24339.76 16,013/km2
Mirdif 9.2 km² 12334.8 882/km²
Area Name Area(km2)
Population(2012)
Population density(/km2)
Small grocery stores
Supermarkets
Muhaisanah Fourth
13 km² 138122.4 6,990/km²
Muhaisanah Third
13 km² 138122.4 6,990/km²
Muhaisnah First 13 km² 138122.4 6,990/km²
Nad Al Hammar 8.4 km² 3895.76 6.16/km²
Nadd Al Shiba Fourth
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 11.3/km²
Nad Shamma 1.36 km² 1836.16 888.34/km²
Naif 0.561 km² 43427.92 50,928/km² 4 1
Al Muteena First
1.12 km² 27502.88 16,155/km² 4 1
Al Muteena Second
1.12 km² 27502.88 16,155/km² 4 1
Al Nasr, Dubai 1.5 km² 3752.88 1646/km²
Port Saeed 1.84 km² 680.96 243.4/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
Trade Centre 2 1.91 km² 5096.56 1,755.5/km² 4 1
Umm Al Sheif 1.87 km² 9519.76 3,350/km²
Umm Hurair First
2.3 km2 6730.56 1926/km2
Umm Hurair Second
2.3 km2 6730.56 1926/km2
Umm Ramool 3.61 km² 7036.08 1,282/km²
Umm Suqeim First
7.2 km² 25017.68 2,286/km² 4 2
Umm Suqeim Second
7.2 km² 25017.68 2,286/km² 4 2
Umm Suqeim Third
7.2 km² 25017.68 2,286/km² 4 2
Warsan First 17.1 km² 2159.92 83/km²
Warsan Second 17.1 km² 2159.92 83/km²
Za'abeel First 10 km² 8030.16 528.3/km²
2,063,908 55 18
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DUBAI130
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
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ILLUSTRATIONS
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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
items
$190.58
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
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REVENUES – EXPENSES=
$$$
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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
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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.
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UNDERSTANDINGTHE
CONSUMERS
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THE GROCERY SHOPPING EXPERIENCE
10%
65%
25%
How do you find your grocery shopping expe-rience?
Hate it Neutral Enjoy it
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WILLINGNESS TO PAY DELIVERY CHARGES?
39%
41%
20%
It depends No Yes
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DELIVERING BENEFITS
Convenience
More products variety
Time-saving
0 5 10 15 20 25 30 35 40 45
Major benefits of shopping online
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IDENTIFYING THE RIGHT PRODUCTS
All of the above Bul grocery items Daily need items personal hygine products
Speciality items0
5
10
15
20
25
30
Grocery products intrested to buy online
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MEETING YOUR EXPECTATION
1-3 hours17%
4-8 hours8%
9-12 hours3%
The following day3%
Within half an hour 69%
Expected delivery time of grocery
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LEARNING FROM THE
EXPERTS
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100%success
Technology
Grocery Consumers
Business Consultant
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LISTENING TO THE
GENIUS
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MR. SANIT JAIN
CEO OF DIGITIZE PORTFOLIO
A website designing and maintenance firm
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TECHNOLOGY ASPECTS
Initial website cost $23,000 USD
Web designing $4,000 USD
Mobile app $4,000 USD
Mobile messaging system $1,000 USD
Staffs for managing $6,000 USD
Yearly maintenance cost $2,000 USD
Domain name and online space $6,000
USD
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ACCORDING TO THE
GROCERY’S EXPERT
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FAST DELIVERY IS THE BIGGEST
CHALLENGEOF E-GROCERY
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CHOITHRAM & SONS LLC.’S EXPERTS
Giant retail with
37 supermarkets across UAE
Suresh S. Raja, Deputy Group Procurement Manager
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FUTURE OUTLOOK
“Positive about growth potential of e-grocery in Dubai”
Choitram entering e-grocery market by year end.
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RIGHT TRAIN ONTHE WRONG TRACK
Quality is our priority!Quality of products vary from store to store.This model compromise our brand value.
NO!
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THE
MORADIANWAY
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BOMAN MORADIAN
FREELANCE CONSULTANT
Experts in:
Productivity
Mathematical Programming
Marketing
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“CUSTOMER IS MY
CEO ,WHO PAYS MY SALARY.”
Quality is not negotiable!
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SHORT TERM SUCCESSBUTUNSUSTAINABLE IN THE LONG RUN• Backward integration is they key to success• Transforming into a…
HYBRID MODEL
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UNDERSTANDING THE CONSUMER’S MIND
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DIFFERENT PEOPLE DIFFERENT PERCEPTIONS
“Long delivery time disappoints me”
“I’m young. I embraced this idea!”
“Homemaker like me has
more than enough time”
“This is perfect for busy professionals!” “Ideal for bachelors too!
TRUE STORY”
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CONCLUSION
DONE BUT NOT FINISH
GOOD BUT NOT GREAT
COMPLETE BUT NOT PERFECTThere is always room for improvement!
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TIME IS TOO PRECIOUS TO BE
WASTED ON SLEEPING…
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TIME IS TOO PRECIOUS TO BE
WASTED ON SLEEPING…
GROCERY SHOPPING
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THANK YOUQ & A