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?
References1. Al-Amoodi, M. (2013). Online Grocer. Edmonton: Google Drive.2. ATKearney. (2012, March 01). Ideas and Insights. Retrieved July 13, 2013, from ATKearney: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/a-fresh-look-at-online-grocery/
101923. Browne, K. (2010, March 04). Grocery shopping online. Retrieved July 11, 2013, from Choice: http://www.choice.com.au/reviews-and-tests/food-and-health/food-and-drink/groceries/grocery-shopping-
online/page/online-versus-instore.aspx4. Demery, P. (2011, March 18). Online grocery shoppers like home delivery. Retrieved June 16, 2013, from Internet Retailer: http://www.internetretailer.com/2011/03/18/online-grocery-shoppers-home-
delivery5. Empower Research. (2009, April 09). Empower Research. Retrieved July 11, 2013, from Slide Share: http://www.slideshare.net/incred23/online-grocery-industry6. ePerformance Observatory. (2012, January 01). Food and Grocery. Retrieved July 11, 2013, from ePerformance Observatory: http://www.eperformance-observatory.com/etudes.php?titre=Food%20and
%20Grocery7. Evolution Insight. (2010, January 01). Online Grocery Shopper Behaviour. Retrieved July 13, 2013, from SlideShare: http://www.slideshare.net/evolutioninsights/online-food-grocery-the-shopper-
perspective-sample-extract8. Galante, N. (2013, April 01). The future of online grocery in Europe. London, United Kingdom.9. Goyalarpit. (2013, April 14). “Online Grocery Retail” Survey Result. Retrieved July 11, 2013, from IspiratO: http://ispirat0.wordpress.com/2013/04/14/online-grocery-retail-survey-result/10. Hartman Group. (2012, January 01). The Online Grocery Opportunity. Retrieved July 11, 2013, from Hartman Group: http://www.hartman-group.com/downloads/the-online-grocery-opportunity-
2012.pdf11. Kevin, C. (2001, January 01). Online Grocery Shopping. Retrieved July 13, 2013, from Business Information Systems: http://www.freewebs.com/aimeili/onlinegrocery.pdf12. Key Note. (2013). E-Commerce: The Internet Grocery Market Report 2013. Computing and IT , 1.13. Kornum, N. (2004). Grocery eCommerce. Massachusetts: Edward Elgar.14. Mélanie. (2011, July 5). E-commerce: The Future of Online Supermarkets. Retrieved June 17, 2013, from The Followers: http://blogs.terrapinn.com/internetshow/2011/07/05/commerce-future-online-
supermarkets/15. Morganosky, M. A., & Cude, B. J. (2000). Consumer response to online grocery shopping. Emerald 28 , 1.16. Neville, S. (2013, February 18). Online grocery market will double within five years. Retrieved July 08, 2013, from The Guardian: http://www.guardian.co.uk/business/2013/feb/18/supermarkets-online-
grocery-business-value17. Nielsen’s. (2012). Half of Online Consumers Have Bought a Grocery Product Online. Thetford: MarketingCharts staff.18. Poulter, S. (2011, June 21). It's back to the shops! Why we’re fed up with buying groceries. Retrieved June 21, 2013, from Mail Online: http://www.dailymail.co.uk/news/article-2006005/Grocery-
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:
http://www.prnewswire.com/news-releases/more-than-one-third-of-us-adults-currently-or-plan-to-shop-for-groceries-online-reveals-new-couponcabincom-survey-190992051.html20. Research Methodology. (2012, July 30). Online Food and Grocery Shopping as a Branch of E-Commerce. Retrieved July 08, 2013, from Research Methodology: http://research-methodology.net/online-
food-and-grocery-shopping-as-a-branch-of-e-commerce/21. Site, S. (2011). Online Grocery. Chicago: Survey Site.22. Symphony-EYC. (2013, January 02). Shopper Research 2013, USA. Retrieved July 08, 2013, from Symphony EYC: http://www.symphonyeyc-omni.com/2013_SymphonyEYC_Shopper_Research.pdf23. Trassard, P. (2013, May 2). Online Grocery Shopping Hasn’t yet Caught on among All US Consumers. Retrieved June 21, 2013, from L'Atelier: http://www.atelier.net/en/trends/articles/online-grocery-
shopping-hasn-t-yet-caught-among-all-us-consumers_41937824. Web Site Magazine. (2013, June 7). Supermarket Stats Good Retail Benchmark. Retrieved June 21, 2013, from Web Site Magazine:
http://www.websitemagazine.com/content/blogs/ecommerce/archive/2013/06/07/supermarket-stats-good-retail-benchmark.aspx25. Yousept, I., & Li, F. (2004). Online Supermarkets: Emerging Strategies And Business Models In The UK. Bled eCommerce Conference (pp. 1-22). Bled: University of Newcastle.
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