INTERNATIONAL SCHOOL OF BUSINESS & MEDIA, PUNE

Retail Management Online Grocery Store: Shopease

9/18/2015

Done by:

Veeranna Bhusannavar 15063

Manoj Kumar 15219

Sumanjit Mohanta R20145006

Rasmita Sahoo 15061

Tushar Srivastava 15223

Animesh Shrivastava 15229

N Sumanth Bang Campus

Rashmi Singh15222

Executive Summary

Shopease is focused on online grocery retail business. It plans to connect millions of household

customers and retailers. Shopease is an online portal and mobile based app available 24 X 7 to

the internet friendly customers. It is a virtual online market place facilitating easy buying and

selling of groceries. Shopease aims to tap the growing Indian consumer goods market.

Shopease plans to start it in Pune region in the beginning and in the next 6 months or one year

to grow its presence in six major cities in India namely Mumbai, Delhi, Kolkata, Chennai,

Bangalore, Hyderabad and then increase its regional base to more cities in India. This Business

plan describes the basic business model describing the categories of business, details of the

processes and other features. The operations describe the operations, logistics involved and the

SCM in details. How we are going to optimize it to give best value to the customers. It also talks

about the inventory management and type of operations model we are going to use. The

market analysis gives us the clear picture of the present situation and how we handle the

situation for our benefit. How we form a brand and spread the awareness customers. The

marketing also segregates the customer segment and how to reach them. We are also going to

talk about the advertisement strategy. The financials take care of the capital estimation,

breakeven analysis, and profit estimation. It also talks about the fund sourcing and growth

strategies. We believe Shopease as a disruptive technology destined to remove the traditional

way of trading though it might take a great time.

Objectives

The main objectives of Shopease are as follows:

To serve our customers flawlessly.

To built a stable and effective network between the distributors, wholesalers, retailers

and the household customers.

To build a effective sustainable technology.

To give our customers the best value for money and quickest service.

Mission

Our mission is to provide a online platform where people can shop for groceries along with

door step delivery. Shopease taps the unattended needs of the people who do not find

traditional trading convenient due to many unavoidable reasons. Our foremost mission is to

provide convenience to the customers followed by best value for money backed by quality and

satisfaction.

Vision

Shopease is a web start up with limited resources but it align all its strategies keeping in mind

the following visions:

To make Shopease available all over India.

To be the largest indigenous e-Commerce portal in India.

Values

We aim to build our business along the path of great values and business ethics which includes:

Integrity

Leading Change

Excellence

Quality

Respect for Individual

Learning

Sharing

Keys to Success

In order for the company to operate, a number of specific ingredients are needed. Following

are things to put in place before the service can be offered.

1. Design, maintain, and promote a user-friendly website, the corporate trademark, which

offers an easy and trouble-free way of shopping for the consumers and to track their

orders placed.

Present procedures to the consumer in the most concise format.

Inform the customers of the entire transaction as it occurs if they wish to.

Provide confirmation emails or messages to the customer for receiving their

orders.

Maintain a record of the transactions for the company's own database.

2. Develop successful relationships with customers for better customer retention.

3. Develop strategic alliances in future with local super markets or distributors, logistic

companies.

Startup Summary

Shopease is focused on online grocery retail business. It plans to connect millions of household

customers with distributors. Shopease is an online portal available 24 X 7 to the internet

friendly customers. It is a virtual online market place facilitating easy buying and selling of

groceries. Shopease aims to tap the growing Indian consumer goods market.

It will be a partnership owned company by 7 people. The 7 Partners are Veeranna Bhusannavar,

Sumanjit Mohanty, N Sumanth, Tushar Srivatsava, Animesh Srivastave, Rashmita Sahoo and

Rashmi Singh.

Startup Funding

Sr. No. Particulars Amount

1. Operating Loan Rs. 1,00,000,00

2. Partners Capital (Owners Equity) Rs. 14,00,00,000

Total Rs. 15,00,00,000

Start-up expenses to fund

Legal fees (Approx) Rs. 10,000

Registration Charges Rs. 4,500

Promotional Activities Rs. 7,00,000

Branding Activities Rs. 20,000

Payment Gateway Rs. 40,000

Total Rs. 7,34,500

Start-Up Assets to Fund

Refrigerators Rs. 10,00,000

Shelves Rs. 4,00,000

Furniture Rs. 2,00,000

Weighing Machine (5) Rs. 25,000

IT Infrastructure Rs. 5,00,000

Tempos (3) Rs. 13,50,000

Scooters (6) Rs. 1,80,000

Total Rs. 36,55,000

Fixed Operating Expenses

Warehouse Rent Rs. 2,10,000

IT Expenses Rs. 5,000

Utilities Rs. 15,000

Personnel Salary Rs. 7,02,000

Insurance Rs. 10,000

Total Rs. 9,42,000

Variable Operating Expenses

Inventory Rs. 35,00,000

Fuel Expenses Rs. 63,000

Packaging Costs Rs. 15,000

Stationary Rs. 2,000

Total Rs. 3,58,00,00

Offerings

The main model of business can be categorized into two major divisions according to the

customer segment and the type of their interaction with the suppliers.

Business to Customers (B2C): This is meant for household customers. This model is built

around providing convenience, quality and best value for money to the end users. The

customers can browse through the catalogs and see the different items listed by the

suppliers. The customer orders the selected items and we deliver the product on their

doorsteps. This is our main focus and we concentrate all of our initial resources at this.

Business to Business (B2B): This model is meant for the retailers who need some items

which are unavailable in the local market or looking for better rates. This is for bulk

shipments and we charge the customers for the shipment. This is not our primary goal.

So as a web startup we don’t start with this but we definitely plan to implement this in

the future.

Listed Below are some of the offering which are we are going to be offering and will be listed on

our website and mobile based app:

Fruits & Vegetables

Cut Fruits & Vegetables, F&V Combo, Organic F&V, Vegetables

Grocery & Staples

Dals & Pulses, Dry Fruits, Edible Oils & Ghee, Flours & Sooji, Masalas & Spices, Organic

Staples, Rice & Rice Products, Salt, Sugar, Jaggery, Flours & Sooji, Masalas & Spices,

Organic Staples, Rice, Rice Products

Bread Dairy & Eggs

Bread & Bakery, Dairy products, & Eggs

Beverages

Energy & Health Drinks, Fruit Drinks & Juices, Mineral Water, Soft Drinks and Tea &

Coffee

Food Items

Baby Food, Baking & Dessert Items, Biscuits, Breakfast Cereals, Canned Food,

Chocolates, Sweets, Health & Nutrition, Jams & Spreads, Noodles, Organic Branded

foods, Pasta & Vermicelli, Pickles, Ready to Eat & Cook, Sauces & Ketchup, Veg Snacks.

Personal care

Ayurveda, Baby Care, Cosmetics, Deos & Perfumes, Fashion Accessories, Grooming tools

& Accessories, Hair Care, Oral Care, Personal Hygiene, Sanitary Needs, Shaving Needs,

Skin Care.

Household

Stationary Items, Car Care, Cleaning Accessories, consumer Durables, Cookware, Detergents,

Festive Decorative, Pet Care, Repellents & Fresheners, Shoe care, Toilet, Floor & Other

Cleaners, Utilities.

Imported and Gourmet

Baby Formula & Food, Baking Needs, Biscuits, Snacks & Chips, Cheese By Type, Cooking

Ingredients, Dairy Imported, Drinks & Beverages, Dry Fruits, Berries & Nuts, Gourmet

Bakery, Gourmet Breakfast & Cereals, Imported Non-Food, Jam, Honey, Spreads, Oil &

Vinegar, Pasta, Rice & Noodles, Ready To Cook Meals, Sauces, Dressings & Dips, Soups &

Instant Foods, Tinned & Jarred Food.

Marketing Strategy

The needs of the market which was unattended by traditional practices are needed to be

catered. First there must be an awareness spread across the population for converting the

needs to demands. The marketing strategy is made to sustain the business. Shopease is a

disruptive technology destined to topple the traditional practices. The marketing strategy will

be aligned with the vision and mission to reach our objectives.

Situational Analysis

The traditional practice of buying grocery is characterized by:

1. Manual Process

2. Time Consuming

3. Does not give best value for money

4. Time constrained

5. Inconvenient

Shopease home delivery services can be as much as 43% cheaper than compared to current

costs of customers visiting the store using their our car and spare time. Deliveries will be made

using our personal delivery van and executives.

Market Segmentation

We have identified the customers for our business:

Customers are aged between 23years and above.

Customers whose house hold income is > Rs10,000/- Per Month.

If any customers are having dual income households.

Customers / households with children.

Customers with education level above Bachelors, since they have to be educated about

internet and its usage.

Consumer who are looking for convenience; that means they do not want to invest time

in traveling and shopping.

Average commute time to work of customers.

Customers number of households with internet access and its awareness.

Customers & adults with credit cards access

So we can justify our market segmentation by:

Segmentation Type Variables

Geographic Metro and Cities

Demographic Aged 25-44 years; No Gender barrier; income above Rs. 10,000/-;

Senior citizens

Behavioral Awareness & access to Internet

Occasion Planned for personal as well as public occasions

Benefits Ease of Purchase; power of freeness; Best quality provided

Customer Needs

1. Convenience: In this fast paced life of metros customer does not have time to drive

down to the shop and get the groceries. The drive takes petrol and time along with

traffic frustrations. The customer needs convenience of door step delivery.

2. Quality: The traditional system does not assure quality, we would replace any defects

and customer satisfaction is our top priority. Degradable quality leads to hassle,

inconvenience. Customers do not need those so we aim to take care of these

requirements.

3. Value for Money: eGorocery.com promises a great value for money for all its offerings.

It promises the cheapest deals in the market than any other methods as we provide

discounts for all deals.

Pull Strategies

1. Newspaper Leaflets

2. Pune Newspaper

3. Mobile Based App promotion

4. Social Media

5. Online

6. Mailers

7. Radio Ad’s

Push Strategies

1. Offers and Discounts

Logo

Slogan

Everything at once

Sales Forecast

For an E-commerce industry to do a sales forecast you need traffics which is created on your

websites and also the number of conversion rate as being a start up company we don’t have

the data so we are going to take the Industry average and prepare a sales forecast. We have

taken 150 clicks per day on our websites and 350 on mobile based app and the industry

conversion rate is 17%. According to SOGS report of 2012 on average, customer on per

transaction spends Rs.551.

Traffic Conversion Sales

Month 1 15000 2550 1405050

Month 2 16500 2805 1545555

Month 3 18150 3086 1700111

Month 4 19965 3394 1870122

Month 5 21962 3733 2057134

Month 6 24158 4107 2262847

Month 7 26573 4517 2489132

Month 8 29231 4969 2738045

Month 9 32154 5466 3011849

Month 10 35369 6013 3313034

Month 11 38906 6614 3644338

Month 12 42797 7275 4008772

Total 320764 54530 30045988

Project Milestones

Management Summary & Manpower Planning

President: responsibilities include strategic guidance of the enterprise, exploration of

expansion opportunities, and strategic alliance facilitation and management.

Chief Executive Officer: the main responsibility is to maintain a strategic fit between the

corporate resources and external factors. Responsibilities include running of the overall

day-to-day operations, technological and operational soundness, and financial stability.

Director of Finance and Operations: responsibilities include financial oversight,

safeguarding of assets, and human resources management.

After 6 months entry into Mumbai Region

After Break Even in Pune will move to other Metro

Cities

Venturing into Electronice

Goods

Director of Information Technology: responsibilities include overall technological

efficiency, software development, and information control.

Director of Sales and Marketing: responsibilities include sales generation, marketing

programs development, and public relations.

Director of Supply Chain & Logistics: responsibilities include overall efficiency of

procurement of goods, inventory management and logistics.

Manpower Planning

Job Tittle NO’s Salary Total

Delivery Boys 12 Rs. 10,000/- Rs. 1,20,000/-

Loaders & Helpers 8 Rs. 7,000/- Rs. 64,000/-

IT Department 4 Rs. 18,000/- Rs. 74,000/-

Partners 7 Rs. 60,000/- Rs. 4,20,000/-

Marketing Exec. 2 Rs. 12,000/- Rs. 24,000/-

Total Rs. 7,02,000/-

Industry Analysis

Porters Five Force Model

Threat of new entrant : HIGH

o Most of the Physical/Mortar grocery stores are entering into Online grocery

industry apart from the new E-Grocers leading to intense competition.

Bargaining power of the Buyers: LOW

o Prices are fixed by the online grocers leaving no scope for bargaining though

often offers in some forms or the other are always available

Threat of Substitutes: HIGH

o Growing Super & Hyper markets with chain store everywhere, people don’t find

locating one near their homes difficult hence choosing the feel-see-touch stores

and also traditional retail outlets are one of the major threats

Competitive Rivalry: HIGH

Threat of New Entrant - High

Bargaining power of Buyer- Low

Bargaining power of Supplier - Moderate

Threat of Substitute - High

Competitor Intensity - High

o With increasing internet penetration and the emergence of new markets there is

ever increasing number if new players entering the market.

Bargaining power of Suppliers: MODERATE

o With increasing number of players and their increasing customers’ base suppliers

have no other option than listing their products, but because of traditional retail

outlets they still have some bargaining power with them.

Competitor’s Insight

Major Players

Big Basket - $33.7M revenue

Local Banya - $11.8M revenue

Aaramshop.com

Zopnow

Key Players Business Model Delivery Slots Minimum Order

for Free Delivery Funded

Aaramshop.com Aggregator 24*7 Rs.500 Yes

BigBasket.com Integrated supply chain Same & Next Day Rs.1000 Yes

ZopNow Integrated supply chain 7am to 10 pm Rs 500 Yes

LocalBanya Integrated supply chain 7 am to 9 pm Rs. 500 Yes

Consumer Behavior

Key Trends

The online grocery delivery market in India has some very unique demographic statistics that

have risen out of a new shopping method for the country including:

Women ages 30-35 are the largest adopters of online grocery shopping

68% of all users on major e-grocer LocalBanya.com are women

14% of LocalBanya’s customers are senior citizens

11% of orders are done in 10pm - midnight slot. Previously unattainable

Institutional clients make up 29% of orders for select major retailers

The prevalence of women online emerged in India’s eCommerce industry. It is projected that

women-influenced sales will be 35% of Indian eCommerce by 2016. This is a massive departure

from brick-and-mortar sales, which are dominated by men across all industries. The rise of

women in eCommerce has been attributed largely to convenience, as well as increased privacy

and safety. Online grocers have been able to target a niche by offering later delivery windows

than many traditional grocery stores. Currently, 11% of orders are for delivery during the 10pm

– 12am time slot, which was previously unattainable for customers. This offering comes at a

time when Narendra Modi has spoken about extending work hours to 8 pm from 6 pm for

government officials, while overall workers in India feel they are working longer hours than in

previous years. Larger online grocers have also been able to attract a high number of

institutional clients from restaurants to corporations to other organizations that require

groceries in bulk. As some of the larger online grocers continue to white label consumer diet

staples, restaurant purchasing could even increase further. The middle class is also expanding in

India and will be the 3rd largest middle class in the world in 2020, and the largest in the world

in 2030. This will lead to a growing number of consumers that buy groceries, but begin to

calculate a time-value analysis as their wealth grows. These consumers will subsequently find

that grocery shopping via the Internet is a high value-add service.

Supplier & Vendor Management

This allows the manufacturers, wholesalers and distributors to enlist themselves and their

products to reach to the customers. The following flow chart explains the process. Though in

the beginning phase we will be approaching manufacturers and distributors for stocking

products in the warehouse but everyone will be a registered with the company.

Suppliers Register

Enlist their Products

Manage Products

Feedback & Remarks

Retail Format – Non Store

Online Retailing: Virtual online market place facilitates easy buying and selling of goods and

services. Shopease aims to tap the growing Indian consumer goods market. In recent years

there have been lot of change consumers in Urban and Semi-urban areas are adapting to this

technology based services to shop for their goods and there is still a very huge potential in India

as Internet penetration is still growing in India. Also Indian retail sector is divided into

Organized and Unorganized and 92% of the retail sector is unorganized rather than having a

chain of retail store which will need higher funding we will adopt to Online format which is

getting lot of attention in India. According to the data obtained from Technopak, Deloitte

report, D’Essence analysis:

Globally, e-grocery market is growing nearly 7 times faster than on-ground format.

India is the sixth largest grocery market in the world.

Indian e-grocery market growing at a rate of 19% YoY.

30-40% of the business will be in the online retail space in the next 5 years.

Also having Online retail formats will provide us many benefits:

Reduced overheads - Selling online will remove the need for expensive retail premises

and customer-facing staff, allowing us to invest in better marketing and customer

experience on your e-commerce site and also to expand our base.

Potential for rapid growth - Selling on the internet means getting rid traditional

constraints to retail growth – there is no need to find and pay for larger or better

premises – which will no longer be major factors. With a good e-marketing strategy and

a plan a scale up order fulfillment systems, we can respond and boost growing sales.

Widen our market - One major advantage over premises-based retailers is the ability to

expand our market beyond customers based in our locality very quickly. We may

discover a strong demand for our services in other regions which we can respond to by

targeted marketing, offering our website in a different language.

Customer intelligence - Ability to use online marketing tools to target new customers

and website analysis tools to gain insight into our customers’ needs. For more

information on driving sales through online advertising.

As we are going to provide our services to retailers also which will reduce the intermediaries

between the retailer and manufacturer and make the procurement of goods easier and cheaper

for them. Traditional retailers being the dominant in Indian retail sector through unorganized

sector, we cannot ignore them as a large amount of our business will also be coming from them

until Indian consumers are comfortable with online shopping of consumer goods.

Business Model

It provides a online platform for household customers to choose from a wide variety of

products listed by the suppliers (distributors, wholesalers, retailers). It also allows the suppliers

to enlist their products to ramp up their sales by increasing their reach. This portal also acts

intermediately between the distributor and wholesalers or retailer to supply goods that are

unavailable locally. The customers can browse through the catalogs and see the different items

listed by the suppliers. The customer orders the selected items and we deliver the product on

their doorsteps. This is our main focus and we concentrate all of our initial resources at this.

Buying Process

Register •Contact Information

Browse & Select

•Various product offerings

Payment •Online

•COD

Feedback •Satisfaction

Pricing and Financial Strategy

Revenue Model

The revenue model of Shopease is very simple. Shopease does not charge any customer for

browsing. The browsing is made free of cost. The revenue model can be segregated onto the

following sub categories, namely:

1. Service Charges

a. Shipment – Shopease will charge a nominal amount for shipment of products to

the door step. This depends on the distance and amount gradation. We will be

only charging when the order amount is less than Rs. 400/-

b. We have an option for express delivery where customer will be charged Rs. 50/-

but the order amount should be more than Rs. 400/- and the order will be

delivered within 2 hours of order time.

2. Sale of Goods: We will also be earning a profit margin from the sale of goods listed on

the website which will be our primary source of revenue.

Pricing

Discount Orientation: We will be using low prices as the major tool for competitive advantage.

We can easily adapt to this strategy because of our online format due to which our overhead

costs will be less and also as we are catering to larger customer base we are also expecting to

have a high inventory and lower operating costs.

Store Location & Site Evaluation

Warehouse Location: G.No. 529/1, Shelkewadi,Off Hinjewadi-Pirangut Road,Near Hinjewadi

Phase-3, Phase 3, Hinjawadi, Pune, Hinjewadi, Pune, Maharashtra

Area: 10000sq.ft @ Rs. 21/-

We have selected the warehouse in Hinjewadi for multiple reasons one of them is that it is

situated right in the heart of Pune city and all other location are close by to it leaving Viman

Nagar, Swargate and Koregaon park. Another one of the reason is that as Hinjewadi is known as

the IT hub in Pune we will be able to cater to lot of IT professionals who don’t get time to shop

or they are looking for easy and convenient shopping. After 6 months we will be coming

another warehouse around Koregaon Park.

Literate Population:

Warehouse (Layout and Design)

Warehouse is formed near the market- for better availability and utilization of waiting

time. For time being there will be a major warehouse in the xyz to have better access to

different regions of the city after that we will be having smaller warehouses in different

regions of the city which are located far from us. It will depend on the sales data which

we will get in the beginning months of the operation. This will in turn help us to reduce

delivery time.

Warehouse is Half Grounded & the rest is above the ground

o Half grounded – this part of the warehouse is for the products that are to be

kept in temperature controlled

o Above Ground- This part will be for the products to be kept in normal

temperature.

Purchasing Systems

For Class A & B category products (urgent, better quality and fresh)- from the

Wholesalers, Distributors and manufactured Plants

For Class C category products – are to be procured from the local suppliers and retailers

Motive is to be tie up and held strong relation with the local suppliers

Inventory Decision Analysis

Applying ABC model while analyzing the category of products

Optimum quantity is to be ordered through EOQ model on the basis of A & B category

products

Analyzing EOQ with respect to Constraints

Estimating the safety stock in order to avoid stock out losses

Reorder quantity is determined through Lead time analysis

Inventory Management Practices

Category A&B products are required to be checked periodically( depends on the type of

goods, that may also be weekly basis)

Proper Demand Forecasting

Technologically advanced inventory management systems to show continuous inflow

and outgoing of goods.

Proper Quality checking in order to avoid pilferages

Supply Chain & Logistics

Logistics is going to be taken care by us

Main approach –

o JIT

o Less lead time generation

o Provide facility for different temp controlled products

o Risk management

o Proper Order receiver and order taker

o Provide serviceability 24 hours

For the first 3 months we are going to have a fleet of 3 tempos and 6 scooters for

delivery purpose and mover forward accordingly whether we are able to meet the

demands or we need to increase our delivery vehicles.

Distribution Model

Legal Compliance

Register domain name

With eCommerce business abound, we need to make sure that we choose a unique

domain name for our eCommerce business.

Once we are done with choosing we will get our new domain name registered from an

appropriate national registry.

For that we will have to pay a registration fee, give a valid address and submit id proofs.

Obtain a federal tax id number

To make our eCommerce business a separate legal entity we will need to obtain a

federal tax ID number from IRS (Indian Revenue Services).

By doing so our eCommerce business transactions can by tracked by IRS, thereby

making our business transactions straightforward.

Pay the VAT/Service tax to avoid legal embroil

Make sure we add VAT for all applicable products and pay the taxes to the government.

Draft a Memorandum of Understanding with our Contractors

We need to be very thoughtful and stringent while formulating a Memorandum of

Understanding with all our contractors to prevent spurious services.

We will need to include a Disclaimer for products we sell in our eCommerce site

As we will not be directly involved in selling a product or offering a service and hence we

may not be aware of the product's authenticity. Such a thing might expose our

eCommerce store to legal problems.

By adding a disclaimer to all our products/services in our eCommerce store we will get

shielded from all legal liabilities.

IT Infrastructure

Key Points

Low overall penetration

Massive user growth and potential user base.

High mobile adoption

High cost of access and usage

India only has 19% of their population on the Internet. This figure grew 14% last year (a high

figure considering Uganda was tied for the most growth at 17%). The chart above indicates that

the entire ecosystem reached escape velocity around 2010, which was driven at least in part by

mobile penetration in the country. Mobile Internet users are expected to reach 213 million by

June 2015, and there were ~935 million mobile connections in October 2014, equating to a little

over 4 connections per user. The general increase of Internet users in India is often attributed

to the rise of mobile technology. Previously the costs and subsequently the barriers to entry for

Internet access were too high with computers. In fact, the $61 per MB/ps (on a PPP basis) gives

India one of the highest median costs for broadband Internet access, more than 4x that of

China, Brazil, and Argentina. Initiatives to develop low-priced mobile devices like the Aakash

tablet have enabled users in both major cities such as Mumbai, Delhi, and Bangalore as well as

tier 2 and 3 cities to come online quickly. There are projects being proposed that could even

more dramatically increase Internet coverage in India over the next 3-5 years, which would

further accelerate the potential markets for broader eCommerce in the country.