Business Model Presentation

By:

Ajay Srinivasan

Sneha ShashiKumar

Souvik Sen

Susanne Pihl

Virtual Store

Introduction

Customer Segment

Value Proposition

Value Chain and Scope of Activities

Strategic Control

Conclusion

3rd Largest Retailer in The World

Present in 14 Countries, Revenue of $94,185 Billion in 2011

Tesco People of South Korea

Population of 50 Million, ~80% in Urban Area

Technology Driven

Very Busy People

Shopping A Dreaded Task

2nd Most Hardworking People

Long Work Hours Very Less NO. of Leaves

Long Queue

Only on Weekends

Easy To Access To Store

Other Easy Means

E-Mart is a Big Rival

Position of Tesco

NO. 1 Retailer in South Korea

Large NO. of Stores

Cannot Open New Stores

Strict Gov. Regulations

? To Be NO.1 in South Korea

Opposition of Mom-Pop Stores ? Increase Sales Without

Increasing NO. Of Stores

Smart Phone User Subway

Free Internet on the Subway

Widely used by South Korean

15 Million Smart Phone Users

~40 Million Smart Phone Users by 2014

Demographic Location of Population

80% People Stay in Urban Area

Technology Friendly People

Lots of Place for ADs

2D Images of Products

Tablets and Smart Phone To Scan

Metro Entrances and Platform

Items Delivered to Customers

Bridge the Gap between Online & Physical Shopping

Bring The Store To The People

Shop On-The-Go

Waiting Time At Station Equal Shopping Time

Convenient Delivery

Order Before 1pm, Delivered On Same Day

Accommodate Delivery Changes

Set Delivery Date 3 Weeks in Advance

Secure Online Payment

No Cash Payment Hassle

Tie With O2, App work on Android, iOS, Symbian

5:30 am up

6:30 Leave home

8:30 Arrive at work

9 pm or later Leave

work

11-12 pm Arrive home

People in Korea work 2193 hours a year, the highest rate in the OECD where the average is 1 749 hours.

39-year-old Lee. A civil servant at the

ministry of agriculture

• Work long hours • Very little peronal time • Shop at night or in weekend So crowded • Prefer fresh food • Often Singles or no children • Tech savy • Buying power

Conveinient location, shop on the go.

Make waiting time to shopping time

Hassle free payment

New unique experience

Convenient delivery

Wellknown company, branded products, fresh items

Korean society is aging rapidly, and government policies are struggling to keep up with the pace of change. However, many ordinary Koreans are not prepared to give up on their long tradition of respect and care for the elderly. (Jarrod Hall/The Epoch Times.)

By 1990: 5 %

By 2012: 11,8 %

By 2050: 37,6 %

Those Aged 65 and Above

That is 5.6 million people above 65 in 2012

60 % of population has smartphone. Age group expand

• Shop few items often • Often limited mobility • Flexible shopping and delivery hours • Often have a caretaker/family for shopping • Cooking an issue. Help needed • Sceptical to new technology • Price important

Convenience. Caretakers can shop on their way to/from work

Convenience: Retiree shop from home, no travel, store come to them

Convenience: Skip Q and commute to store, delivery at doorstep

Delivery fee can be an issue

Fresh items, known brands,

Virtual store and Catering service

Skip cooking

Caretaker shop and provide meals on the go

Or retiree order from home

Tradition for women to stops working when married

50 % of women between 15-64 are home runners

2010: 54.6 % of households have children.

Only 33,9 % Korean families use childcare

Skip nightmare shopping with kids in store. Hassle free

Convenience: Shop comes to her.

Delivery: Do not have to carry items.

Delivery fee can be an issue

• Shop often; - fresh food and rising prises • Shop bulk items (Diapers etc.) • Cook at home • Go by subway to parks/play areas • Flexible times during day for delivery • Healthy food and childrens items important • Shopping difficult with children

Shop comes into costumers home

Expose costumer to Virtual shop

Buy when seen

Shop when need appear

Ad to shopping chart instantly

Convenient real time shopping;-Store comes to costumer every where

Hassle free shopping

New cool shopping experience

Store comes to her home

Convenience: - Shop anytime - Shop where

you are - Delivery at

doorstep Brand - Branded

company - Branded

products

Save time

Wating time to active time

New cool shopping experience

Selection - Broad - Fresh

Homeplus virtual shopping 7 eleven E-mart

Higher price (delivery) Expensive Low price

- Convenient location

- Convenient opening hours - Convenient delivery - Hassle free payment - Fresh items - Broad selection - Branded products

- Conveinient location on the way

- Convenient opening hours - No delivery, carry home - Time consuming payment - Ready meals/ not fresh - Limited (targeted) selection - Branded products

- Location inconvenience

- Limited opening hours - Normally carry home - Time consuming payment - Fresh items - Broad selection - Branded products

- Waste time to active time - Real time shopping

Foreign and Fancy Pain the ……..

New unique experience Fast culture National treasury

E-mart 7 Eleven HomePlus Virtual store

High

Low

Ordering Delivery

Packaging

Ordering

More than 500 products

Scanning of any code

Packaging

Super Market

Warehouse

Delivery

Ordering before 1 pm, goods delivered on the same day.

Time slots-Interval of 2 hours.

Delivery during weekends preferred.

‘Virtual fridge’ inside Gatwick -Stock up while waiting for your plane.

Pick a delivery slot date/time ( up to 3 weeks ahead)

Packaging

Suppliers

Interactive Display

Tesco Home plus

Tesco Gatwick

Commission On Posting Ads

Delivery

Delivery Charges

Customer

ADs In Subway

Online Payment

Scan & Place Order

Grocery shopping while waiting for their friends at the station foyer.

Analyst Feel it’s a Failed Attempt

A lack of strategy

Besides strategy, everything else fails

Cold Storage

Virtual Shops at Bugis and Boon Lay Subways

Train Platform Don’t have Larger Advertising Space

• Complementary

assets • Control of industry

architecture

Appropriability Regime

• Create market wave • Value proposition to

create market presence

• Tech ego of people

Sustaining profitability

• E Mart business vs

Tesco Business • First mover advantage • Customer focus

Competitive Advantage

Superior Value Proposition

Tesco identified the fact that

Korean’s were adept in using smart

phones to the fullest.

15 million smart phone users

were there in Korea

Tesco’s strategy was to target

the technological ego of the

young office going Koreans

Tesco believed that reaching the

critical mass to the population shall

enable its market presence.

Tesco identified the fact that

Korean’s were adept in using smart

phones to the fullest.

15 million smart phone users

were there in Korea

Tesco’s strategy was to target

the technological ego of the

young office going Koreans

Tesco believed that reaching the

critical mass to the population shall

enable its market presence.

Capturing the voice of customer was the most important strategy !!

Tesco’s strategy of having entered Korea with Samsung was to identify the

mentality of Korean people

Korean’s were tired waiting at long queues for getting their items billed.

First Mover advantage – Virtual Store

RED OCEAN STRATEGY

Compete in existing market space

Beat the competition

Exploit Existing Demand

Make the value-cost-trade-off

Align the system of firm’s activities to a strategic choice of differentiation OR low cost

1

2

3

4

5

Tesco competed in Korean market which was ruled by their competitor

E-Mart 1

Tesco’s target was to beat E-Mart and become No.1 in Korea

2

The people of Korea were tired of long queues in billing counters 3

Tesco provided items and lower cost and hence concentrated on

providing better value 4

Tesco strategic intent was to differentiate itself from its

competitor 5

Market control using Red Ocean Strategy

Poor planning

Customer acquisition costs - Branding

Failure to provide due customer

service

Failure to predict the readiness of

the consumer market

Higher delivery cost

Big investment on delivery vans

Spending too much capital before

producing any profit

Expanding too quickly before trying

to establish in a specific market

Logistic issues Poor Customer

planning

Strategic Control

Scope of Activities

Value Proposition

Customer Segment

Value Capture

Stores to people Shop on the go Waiting Time to Shopping time

People of South Korea Tech Driven Young Working people House Wife

Products Sold Delivery Charges Commission*

Order Packaging Delivery Handling Display*

15 million smart phone users were there in Korea

Strong Technological capabilities

First Mover Advantage

Superior Value Proposition

Leveraging the E-Commerce

Future of Shopping

Smart Shopping