1995: COMMERCIALIZATION OF THE INTERNET

2000:DOT.COM BUBBLE BURST

2012: E-COMMERCE TOPS $1 TRILLION

BUT

E-GROCERYBUSINESSESNEVER

TOOK OFF…

“IT’S WHEN THE SCARED RATS START RUNNING AWAY FROM THE SINKING MARKET THAT THE TRUE ENTREPRENEURS COME IN.

A TRUE VISIONARY.”

FEASIBILITY ANALYSIS OF AN E-GROCERY MODEL IN

DUBAI

GAURAV – RAHUL - TEAM

OBJECTIVES: E-grocery

problems with current e-grocery models

4-step model

SWOT

Feasibility analysis

Learning from the experts

Conclusion

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.

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.

PROBLEMSWITH CURRENT E-GROCERY MODELS

E-GROCERS

VS

CONSUMERS

E-GROCERS’ PERSPECTIVES

CONSUMERS’ PERSPECTIVES

• LONG DELIVERY TIME

• DELIVERY CHARGE APPLICABLE

• NO PRICE ADVANTAGE

• HIGH OPERATING COST

• HIGH INVENTORY MANAGEMENT AND HOLDING COST

TRANSFORMING ADVERSITIES INTO

OPPORTUNITY

THE 4-STEP MODEL

HOW IT WORKS…

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

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

Strengths

Weakness

Threats

opportunity 4-step model

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

OPPORTUNITY THREATS

- E-grocery gaining popularity

- High disposable income

- High internet penetration

- Cultural diversity

- Competitions from big supermarkets

- Lack of common fixed price

FEASIBILITY ANALYSIS

FUNNEL APPROACH

Target Market

Target customers

Profit generation

model

$$$

DUBAI

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

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

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

ILLUSTRATIONS

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

REVENUES – EXPENSES=

$$$

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

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.

UNDERSTANDINGTHE

CONSUMERS

THE GROCERY SHOPPING EXPERIENCE

10%

65%

25%

How do you find your grocery shopping expe-rience?

Hate it Neutral Enjoy it

WILLINGNESS TO PAY DELIVERY CHARGES?

39%

41%

20%

It depends No Yes

DELIVERING BENEFITS

Convenience

More products variety

Time-saving

0 5 10 15 20 25 30 35 40 45

Major benefits of shopping online

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

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

LEARNING FROM THE

EXPERTS

100%success

Technology

Grocery Consumers

Business Consultant

LISTENING TO THE

GENIUS

MR. SANIT JAIN

CEO OF DIGITIZE PORTFOLIO

A website designing and maintenance firm

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

ACCORDING TO THE

GROCERY’S EXPERT

FAST DELIVERY IS THE BIGGEST

CHALLENGEOF E-GROCERY

CHOITHRAM & SONS LLC.’S EXPERTS

Giant retail with

37 supermarkets across UAE

Suresh S. Raja, Deputy Group Procurement Manager

FUTURE OUTLOOK

“Positive about growth potential of e-grocery in Dubai”

Choitram entering e-grocery market by year end.

RIGHT TRAIN ONTHE WRONG TRACK

Quality is our priority!Quality of products vary from store to store.This model compromise our brand value.

NO!

THE

MORADIANWAY

BOMAN MORADIAN

FREELANCE CONSULTANT

Experts in:

Productivity

Mathematical Programming

Marketing

“CUSTOMER IS MY

CEO ,WHO PAYS MY SALARY.”

Quality is not negotiable!

SHORT TERM SUCCESSBUTUNSUSTAINABLE IN THE LONG RUN• Backward integration is they key to success• Transforming into a…

HYBRID MODEL

UNDERSTANDING THE CONSUMER’S MIND

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”

CONCLUSION

DONE BUT NOT FINISH

GOOD BUT NOT GREAT

COMPLETE BUT NOT PERFECTThere is always room for improvement!

TIME IS TOO PRECIOUS TO BE

WASTED ON SLEEPING…

TIME IS TOO PRECIOUS TO BE

WASTED ON SLEEPING…

GROCERY SHOPPING

THANK YOUQ & A