final report on savegenie
DESCRIPTION
savegenieTRANSCRIPT
Table of contents Page no.
Title page 00Declaration 02Project completion certificate 03Company Certificate 04Acknowledgement 05
1. Executive summary 062. Introduction 07-11
a. Industry Profile _____b. Organization Profile _____
3. Need for Study 094. Literature Review 10-125. Objectives and Hypotheses 12-136. Research Methodology 13-29
a. Research Design _____b. Detailed description _____c. Marketing and Promotional Strategies _____
d. Outcomes of the project _____e. Analysis _____
7. Findings from the research 308. Suggestions and Recommendations 30-319. Limitations of your project 3110.References 32
DECLARATION
I hereby declare that the information provided along with my report are based upon the facts made by savegenie team. It is completely true and rechecked by the company’s vice president Mr. Priyatam vusala.
Date : ……………Your name :TABISH AHMEDRoll no : PGD13096Batch : 2013 - 2015
Savegenie E-Marketing Pvt. Ltd.SCF 26, Basement, Huda Market, Sector 4,Urban Estate, Gurgaon-122001Phone: +911244276464E-Mail: [email protected] No: U74999HR2014PTC051518
PROJECT COMPLETION CERTIFICATE
Name of the Student:TABISH AHMED
Roll Number: pgd13030
Project Title:
1. Study and design of database for an e-commerce startup.
2. Launch an e-commerce website and lead the initial sales push.
3. Marketing and sales strategy for an e commerce startup.
4. Create an advertisement and sales promotion campaign for savegenie.in
This is to certify that TABISH AHMED, a student of Institute of Management Studies,
Noida has successfully completed his summer internship in the above mentioned projects
under my supervision. The student has submitted the final report.
Certificate of Completion
This document certifies that
Mr. TABISH AHMED
B2B(BUSINESS TO BUSINESS), B2C(BUSINESS TO CUSTOMER), External Operations, Market Research, Database Management, Image Processing, Social Media
Marketing, sales and advertisement
SavegenieE-MarketingPvt.Ltd. SCF26, Basement,HudaMarket, Sector–4, Gurgaon-122002.Ph: 0124–4276464
AcknowledgementSavegenie E-Marketing Pvt. Ltd., right from the start provided a wide range of professional experience to me. During the course of my project I was always guided and nurtured which has helped me to grow more rational and practical in my thinking and approach.
I am extremely grateful to my mentor Mr. PriyatamVusala, vice president, savegenie E marketing Pvt Ltd. and Mr. Mahesh NathSahu, Vice president, Savegenie E Marketing Pvt. Ltd. for providing me an opportunity to work in an able startup as a summer intern under their guidance and giving me the opportunity to work on various wide ranged projects which helped me in integrating my theoretical and practical knowledge, thereby allowing me to experience and learn from the challenges in an organization of this stature from a managerial perspective.
My special thanks to Mr. Amit Verma, Founder, Savegenie for helping me throughout my internship period and enlightening me with his deep knowledge. I am grateful to him for showing me the right direction.
I am also grateful to the entire staff of Savegenie E-Marketing Pvt. Ltd. for their continuous help and support.
1. Executive Summary
Being a new startup the opportunities for learning in Savegenie were immense. Our work started by gathering knowledge about the working of the company and the work done till now by other interns who joined earlier than us.
I was involved initially in the making and upgrading the databases that were to include all the product SKU’s (stock keeping units) collected from various shops through tie ups that were finalized before we joined.
Thereafter, I was involved in B2B(BUSINESS TO BUSINESS) activities of going through various shops and collecting data of product SKU’s(stock keeping units) present in various shops allover Gurgaon.
After completing the B2B(BUSINESS TO BUSINESS) works, I was involved in designing questionnaire and doing pre-launch surveys to know about the notion of the customers regarding our future website. In the meantime the IT and photo shop team would integrate the collected data and pictures of product SKU’s (stock keeping units) with the website.
Thereafter, I was convinced form the results of the surveys that the website will be a success and had knowledge about which features of the website is liked and disliked the most and hence, we altered our strategy accordingly.
Finally, I was ready with the beta version of our website, while in the meantime we continued with the pre-launch surveys.
After the final launch of the website,I was also involved in B2C (BUSINESS TO CUSTOMER) works , wherein we again went through the procedure as followed in the surveys and went from market to market and park to park supervising pamphlet distribution, collecting e-mail IDs/phone no’s and working on other marketing domains so as to make this website a hit.
In the final phase of our internship we did promotion (advertisement) of our company, we went to different malls and societies. We meet their RWA officers/managers and collecting the information about his society’s advertisement costs means how much they charge for putting their standees, flaxes, canopies, umbrellas, notice boards and drop boxes. We have motivate them to charge less amount to us (data’s mention below). We meet some brokers also who takes some commission and make sure to do advertisement they charge some percentage to promote the company. After that we went to manufacturer of all these things (like canopy, standee, umbrella, flaxes etc.) and also motivate him to charge less amount and then after further going on to the promotion.During this period, two months of our internship period were completed with an indispensable experience of working and marketing a startup.
2. Introduction
2.1: Industry profile
Being first in the market contributes a lot towards the success of any product or service. The first and second laws of “The 22 immutable laws of marketing” also reinforce this assumption by stating that “It is always better to be first than to be better” and “If you can’t be first in a category, create a new category in which you can be the first.” Savegenie E-Marketing Pvt. Ltd. is a start-up venture which followed these two laws in creating its product savegenie.in
The internet has seen a sudden spike in the number of online grocery stores since 2011. Even though there have been closures and bankruptcies in the initial days, the large customer base and the ever increasing penetration of internet usage in the Indian customer market is luring entrepreneurs into this business. Big players like Sahara and Godrej have also entered this fray with Sahara’s “Qshop” and Godrej’s “Nature basket”. But all the online grocery stores currently in operation, buy and sell the goods themselves. This gives the feeling of visiting a single super store to purchase all the groceries, which leaves a void in the heart of the typical Indian customer when he buys online. The personality of the Indian customer is naturally imbibed with an instinct to compare the prices of products in multiple stores in order to save more money.
Savegenie has addressed this point by creating its own category in online grocery stores with a new business model. It aims at creating an online market place for consumers and retailers to come together for business. The customers get the benefit of comparing prices of products from various stores online and buy accordingly while sitting at home and thereby saving their time, money and effort.
There are around 12 million unorganized kirana stores in India. These medium and small scale retailers face stiff competition from major enterprise like Reliance, Big Bazaar and now online retailers has enhanced their competition, making their survival tougher. Retail sector is now working on Darwin’s law “Survival of the fittest”.
2.2: Organization profile
Savegenie has launched its e-commerce business in January 2014 and is in the nascent stage of establishing itself in the Indian e-market.
SaveGenie E-marketing Private Limited is working to leverage this unorganized business into an organized one through its ecommerce portal in the retail space with Gurgaon as its target market.
SaveGenie will provide these small and medium scale retailers a new marketplace for selling their products online. It will be one of its own kinds of business model in Gurgaon. With its marketplace model SaveGenie will bridge the gap between the retailers and the customers. It will act as a service provider and a channel to maintain a proper information and communication between them. SaveGenie will benefit both the customers and the retailers. This will help the retailers to increase their sales and provide the customers a marketplace where they can order their grocery from various retail stores, especially to those who still choose traditional shops over branded stores.
Researches show that there are many factors for online groceries to thrive in the world of ecommerce.Most of the consumers dislike the chore of grocery shopping and many of them even suffer from shopping stress. Thus, convenience and time saving can be the dominant reasons for consumers to shop for groceries online and Savegenie focuses on providing its customers convenience, time saving with less effort.
Founders and DirectorsThe company is founded by three people – Mr. Amit Verma, Mr. Uppkar Aggarwal and Mr. SharadGoenka and incorporated successfully as Savegenie E-Marketing Private Limited on 8th January 2014 in accordance with the laws of India.
Mr. Amit Vermais a management professional with deep interest in entrepreneurship and consulting with well-rounded skills in strategy, finance, marketing, operations and technology who believes that a business is a sum total of all these areas and to understand business environment a balanced view of every skill is required. He is an alumni of National Institute of Kurukshetra and Indian Institute of Management Kozhikode. He is the also the Founder of and Management Consultant in Apogee Consulting Limited based in Mauritius.He has previously worked in Daewoo Motors Limited, MarutiUdyog Limited, GE Capital, HSBC, DTOS Limited and Ireland Blyth Limited.
Mr. Uppkar Aggarwal, Executive Director of Savegenie of E-Marketing Private Limited. He is an alumni of National Institute of Kurukshetra and currently working as Principal Engineer at Tejas Networks.
Mr. SharadGoenka is a pure finance professional with a vast experience in various financial institutions. He is an alumni of Sydenham College of Commerce and Economics, Mumbai University and Indian Institute of Management Ahmedabad. He is also certified Chartered Accountant and Chartered Financial Analyst.
4.1Vision and Values:
Vision:
To give “value added” time back to busy families by “drastically reducing time and effort” from non-value added “routine but must to do things” that have low entertainment value specifically grocery shopping (both food and non-food items) through internet retailing.
Mission:
To establish ourselves as customer’s preferred market integrator by being relevant to each stakeholder in the chain through providing “value”, “ease”, “comfort”, “fun” and “certainty” by achieving 10-15% share of purse for the geographical market we enter in within 2 years.
Key Definitions
Value- Right quality at right price, benefit to all stakeholders
Ease- Process is understandable, easy, integrates seamlessly, Customer facing interfaces simple to understand and act
Comfort- Accessible all the time through various online, offline platforms, non-intrusive
Fun- Process should try to maximize the fun element, like some graphics that show savings and keep the buyer tuned in as real life experience can
Certainty- Peace of mind, order placed should mean delivery as per order, no negative surprises, commitment to timely delivery, deliver what you promise.
Services-Savegenie is a marketplace where the customers meet retailers and make an educated choice of buying groceries. Savegenie does not provide groceries to any customers directly or indirectly. Savegenie does both business to customer as well as business to business.
Savegenie provides the local retailers a marketplace to have a presence online and to compete with big retailers. Thus giving them opportunity to gain more profit, increase their serving area and increase of customer base. Thus Savegenie helps the local retailers of various sectors of Gurgaon to have a global presence.
Savegenie serves as a link between the customers and the retailers. Savegenie saves three key things for customers, Time and Money and Efforts the three most valuable factors in the modern world. The available products ranges right from fresh Fruits & Vegetables, Rice, Dals, Spices and Seasonings to Packaged products, Beverages, Personal care products, Meats, etc. Customers can easily make their order and pay with their convenient option via Credit/Debit card, Net banking or Cash on Delivery.
The key features which differentiate Savegenie from other online grocery websites are
Swapping between the products. Switching the stores. Merging & combining the list. Splitting the list Pickup & delivery Tracking the product prices.
4.2 Business Operations:
Savegenie’s interface is designed as per the best in class industry standards. It provides the customers all the features they would need to choose their preferable groceries. The website has all the features which would help the customers save their most valued time and money. Once the customer is registered he/she would be redirected to the Savegenie main page where he/she could continue with shopping.
To provide the customer wide range of products to choose from, data (product SKU, size of the package, brand etc.) from the retailers who are associated with Savegenie is collected and was uploaded on the website in the required format.
Our Customers are those individuals/groups who visit and purchase through our website. Before they start purchasing, they need to register to the website. After registering they would be getting an SMS and an e mail to verify the link. On clicking the link it will direct to a page where they have to fill further information to complete the registration process.
Once the registration process is complete, Customers will surf the site and purchase items they need. After the items are added to the cart, they will use features from Savegenie to save money and subsequently the time. They will be again getting an SMS when they place an order. After that order form will be
forwarded to the respective retailers who will deliver the products to the customers at the scheduled delivery time.
In order to provide the customer best experience in-house call center will be developed to answer their queries.
4.3 Demand and Supply Analysis
Increased internet usage. Growing online shoppers. Growing e-commerce market in India. Increased affluence level of people. Customer driven, not investment driven Flexible delivery option (Pick up/ Delivery, Time Slots) Convenience Multiple mode of payments: Cash, Internet banking, Credit Cards and Debit
Cards. Availability of products. Switching between the store Swapping between the products
3. Need for study
Being first in the market contributes a lot towards the success of any product or service. The first and second laws of “The 22 immutable laws of marketing” also reinforce this assumption by stating that “It is always better to be first than to be better” and “If you can’t be first in a category, create a new category in which you can be the first.” Savegenie E-Marketing Pvt. Ltd. is a start-up venture which followed these two laws in creating its product savegenie.in
The internet has seen a sudden spike in the number of online grocery stores since 2011. Even though there have been closures and bankruptcies in the initial days, the large customer base and the ever increasing penetration of internet usage in the Indian customer market is luring entrepreneurs into this business. Big players like Sahara and Godrej have also entered this fray with Sahara’s “Qshop” and Godrej’s “Nature basket”. But all the online grocery stores currently in operation, buy and sell the goods themselves. This gives the feeling of visiting a single super store to purchase all the groceries, which leaves a void in the heart of the typical Indian customer when he buys online. The personality of the Indian customer is naturally imbibed with an instinct to compare the prices of products in multiple stores in order to save more money.
Savegenie has addressed this point by creating its own category in online grocery stores with a new business model. It aims at creating an online market place for consumers and retailers to come together for business. The customers get the benefit of comparing prices of products from various stores online and buy accordingly while sitting at home and thereby saving their time, money and effort.
There are around 12 million unorganized kirana stores in India. These medium and small scale retailers face stiff competition from major enterprise like Reliance, Big Bazaar and now online retailers has enhanced their competition, making their survival tougher. Retail sector is now working on Darwin’s law “Survival of the fittest”.
A Fresh Look at Online Grocery
When e-commerce was first recognized as a sea change in business, many companies
tried to enter the realm of online grocery. But many of these pioneers failed when the
Internet bubble burst, and in the decade since, online grocery sales have grown much
slower than the overall e-commerce market.
For the most part, customers in Western countries continue to shop for their groceries by
going to bricks-and-mortar stores. However, the online market is growing quickly in some
countries. The United Kingdom has a particularly vibrant market, with Internet grocery sales
comprising 4.5 percent of total grocery sales in 2010. In other countries with similar
characteristics, however, growth has been slow; the Internet comprises just 0.2 percent of total
grocery sales in Germany.
We recently studied the state of the online food retail industry in partnership with the
University of Cologne. We found an industry with significant potential for growth. While our
research centered on Germany’s online food market, our findings are relevant in markets with
high gross domestic product (GDP) and well-urbanized regions (see sidebar: About the
Study).
This paper examines the business models for online food retail, discusses why food
shoppers are often hesitant to purchase groceries online, and outlines the factors that will
help grocery retailers succeed online.
Delivering the GoodsFrance, Switzerland, the United Kingdom, and the United States all have major online food
retailers that offer a full range of groceries. The U.K. market is the most developed, with
annual combined online grocery sales of major players Tesco, Asda, Sainsbury’s, and Ocado
totaling $4.6 billion, or about $110 per person. Switzerland’s market in 2008 averaged $20
per inhabitant, mostly generated by the two leaders, LeShop and Coop@home. In Germany,
where the food retail market is dominated by discounters, online grocery has made only a
minor dent in sales.
One reason for the gaps across similar countries is that each country has different food retail
markets. Unlike Germany, the United Kingdom and France have highly consolidated food
markets, with less price competition and fewer hard discounters. This opens the door for
“high-value service” retail concepts such as online grocery. Furthermore, some of the require-
ments for establishing an online grocery market—large metropolitan areas with fewer grocers,
high broadband usage, and lots of online shoppers—vary considerably across countries.
Online grocers have to adapt their business models, products, and services accordingly.
For our study, we examined how both traditional retailers and pure online players are setting
up operations and reaching customers. Figure 1 shows the two primary ways customers
receive their goods, depending on which method is used by which online retailer. Customers
either have groceries delivered, or they pick them up at a store or a distribution facility in a
“click-and-collect” service. The vertical axis indicates where retailers full fill the orders for later
delivery to customers—either in a shadow warehouse inaccessible to customers or in
traditional stores.
Online food retailers generally use one or any combination of four approaches to distribute
grocery orders to customers (see sidebar: Four Retailers, Four Approaches on page 6).
Figure Business models of online food retailers
Home delivery Pickup
In-store picking
Warehouse picking
retailers, such as Sainsbury’s in the United Kingdom and Colruyt in Belgium, offer more than one approach. Tesco goes even further—already offering both in-store click-and-collect service and home delivery, it has begun investing in shadow warehouses to increase the efficiency of home delivery. The following describes the online grocery approaches of some of the more established retailers:
Shadow warehouses (pickup). The shadow warehouse approach already used
by companies such as Chronodrive, Leclerc, and Système U has become popular in France.
Traditional retailers such as Intermarché and Carrefour are currently in test phases with this
approach, and German retailer Real has initiated a test phase in two markets. In the United States,
one example of this approach is Farm Stores, a Florida-based online grocer with drive-through
Store to home Click-and-collect
Grocers use existing Online shoppersstores to supply collect goods atonline shoppers grocery stores
Warehouse to home Drive-throughOnline start-ups (and Some grocers
some bricks-and-mortar) are adopting thisdeliver from warehouse time-saving approach
pickup.
One major obstacle to online grocery is quite simply that customers are happy with how they get their groceries now.
The advantage of the drive-through pickup is the time savings—online shoppers can often collect their
groceries without having to get out of their vehicles. Chronodrive, a sister company of French
hypermarket chain Auchan, is currently expanding the number of its outlets to 32 in France and boasts
that its pickup process takes less than five minutes. The approach succeeds because of its efficiency;
on the other hand, the absence of personal contact can hamper both marketing and customer service
efforts.
Shadow warehouses (home delivery). Similar to the first approach, home delivery managed from a
central distribution center is frequently used by pure online retailers that do not have traditional retail
stores. It is common in the United States, where Peapod (founded in the United States in 1989 and
now owned by Netherlands-based Ahold), Fresh Direct, E food Depot, and Net grocer have made a
dent. This approach is moving forward in Europe, too, led by Switzerland’s LeShop, which has
partnered with the Swiss postal service for delivery, and the U.K.’s Ocado. Even traditional retailers
that offer home delivery, such as Tesco, are opening centralized shadow warehouses to benefit from
more efficient picking and delivery.
The efficiency and time-saving features of this approach can be valuable to customers, but the level
of customer service involved can also make it comparatively expensive.
Store- based (pickup). This business model allows customers to pick up pre-packed groceries from
traditional retailer outlets. Publix and Albertsons in the United States have abandoned store-based
home delivery in favour of pickup. This approach is easy for traditional grocery retailers to adopt
within their existing structures. But customers often see little difference between online and offline
channels and, ultimately, may prove unwilling to pay
a premium for the service. When moving into the online business, traditional food retailers often
choose to offer both click-and-collect and home delivery from their stores.
Store- based (home delivery). Traditional retailers entering the online business often take advantage
of their retail outlets and pick customers’ products for delivery from their existing stores. The U.K.’s
Asda uses this approach, while others such as Sainsbury’s, Simply Market,
Colruyt, and Delhaize offer in-store picking and click-and-collect. In-store picking is waning in
popularity among retailers because of delivery inefficiency, costs, and availability. Further-more, trade
chains are encountering local competition; for example, in many countries, including the United
States, it is already common for some single-location stores to offer home delivery in two hours.
Shopping Around: It’s All In the Details
After examining the leading business models for online grocery, our survey findings helped identify
ways to improve online grocery retail. The improvements fall into three categories: customers,
operations, and success factors.
“Customers”
Our focus turned to how and what online grocery shoppers buy. In general, executives agree that the
customer base will widen with the Internet-savvy generation. Busy young professionals who value the
opportunity to save time and young mothers seeking to avoid busy supermarkets are the main target
group in online groceries. As one young mother puts it, “Online grocery shopping is convenient and it
saves time. I do not need to carry heavy bags and I can avoid long lines.”
• Shoppers are happy with the status quo. One major obstacle to online grocery is the simple fact
that customers are happy with how they get their groceries now. Seventy-three percent of
respondents say they do not buy groceries online because they are satisfied with their usual
shopping opportunities and cannot see the added value of online food shopping. In addition, some
people don’t decide what to buy until they are on their way home from work or even in the
supermarket, so online food purchases are not always a viable option. For many, personal contact is
important. While only a few respondents blamed a lack of skills or avail-ability for not shopping
online, these could also be underlying factors.
There is little margin for error—shoppers do not forgive mistakes made by online food retailers.
• Online shoppers are not online food shoppers. Frequent online shoppers are more likely to try
buying groceries online than others, with almost one-third of Web grocery shoppers saying they
shop online at least once a week for other products. But they do not purchase groceries online as
often as other products. Fewer than 10 percent of shoppers say they have bought non-perishable
groceries online, and only 2 percent have bought fresh food from a
website. And of the 60 percent of shoppers who buy something online at least once a month, only 1
percent log on to buy groceries every month.
While some customers happily accept home delivery charges, most are not willing to pay for just the assembly of the order. Sixty percent of respondents say they would pay between $1.30 and $6.50 (€1 and €5) for home delivery, and 17 percent stated they would pay up to $13(€10). On the other hand, few are willing to pay extra when they pick up, either at warehouses or
supermarkets.
Operations
Operations plays a major role when determining the best approach to developing and imple-menting a
customer-friendly strategy. The top companies focus on providing high-quality service, whether delivery
or pick up.
• Get the service model right. Many consumers today see value in home delivery, which may make
it the dominant approach as online food retail matures. But home delivery has its challenges; the
supply chain for online food retail is completely different from all other online products. Each order
consists of multiple products, some of which may require cooling, and delivery accuracy is
important. A wide product selection, particularly of fresh foods, may prove difficult.
Pickup service might alleviate shoppers’ hesitation in buying fresh food online, as they can check the
quality before leaving the collection point. But, of course, pickup service does not offer the same time
saving or convenience as home delivery. And, to date, most customers
appear to have little interest in pickup stations, afraid that they will not be able to examine the
products or, in the event of a problem, address it directly.
• Get the picking approach right. While pure online players use semi-automated shadow
warehouses to pick groceries for customers, some traditional retailers also run store-picking
systems. Shadow warehouses provide almost triple the efficiency of traditional stores.
Today’s shadow warehouses are mainly located close to urban areas. Traditional food retailers often
start with store-picking systems to keep costs low and build the shadow warehouses as the market
grows. Once again, these findings show the trade-off between seeking upfront savings and investing
in the benefits of long-term efficiency.
Success factors
These factors focus on how to succeed in the online grocery market.
• Educate customers. One striking finding from our study is how many shoppers are not even
aware that online grocery service exists. Eighty-two percent of our respondents have no experience
with online food retailing, and only 1 percent say they buy groceries online on a monthly basis.
Many online grocery stores are difficult to find online, and traditional retailers haven’t yet
aggressively advertised their online shopping efforts.
Additionally, many online food shoppers use the Internet to obtain a few select products— almost
always dry goods—that are cheaper online, difficult to find elsewhere, or more convenient to
have shipped. While these customers are easy to target, massive marketing and communication
is required to convince them to buy more groceries online.
• Develop a unique selling proposition. A successful business normally stands out by offering
something unique to customers. Online food retail still struggles with this. Most players assume that
the unique selling proposition is the time saved through home delivery or store pickup, and our study
findings support this view. As one online shopper explains it, “I can order at any time and it gets
delivered to my flat when I am home.” As a result, current online retailers say they target customers
with time constraints. Tesco’s Home plus has succeeded in this area (see sidebar: Groceries, a
Smartphone, and the Subway). However, product selection is also important, as more than 40
percent of our survey participants say they shop online to obtain a product they cannot easily find
elsewhere (see figure 2 below).
Figure Why do people buy groceries online?
Study participants who have bought food online
• %
€ %
‚ƒ%
‚„%
…%
„%
Home Unique Curiosity Time Price Promotionsdelivery online
product
• Win their trust. Customer retention is a major challenge for online retailers, and turning this problem
around starts by minimizing mistakes—which already-skeptical consumers may not forgive. Because
customers are not able to touch online products, they cannot be certain about the quality and are
often wary of the inconvenience of getting a refund for defective goods. One person in our survey
says, “I do not shop online regularly, first because I have to plan ahead to take the delivery, and
second, when I shop online, I often do not get the items I order.”
Because shoppers are generally satisfied with traditional food retailing, online shopping must offer
additional value while also upholding (or surpassing) traditional standards. This might mean higher
operating costs during start-up to ensure excellent picking operations, or a higher rate of spoilage
because of selecting only the freshest goods.
Smart Shopping, Smarter DeliveryIn most Western countries, the online food market is still in its infancy and a niche segment. One
reason is that initial investments are high, with outlays required for infrastructure (mainly new or
upgraded operations), software, and marketing, among other things, and potentially higher operating
costs. The investments also come with higher risk because of market
uncertainties. A well-balanced assortment is vital for sustainable growth as profitability, logistics
requirements, and costs differ significantly across product categories (for example, canned food versus
fresh food).
Pure online grocers find it difficult to enter the market on a broad scale, because of fierce price competition
and start-up costs. They are more likely to operate as niche players in large metro-politan areas working
with logistics and shopping partners (such as Amazon) to provide home delivery services. They primarily
sell small assortments of premium fresh products geared to less price-sensitive shoppers.
Traditional grocery retailers will not enter until they have looked at the risks and rewards of being an online-
food retail pioneer. Those struggling under competitive pressure are most likely to enter as part of a
differentiation strategy, offering an online channel as an additional service. Any competitor that goes big into
online retail will entice others to follow. Traditional grocers will need to decide between staying traditional
and risk losing long-term market share, or investing now to gain an edge in a promising market.
Whether talking to a niche online grocer or a traditional grocer with an online presence, both understand the
importance of providing customer-friendly delivery plans. Most online grocery shoppers prefer (and are
willing to pay for) home delivery over pickup. But, they are neither willing to stay home all day to wait for
their groceries, nor are their homes set up for grocery drop-off, especially fresh goods that require cooling.
In many ways, smart delivery solutions are the tipping point for online grocery success.
4. Literature review
This study identifies variables with a significant influence on residents’ preference for using a grocery store at a proposed infill development in their neighborhood, and roughly quantifies their desire for the new store by comparing significant preferences and current behaviors.To understand the inner workings of this topic it is necessary to understand existing scholarly research in several areas, and to understand the history of the River Road nodal development. The scholarly research reviewed in the report include : land use, especially urban sprawl, smart growth and nodal development; an overview of the retail grocery industry; and a look at consumers’ decision making behaviors. The site specific information in this study covers the details of nodal development in lower River Road, and a brief overview of the Community Planning Workshop’s Neighborhood Needs Survey Report.
Urban Sprawl
Urban sprawl is the unplanned, uncontrolled spread of urban development along the edge of a city (Gale 2009). Urban sprawl consumes significant amounts of resources, adds to travel costs, and creates large areas with uniform land uses (Burchell 1998). The burden of sprawl on living systems can be seen in the deterioration of natural areas, water and air pollution, and the depletion of non-renewable resources (EPA 2009). Humans are not immune from the deleterious effects of urban sprawl. The growth pattern contributes to socio-economic segregation (Talen 1999), (Frumpkin 2002), breaks down social networks (Putnam 2000), Freeman 2001), and
contributes to obesity and other illnesses (Ewing & Mcann 2003), (Ewing, et al 2003).In spite of its deleterious effects, urban sprawl is intimately linked to the fulfillment of “The American Dream.” US citizens like urban sprawl because it dilutes congestion, accommodates unlimited automobile use, provides a heterogeneous economic mix, and fosters neighborhoods separate from blighted core areas where housing values will appreciate (Gearhart 1999).More and more, decision-makers in the US are recognizing that the short term economic benefits of sprawling development can’t outweigh the cost of sprawl on the public sector (Litman 2003). Opening a new highway may bring jobs and tax revenue to a municipality now, but the burden of providing services and maintaining roads outweighs the tax benefit when the area is developed at a low density (Hirshman 2009). In our collective rush to spread roads that serve sprawling needs, our country has under-funded infrastructure, postponed replacement of outdated infrastructure, and not taken full advantage of technological improvements in infrastructure.The River Road neighborhood where this study takes place could not be considered “sprawl.” Rather, it is a historically rural community that the City of Eugene has grown around. The River Road neighborhood now occupies a central location in the Eugene area. Because of its rural history it has a low population density and presents a viable opportunity for nodal development – urban growth that embodies smart growth principles and seeks to counter sprawl.
Smart Growth
Our country’s backlog of infrastructure repairs and increasing health care costs point to the fact that we can no longer afford the sprawling development that has been commonplace for the last 50 years. “Smart Growth” is the term for land use patterns that seek to mitigate the worst costs of urban sprawl.The Urban Land Institute explains that Smart Growth is development that accommodates growth in economically viable, environmentally responsible, and collaboratively determined ways. It calls for building communities that are more hospitable, productive, and fiscally and environmentally responsible than most of the communities that have been developed in the last century. Smart Growth seeks to identify a common ground where developers, environmentalists, public officials, citizens, and others can all find acceptable ways to accommodate growth (Porter 2002).
The Smart Growth Network recognizes that the values expressed above have different meanings in different communities. To promote a comprehensive definition of Smart Growth, the group formulated ten common smart growth principles. The principles that have the greatest bearing on the topic of this paper are the principles of promoting a mixture of land uses, and promoting growth within existing communities. These principles are meant to optimize existing infrastructure, increase community tax bases, increase the proximity of jobs to housing, and preserve rural open space. However, they raise the question of how existing communities can redevelop without losing their existing neighborhood character.
Nodal Development
Nodal developments are one method for incorporating smart growth principles into existing communities. Nodal developments are high density, pedestrian friendly developments that combine commercial uses with multi-family and single-family dwelling units. They are a desirable method for integrating smart growth into existing communities because they balance increased housing densities with the jobs and commercial services needed to support those residents. Nodal developments increase the number of destinations within walking distance for neighborhood residents and can become local centers that evoke civic pride. In Lane County, Oregon, where this study takes place, Nodal developments are considered an effective infrastructure investment for “fostering compact development patterns in communities, encouraging the availability and use of transportation alternatives, enhancing livability and economic competitiveness (LCOG 2002).This study will focus specifically on resident opinions related to the development of a nodal development in the River Road neighborhood of Eugene, OR. A 2007 market evaluation determined that there is a need for 40,000 additional square feet of retail development in the neighborhood by 2015. The development concept promoted in conjunction with the evaluation proposed a 15 acre development with 250 housing units, and 60,000 square feet of retail with the
anchor tenant being a 20,000 square foot supermarket. Retail space is provided over the amount needed by 2015 because the development site lies over existing commercial areas where square footage will be lost (Hovee 2008).River Road community members have identified in multiple surveys that a supermarket is the commercial tenant they want most in the proposed development. Research by Condon and Handy echoes this desire – in general, supermarkets are the commercial tenant residents desire most for infill developments. Local desire for a grocery store can be further explained by the closure of a Safeway store in the neighborhood in September 2007. The reason that grocery stores are perceived as valuable additions to a residential neighborhood lies in both the utility of grocery shopping trips and trends in the grocery retailing industry. In the following sections of the literature review I will first provide a brief history of grocery retailing, then define the spectrum of typologies defining retail grocery outlets. Then, I will review current research on consumers’ grocery shopping preferences.
Grocery Retailing
Over the last century, grocery retailing in the US has been characterized by a reduction in store locations, but an increase in store size. Average annual sales per grocery store grew from about$195,000 in 1934 to about $3 million in 1991 (both in 2008 dollars). Today, the store type that shoppers are most familiar with, the supermarket, averages around $17 million in sales per year. Average grocery items per store increased from 867 in 1928 to 45,000 in 2006. As grocery stores increased in size, the total number of grocery stores decreased from 386,900 in 1939 to 168,016 in 1991 (Messinger 1995). Today there are about 34,000 supermarkets with annual sales over $2 million in the U.S. (FMI 2007).In “Retail Concentration, Food Deserts and Food Disadvantaged Communities,” Troy Blanchard and Thomas Lyson (2003) describe the causes and impacts of growing supermarket sizes:
“The impetus for the shift from a large number of widely dispersed small scale local grocers to a concentration of supermarkets and supercenters into a limited geographic area has been fueled by the globalization of food production and distribution resulting in a handful of corporations controlling the majority of sales Globalization allows supermarket and supercenter chains to purchase large quantities of food from suppliers in order to sell at lower prices. The buying power possessed by large retail chains, such as Wal-Mart, Target, Sam’s Club, Albertson’s, and others, provides these corporations a distinct advantage over smaller chains and “mom and pop” grocers.”
The majority of grocery shopping trips are made to “supermarkets.” The Food Marketing Institute (2007) defines a supermarket as, “any full-line self-service grocery store generating a sales volume of $2 million or more annually.” Other traditional grocery store formats include: food/drug combo stores, warehouse stores, super warehouse stores, limited assortment stores,
corner groceries, and convenience stores. The popularity of the supermarket and other traditional formats are in decline as a variety of new store formats are increasing in market share.
The supercenter is a recent addition to grocery retailing. It is a large food/drug combination store and mass merchandiser under a single roof. The most popular retailer in the new format is Walmart. The company opened their first supercenter in 1988. Non-traditional food retailers include hypermarkets, supercenters, warehouse clubs, mini-clubs, drugstores, dollar stores, specialty markets, fresh format stores, and the internet. For more information on these store types see Figure 2.1. Non-traditional retailers are a rapidly growing market segment. When Walmart opened its first supercenter, 13.8% of food purchases were made at non-traditional stores. In 2006, 32.6% of food purchases were made at non-traditional stores (Martinez & Kaufman 2008). The following literature on shopping preferences sheds some light on the reasons for the success of large format stores and provides the basis for the variables analyzed in this study.
Figure 2.1 Traditional and Non-traditional Grocery Store Formats
Retail Grocery Shopping Behavior
Food is essential for life and the average U.S. citizen spends about 6% of his disposable income on groceries (FMI 2006). However, the variables considered by individuals when they consider which grocery store to patronize and how to do it range from utilitarian to emotional.Marion (1991) states that we classify grocery stores by the range of “prices, services and products” that they provide. Different combinations of these variables are enticing to different types of consumers and the strategy of the grocery store determines its customer base.Figure 2.1 shows that non-traditional grocery store formats that offer very low prices like deep discount drug stores, and limited assortment stores have increased in popularity. However, fresh format stores and internet grocers that offer items at a premium price have increased in popularity as well. Industry wide, retailers are able to offer relatively lower prices because increased store sizes allow locations to profit on smaller per item margins.The products that some shoppers desire most are fresh fruits, vegetables, meats, and dairy. An increasingly popular store type is the “fresh format” store that emphasizes perishables – usually ethnic, natural or organic products. These stores will also carry special prepared products that emphasize health concerns like preservatives and transfats (Martinez & Kaufman 2008).Another product based marketing technique is providing general merchandise or services like banking and vision centers in conjunction with grocery items. They success of this format can be seen in the increased market share of supercenters (Messinger 1995).
Tauber (1972) hypothesizes that the motivation to shop includes desire for the activity of shopping as well as “prices, services and products.” Some people are merely “shopping” for physical activity, sensory stimulation, or social motives. Handy and Clifton (2001) found support for this shopping mentality from respondents who replied, “My wife uses our supermarket because she says it has personality,” and “My supermarket plays better music!” These shoppers are likely to have a specific type of shopping experience in mind when they consider what grocery store to patronize.
The grocery retailing industry has responded to these emotional shopping desires with advertising campaigns that emphasize the social consciousness of their corporations, customized marketing campaigns, and creating more pleasant shopping environments (Martinez & Kaufman 2008). Other considerations of shoppers include local ownership and local products.Grocery stores that meet consumers’ price, product, service, and emotional needs may not be patronized if they are difficult to access. The gravity model of travel behavior suggests that minimizing travel costs is the dominant variable influencing destination choices (Huff 1964), and Holton (1958) adheres to this model by defining grocery shopping trips as “convenience” shopping trips, where the consumer purchases goods “frequently, immediately and with minimum effort. Considering Tauber’s emphasis of the non-product benefits derived from
shopping it is more likely that grocery shopping trips are not purely based on proximity. Grocery industry research supports this idea by indicating that 70% of the variance in people’s choice of grocery shopping destination is determined by the location of the market (Progressive Grocer 1995). Consumers in store-dense areas are less likely to use proximity as the defining store choice variable. Handy and Clifton (2001) found that store choice models suggest the greater the distance between a household and the closest store the less likely residents are to bypass that store to shop at a further option.The vast majority of shopping trips are made by personal automobile (NHTS 2003). However, some neighborhoods allow more opportunities to use alternative transportation for shopping trips. In highly accessible areas walking and biking become desirable over travel by personal vehicle because of the difficulties associated with congestion and parking (Frank & Pivo 1994). Not all alternative transportation users live in dense urban areas. The existence of the desire to use alternative modes for shopping trips may be attributed to the impact of attitudinal and lifestyle variables on travel demand (Bagley, Mohktarian 2001). Residents want to walk or bike to get groceries because, well . . . they want to.The conventional unit used to measure travel behavior is “trips” - direct travel from an origin to a destination. However, consumers often plan their trips so they can travel to a similar location for multiple unrelated needs; or maximize the advantage derived from a required trip by visiting an additional shopping destination (Krizek 2003). Both of these behaviors are called trip chaining.Trip chaining limits the effectiveness of conventional trip based travel analysis because it obscures the reason consumers choose to travel to a particular grocery shopping destination.The lifestyle variables that shape shopping preferences and shopping travel demand have a strong correlation with the demographics of the shopper. The primary demographic variable considered in the literature on grocery store choice is household income. Income influences the degree that the consumer is able to look away from low price options and indulge his emotional shopping needs. Household size is also an important factor because it influences the “basket size” of the shopping trip. Age of household members is also an important consideration because consumption patterns vary over an individual’s lifespan. Shopping travel behavior also varies with age. Another important household characteristic is vehicle access. Households without an automobile have difficulty accessing distant stores and making large purchases.
Neighborhood Needs Survey Report Summary
The literature review concludes with an overview of the methodology and results of the Neighborhood Needs Survey drafted in the 2008 report by the Community Planning Workshop.
Survey Methodology
The Neighborhood Needs survey was mailed out to a random sampling of River Road neighborhood home owners within approximately a one mile radius of a proposed mixed use
development site. The sampling area is shown in Figure 3.1. The survey included seven pages of questions regarding residents’ shopping trip travel modes and shopping preferences. It also asked residents to project changes in their behavior based on the existence of additional shopping options in a local Study Area. The City of Eugene mailed out 1500 surveys and received 379 surveys back, a 25% response rate. Assuming the survey sample was perfectly random and there was no response bias then the survey has a ±2.5% margin of error at the 95% confidence interval. In simple terms, this means that if survey were conducted 100 times, the results would end up within ±2.5% of those presented in this report.
Survey Results: Demographics
The Community Planning Workshop found that respondents under 44 were under-represented when compared to the River Road population. This may be due in part because the survey was sent only to homeowners and likely excludes residents under the age of 18. Younger people are more likely to rent and less likely to own than older age groups. Survey respondents were over- represented in all age categories above the age of 55. The overrepresentation is typical of mailed surveys, but may not be quite as extreme as indicated - nearly 55% of survey respondents said that they had lived in the River Road neighborhood for 10 years or more. This population has “aged in place.” Today, 2000 Census demographics would not accurately represent their age groups.Two-person households were the most common household size for Neighborhood Needs Survey respondents. The average household size was 2.31 persons. This is slightly lower than the 2.48 person average household size recorded for the area in the 2000 U.S. Census.About one third of survey respondents reported a household income between $50,000 and$74,999. An additional 27% made $25,000 to $49,999. As compared to 2000 U.S. Census data, the Neighborhood Needs Survey has more response from higher income households and less response from lower income households. Part of the discrepancy between the Census and Survey data can be accounted for by inflation. A household earning $42,000 a year in 2000 would be making $50,000 a year in October 2008.
It is important that the reader realize that the conclusions drawn in this article are based on the opinions of lower River Road homeowners that may be older and wealthier than the average resident.
Survey Results: Shopping and Travel Behavior
Nearly two thirds of survey respondents indicated they make “very few” or “none” of their shopping trips in the neighborhood. Less than 10% indicated they made “all” or “most of them” to destinations in the neighborhood. The most commonly used shopping location outside the neighborhood is the Santa Clara/Division Avenue shopping area. The types of commercial
businesses that respondents would like to see more of in the neighborhood include a grocery store, and a restaurant or café.
Ninety-seven percent of respondents stated that the quality of the product or service they purchased was an “important” factor in determining where their household shops. Some aspects of “quality” that are important to respondents include organic food and locally grown food, However the majority of respondents prefer conventional groceries. Forty two percent of the respondents’ indicated they purchase local produce “very often” or “often.”The majority of residents drive on shopping trips, but a considerable percentage walk or bike as well. Respondents recognized the lack of close destinations and the quantity of motor vehicle traffic as the two factors preventing them from using active transportation modes more often. If more services were available in the neighborhood, 60% of respondents said they would drive less often, 71% would walk more often and 63% would bicycle more often.
5. Objectives and hypothesis
Objective
Small grocery store companies have many objectives. They usually outline these objectives in their business plans well before the start of new fiscal years. These companies can best reach their objectives by staying customer-focused, offering products and services their customers want. That is why most grocery store companies also develop comprehensive marketing plans to reach their key objectives. Marketing plans help the owners better define their target customers and store concepts, such as whether they serve specialty markets like organic food eaters.
Building Sales and Profits
The major objective of most grocery store companies is to sell products and earn the highest profits possible. However, grocery store owners face major competition from other retailers like restaurants and mass merchandisers. One strategy grocery stores use to counter the competition is to serve more take-out meals, according to a December 2009 report from the Bureau of Labor Statistics. These ready-to-eat meals serve the customer sector that is looking for convenience. Small grocery store companies may also offer movie rentals, check cashing services and non-food products to build sales and profits. These strategies focus on customers more interested in one-stop shopping.
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Increasing Customer Traffic
Small grocery store companies also strive for more customer traffic in their stores. The best way to achieve high customer traffic levels is to locate stores in high-traffic areas. This may include business districts or areas close to residential or apartment buildings. Customer traffic can also be enhanced by providing plenty of parking spaces and easy access to and from major roads. Owners can also increase customer traffic by providing proper lighting and security for those who shop at night. For example, a small ethnic grocer may hire a security guard at night to patrol the parking lot.
Building Customer Loyalty
Small grocery store companies aim to increase customer loyalty in their stores. Loyal customers are those who repeatedly come back each week. One way a small grocer builds a repeat customer base is through loyalty programs. Loyalty programs are designed to reward customers according to their purchase volumes. These rewards can include coupons on popular items or even free products. Grocers may distribute magnetic stripe cards to track customers' purchases. These plastic cards can be obtained through marketing agencies that specialize in merchandising.
Improving Department Ratings
Some grocery store companies conduct periodic marketing research on their various departments: Produce, deli, meat, dairy and customer service. The impetus behind such research is that grocery stores are only as strong as their weakest link. Customers expect high-quality food and exceptional service when shopping for groceries. They expect the quality and service to be the same whether they are shopping for dairy products or produce. Grocers can hire marketing research agencies to conduct phone surveys among customers, for example. Each department may be rated on quality, service, cleanliness and other key factors. The research company may use a 1-to-5 rating scale for each of the attribute ratings -- with 5 being the highest. Customers should be encouraged to make comments on their ratings. That way grocers can study the survey results and make the necessary changes to upgrade certain departments.
Hypothesis
Being a new business category, online grocery shopping has received less attention so far. Few researches have been made in this field till now. Bangalore based online grocery store “Aaraamshop” has started publishing an annual report of its sales online which gives some insights into the current state of online grocery in India across various cities. The major observations from these reports and other researches are:
1. Number of male buyers has been increasing over the years and now it is higher than the number of female buyers
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2. 75% of buyers are above 24 years. Online grocery is not a “Youth” thing. 18-24 year olds consist of 24%
3. Average purchase value of men increased to Rs.580 and crossed that of women at Rs.552
4. Most orders are done between 6:00 A.M to 12:00 P.M and 90% of them are same day delivery requests by late afternoon or by early evening
5. Mostly buying happens on Saturday, Sunday and Monday6. Share of top brands decreased indicating that buying pattern has spread out over a large
variety.7. Brands like Aashirvad, Amul and Haldiram continue to top sales both in value and
volume8. Many people claim that they purchase goods only of select brands, but when inside a
store they make their decisions based on the best deal available9. People feel grocery shopping as a chore and they do not like spending time on it. They
believe that that time could be used for some leisure activities10. If information of prices of products are made available, people instinctively switch
stores to buy from the lowest priced shop. They tend to purchase from big stores mainly because of the convenience they provide
6. Research Methodology
The study adopts an online secondary research data collection followed by a primary survey based research. In the first phase, i.e., the secondary research, information was gathered from various websites online and the distribution of residential sectors in Gurgaon was identified. Details regarding the population, apartment buildings, shopping options in the vicinity and distance to nearest store are collected with as much detail as possible. The second phase of the research employs this data to identify the areas to be covered for the primary survey.
6.1: Research Questions
The research is mainly aimed at getting answers to a specific set of questions which are mentioned below.
1. How much time do people spend shopping groceries?2. Do people like spending time on grocery shopping?3. Share of wallet for groceries?4. What is more convenient delivery or pick-up?5. Where do they buy groceries – Branded stores like “Big Bazaar” and “Easy day” or
local Kirana stores or vegetable carts?6. Type of store for small purchases and big purchases.7. People's’ propensity of swapping brands based on price
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6.2: Benefit of Research
The aim of this project is to identify and get deeper insights into the consumer’s perspective of online grocery shopping and thereby form an effective marketing and sales strategy for the company. It is also aimed at evaluating the USPs of the Savegenie website with the consumers. The questionnaire is designed in a way that it not only is used in the survey but also serves as a subtle marketing tool for the company. The analysis of the research data will also help in identifying the costs that will be incurred in setting up canopies and distributing fliers in different places. The marketing strategy will be formed in a way that maximum people can be tapped with minimum resources.
6.3: Expected resultsThe analysis of the data was expected to provide greater insights into the buying pattern of consumers in grocery shopping. The main answers looked for are people’s propensity to swap brands and switch stores based on price differences. This helps in estimating how big the Savegenie product can expand to be. Also the analysis was expected to provide details of the demographic, geographic and economic distribution of the target customers to formulate the marketing and sales strategies effectively.
Research Design
6.5: Sampling Frame
The targeted sample for data collection was a minimum of 1600 responses with not less than 100 responses from each targeted sector. It was agreed that the sample should consist of respondents of different age groups with at least 60% responses from people between 25 and 40 years of age.
6.6: Data Collection Procedure
The study involved a focus group discussion to prepare a questionnaire, which when used in a survey, serves as a study of the target market and also as a subtle marketing tool for savegenie. The questionnaire was designed in such a way as to find out the consumer’s propensity to switch between various SKUs, brands and stores to save money and also to find their willingness to buy online. Instead of targeting shopping malls, residential areas and vegetable markets are targeted for data collection to get better responses from the target market. The data collection procedure employed going to people shopping for groceries, asking them the questions and manually entering their responses in the questionnaire.
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6.7: Data Analysis and Form of Outputs
The data analysis was done using Microsoft Excel and the various outputs were depicted in pie charts and bar charts. The detailed looked out for are:
1. Descriptive statistics – Frequency analysis of all the factors2. Residents economic class distribution among the sectors3. Areas where people from most sectors visit4. Frequency of grocery shopping and average monthly spending on grocery5. Propensity to swap brands and switch stores6. Readiness to shop online for grocery
Detailed Description
The major operations of Savegenie can be divided into two categories viz. B2B(BUSINESS
TO BUSINESS) operations and B2C(BUSINESS TO CUSTOMER) operations
B2B(BUSINESS TO BUSINESS) Operations
The B2B(BUSINESS TO BUSINESS) operations of Savegenie are carried out in the following fashion:
• Savegenie team approaches a store.• The team explains about the website and its commercial benefits.• Store is interested in partnership with Savegenie.• Store agrees and allows Savegenie to collect data about SKUs and prices.• Savegenie collects data of all SKUs and its respective prices in the store.• Data is organized and stored in the standard format comparing to the master database.• Store chooses a suitable plan to serve the households, from the schemes available.• Store writes a cheque to Savegenie for the selected scheme.• Savegenie and the store come in to contract and a legal agreement is signed.• Store has to abide by all the points mentioned in the agreement.• Store registers to the site by entering all the details like store name, slots available, pick-
up and delivery options, store open and close time, liaison details, areas to be served, etc.
The revenue generation model of Savegenie has been decided to operate according to the following table:
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Table 1: Revenue generation Model
Store Selection Criteria :
Vision- To have stores as partners who have vision to differentiate and provide value added services and financial and strategic capability to understand new age selling
Kind of phone he is carrying Kind of till (any computerized/semi computerized selling aid in shop) Behavior towards customers (consultative/smiling/matter of fact/annoying) Physical look and dressing etiquettes Size of store Variety of products Variety of brands Willingness to be e-enabled Personal ambition and strategy if any Arrangement in shop Behavior towards his employees Home delivery MRP/Discounts Credit card /no credit card Professionalism Age group Language spoken Kind of hoardings/sales material Number of sales staff Ability of store owner to create a larger mega store through alliances in his area Ability to invest around 25k for training and software /hardware installation and pay 3
months of rental in advance.
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Store Household Ratio:• Sales Target- each store on average should get INR 200,000 per month as gross revenue
from our website i.e. approx. INR 20,000 of gross profits
• Assuming each household has monthly spend of INR 8,000 and we get 50% share within 6 months, 1 household will give gross revenue of 4000.
• So each store should on average be serving a min of 50 households
• Given our target penetration rate of 15% of households in a chosen area in one month, we shall not have more than 1 store for 330 households
• So for example maximum number of stores in 4 sector should not be more than 10 (2200 odd houses, including tenants and nuclear sub units around 3300 households)
• Each store can serve a few areas of his choice including the area which he is residing in. we can probably restrict the geographic area he can serve in basic tier membership. We can have tiered rental rates and commission structure based on geographic reach a store wishes to have
• Gurgaon has around 150,000 households. Assuming relevant market is 30%. 45000 households is our target and assuming penetration of 15%, our immediate target is 6750 households for which we need 135 stores to start with.
• With our target of 40% penetration we can go up to 360 stores within 6 months.
• Delivery areas Decision:• Objective criterion
– Household choice criterion– High target density– Vertically spread buildings preferable than horizontal spread
• Subjective criterion– Feedback/demand from stores– Ease of identifying households or navigating through area– Cash on delivery success
B2C(BUSINESS TO CUSTOMER) Operations
Households Divide Gurgaon into 6 units Select areas in this portion to deliver:
– Granular data on housing blocks (identify GPRS co-ordinates, google map data)– Resident size– Internet penetration– Quality of households
Income group Occupation Habitant or expat Shops currently serving these areas Size of shop Variety of goods available Format of shop
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Proximity to large format formal branded store like Reliance etc. Home delivery data if possible (how many shops and do people order over phone) Variety of shops Peak hour data of shops- how much local crowd buys from local shops Number of shops within 1 km of household Variety of shops (stationary, kirana, food, multiple stores, pharmacy etc.)
Household Buying behavior:
Who buys the goods? maid, owner, young family member, breadwinner, parents of the breadwinner
Frequency at which they buy the goods Average ticket size of the goods Do they change buying behavior if the shopkeeper recommends them something Do they ask shopkeeper to choose their brand Can shopkeeper easily substitute the brand What all products can you see in the basket of the people who are leaving the market
(variety of products) What all the people do in the market when they come in What kind of clothes are the wearing (sports, casual, formal office wear)
Households Choice Criterion:
Vision- To convert 15%, 30%, 40% of households in the community to be buyers from Savegenie within 1/3/6 months of launch in that area and gain a share of wallet of 50% or INR 4000 per household per month
High internet penetration Working nuclear household with expat population density-high High Average ticket size Proximity buying high Parent buying low Home delivery percentage high. IT/BPO or new age sector professional high.
Marketing and Promotional Strategies
Branding Store
– Hoarding carries Savegenie logo and Savegenie registered store– Employees at least delivery staff wears Savegeniet-shirt– Delivery staff trained on etiquettes to display Savegenie values and
SavegenieBehavior– All paper bags /poly bags carry Savegenielogo
Delivery– Delivery Staff– Packaging– Environmental benefits due to “car-pooling” of groceries
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– Use segregated delivery trays (second round not initially) to deliver clients goods in environmental and food safety mechanism
– Delivery cycle/bike Social Media integration
– Integrate in code Facebook like status at time of delivery confirmation, order booking, time and money savings etc.
– Tweet about our campaigns and what customers have to say Local newspaper and print media advertising Hoardings to launch /showcase success Social
– Take up high visibility low cost community projects (second stage)
Area Launch Strategy: Canopy
– Demonstrate key product features– Assist in navigation– Inform about a demo video– Inform through pamphlets the number of stores serving that are and their profile– Inform about the free gifts on registration and buying– Use political discourse and political messaging around that time to transfer interest on
to us like tame inflation etc.– Door to door campaign (with effective MIS) to target high conversion rates– Team exchanges to capture the last household
Media Advertising– Poster/pamphlet/newspaper campaign– You tube , Facebook and other campaign– Provide transparent feeds to let registered customers know the people who are being
added periodically– Reproduce original saving rates, time and money both through social media and
emails/SMS– Targeted SMS campaign– Use mobile videos to spread the word around
Use Local elderly people and community leaders– Identify local influencers and demonstrate them for wider VOC campaign
Stores– Use local stores area of influence and his client sets to make a noise about Savegenie– Give the local stores free visiting cards or pamphlets which they can use to spread
word about their new e-strategy– Local store should ideally have a demonstration video
Outcomes of the project6.8: Time frame
The internship consists of four stages which have to be executed over a period of two months. The stages and their approximate time periods are given below.
I. Stage – 1 : Secondary research (Week – 1)II. Stage – 2 : Primary research – Collection and analysis of data (Week – 2 to week – 4)
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Data is collected over a period of 3 weeks till the targeted sample responses are received. An average of 80 responses was collected per day.
III. Stage – 3 : Formulation and presentation of marketing and sales strategies –Estimation of costs, logistics and necessary resources (Week–5 to Week– 6)
IV. Stage – 4 : Execution and generating leads (Week – 7 to Week – 8)
6.9: Analysis of data collected from the researchFor the survey people from various parts of Gurgaon were given a questionnaire and then asked for their responses. Based on the responses, the following research analysis have been carried out. The total number of samples in this case is 1098.
Fig 1: Gurgaon Map
For simplicity, entire Gurgaon was divided into 6 divisions and the research was then carried out.
Group A: Sector 4,5,7,8,9,9A,10,10A,11,12,12A,33,34,36,37,37C Group B: sector
2,3,13,14,15,17,17A,17C,18A,18B,19,20,21,21A,21B,22,22A,23,23A,31,32 Group C: Sector 24,25,26,26A,27,28,29,41,43 Group D: Sector 51,52,53,54,55,56 Group E: Sector 48,49,57,58,61,62,63,65,69,Sohna Road Group F: Sector 30,38,39,40,44,45,46,47,50
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Based on the responses collected the following analysis has been made.
6.10: Analysis
28%
21%27%
24%
Income Distribution
Under 35000 35001-6000060001-100000 >100000
Fig2: Income Distribution on a monthly basis
Sec 14 Sec 22 Sec 23 Sec 27 Sec 29 Sec 4 Sec 47 Sec 49 Sec 570%
10%
20%
30%
40%
50%
60%
70%
80%
Visitor’s economic class
Under 35000 35001-6000060001-100000 >100000
Fig3: Sector wise SEC
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A B C D E F0%5%
10%15%20%25%30%35%40%45%50%
Residents economic class
Under 35000 35001-6000060001-100000 >100000
Fig 4: SEC based on different groups
Sec 14
Sec 22
Sec 23
Sec 27
Gale-ria
Sec 27 MG
Road
Sec 29
Sec 47
Omaxe
Mall
Sec 49
Sec 57
Sec 4
A 0.197916666666667
0.008695652173913
08
0.080459770114942
5
0.129629629629629
0.212121212121212
0.165413533834586
0.333333333333333
0.040540540540540
5
0.057971014492753
6
0.850000000000001
B 0.59375
0.826086956521739
0.862068965517239
0.111111111111111
0.212121212121212
0.285714285714288
0.096774193548387
3
0.027027027027027
2
0.014492753623188
4
0.05
C 0.135416666666667
0.104347826086957
0.034482758620689
7
0.379629629629632
0.227272727272727
0.293233082706767
0.053763440860215
4
0.067567567567567
6
0.014492753623188
4
0
D 0.041666666666666
7
0.017391304347826
1
0.011494252873563
2
0.240740740740742
0.196969696969697
0.060150375939849
7
0.043010752688172
0.027027027027027
2
0.521739130434786
0
E 0.010416666666666
7
0.043478260869565
2
0.011494252873563
2
0.027777777777778
1
0.060606060606060
6
0.060150375939849
7
0.311827956989251
0.797297297297298
0.362318840579712
0.075
F 0.020833333333333
4
0 0 0.111111111111111
0.090909090909091
1
0.135338345864662
0.161290322580645
0.040540540540540
5
0.028985507246376
8
0.025
5%25%45%65%85%
Survey locations
% o
f v
isit
ors f
ro
m e
ach
are
a
Fig 5: Sample Sector Mix
37
Female
Male
0% 20% 40% 60% 80% 100% 120%
Online Shoppers (Gender)
Yes NoFig 6: Gender mix of Online Shoppers
<25
25-40
41-50
>50
0% 20% 40% 60% 80% 100% 120%
Online Shoppers (Age)
Yes NoFig 7: Age mix of Online Shoppers
38
Female Male0%
20%40%60%80%
100%
Pick-up preference
No Yes
Fig 8: Pick-up vs Home delivery
Time Variety Convenience Price0%
10%
20%
30%
40%
50%
60%
37%42%
35%
43%
51%45%
35% 35%
Female Male
Fig 9: Sales pitch for men and women
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Sec 14
Sec 22
Sec 23
Sec 27
Gale-ria
Sec 27 MG
Road
Sec 29
Sec 4 Sec 47
Omaxe
Mall
Sec 49
Sec 57
Time
0.37254901960784
5
0.43037974683544
6
0.5 0.52727272727272
7
0.61538461538461
6
0.28333333333333
3
0.6875
0.52083333333333
4
0.63888888888889
3
0.25
Convenience
0.07407407407407
41
0.30985915492957
8
0.50980392156862
7
0.41269841269841
3
0.41666666666666
8
0.26229508196721
3
0.5 0.36363636363636
4
0.44117647058823
5
0.8
Vari-ety
0.33333333333333
3
0.14084507042253
5
0.65671641791045
0.53424657534246
6
0.51612903225806
8
0.18965517241379
3
0.41666666666666
8
0.61764705882353
5
0.58974358974359
0.2
Price
0.3265306122449
0.53424657534246
6
0.34615384615384
6
0.33783783783784
0.34782608695652
3
0.37288135593220
6
0.38888888888889
3
0.31818181818182
0.34782608695652
3
0.5
5%25%45%65%85%
Survey Locations: Time/Convenience/ Variety/ Price
Fig 10: Survey Location parameters
A B C D E F0%
10%
20%
30%
40%
50%
60%
70%
Bulk Need-to basis
Fig 11: Order Volume preference (group wise)
40
A B C D E F G0%
5%
10%
15%
20%
25%
30%
35%
40%
<3000 3001-6000 6001-10000 >10000
Fig 12: Average monthly order (group wise)
44%
56%
Need-to basis Bulk
Fig 13: Grocery Buying Behavior
41
23%
5%
15%57%
Frequency of buying in bulk
2-3 times a month 2-3 times a weekOnce a week Once in a month
Fig 14: Frequency of Order
Under 35000
60001-100000
35001-60000
>100000
<3000 150 54 61 42
>10000 13 30 11 60
3001-6000
73 92 94 57
6001-10000
48 100 48 86
10
50
90
130
Income vs Grocery spending
Monthly Income
Groc
ery
Expe
nditu
re
Fig 15: Income vs spending on groceries
42
A B C D E F0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Fig 16: Ratio of online user
A B C D E F G0%
10%20%30%40%50%60%70%80%90%
100%
Willingness to use website with feature for store comparison
Fig 17: Ratio of people willing to explore Savegenie features
43
A B C D E F0%
10%
20%
30%
40%
50%
60%
70%
80%
Buying preference
Same brand Decide in store
Fig 18: Brand Loyalty
A B C D E F0%
10%20%30%40%50%60%70%80%90%
Brand Swapping given they look for same brand in stores
Yes No
Fig 19: Ratio of people willing to switch to other brands if offered a lower price
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7. Findings from the Research:
Survey included people from all targeted income groups. Regions with rich visitors (Greater than 60,000) :
Sectors - 14, 22, 27, 4, 49, 57 Regions with rich residents (Greater than 60,000):
Groups - A, D, E, F No effect of Gender on online shopping Target young population <40 years Males and Females shows similar behaviour when asked about their preference for
pick-up. Males give more importance to time. Females give more importance to price. In spite of having Same Brand preference, people are showing interest to swap brands
given they are priced low.
Suggestions and recommendations
According to me,savegenie.in has to develop unique, dual interfaces tailored to the expectations and needs of the first-time user versus the experienced users. For first-time shoppers, consider a comprehensive interactive tutorial that guides the journey—showing where to start and directing progress through each department/category. Provide ways for experienced users to take shortcuts and personalize their experience.
It has to grow distribution networks to satisfy desire for near-term delivery. Creating local partnerships will help them to facilitate fresh merchandise, local items, and quicker turnaround. This enhances more spontaneous shopping and usage occasions.
It has to do mass advertisement on a regular basis until word-of-mouth takes over. They need to create a sales and marketing team dedicated to the cause.
Increasing the customer visits to the site is of primary importance as this is the only way to increase sales to the retail partners. Major chains use regular advertising on daily, weekly or biweekly basis through mediums like social networking sites, newspapers etc. If multi-page insert can’t be done every week, targeted advertising can be done in various sections of the newspaper. Segments like the cooking section should be targeted as it correlates with the products being sold at savegenie.in
Introductory offers like discount coupons and cash backs should be offered to attract the customers.
Apart from mass media advertising, they can also organise some eventsinpopular public places. This will increase the recall and engagement of the customer.
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More resources has to be allocated as the company is in launch stage. The growth of the company is proportional to the input given. Hence, allocating the right human power for the marketing purpose is recommended.
Short term and long term targets have to be pre-planned and monitored on regular basis to see if the growth track is in the right pace or not.
It should also plan on creating a dedicated call centre catering to the customer needs.
Limitations of your project:
Software:– Printing technology– SDK and customization– HTML resource– Picture cutting– Website loading- call on weekend
Marketing:– Sales Manager- IIM/IIT vs full time strategy– Sales staff– Shopkeeper one time installation staff– T- Shirt– Polybag– Advertisement strategy –any other
Operations & logistics:– Training of delivery boys- outsource behavioral training (training module)– Call center– Vehicle if any– Office rental & fitment & location
Finance, Secretarial and Legal :– Bank Account– Pan Card- filed– TAN number– Accounting staff- AA initially– Capitalization to induce capital- resolution– Savegenie TM registration– Budgeting– Closure of pre -incorporation accounts
References
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Articles
Sudheer,P.(2012),Online Grocery Shopping:Rising trend in India.
Atul, M. and Hemant. K.(2011), Comparison of Online grocery business of India and western countries.
Reports
Aaraamshop.in, State of Online Grocery Stores (SOGS Report) – 2012.
Aaraamshop.in, State of Online Grocery Stores (SOGS Report) – 2013.
Google and Wikipedia.
www.Savegenie.in
www.businessknowhow.com
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