New e-grocery model in Dubai

1. 1995:
COMMERCIALIZATION
OF THE INTERNET

2. 2000:
DOT.COM
BUBBLE BURST

3. 2012:
E-COMMERCE
TOPS $1 TRILLION

4. BUT
E-GROCERY
BUSINESSES
NEVER
TOOK OFF…

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

6. FEASIBILITY ANALYSIS
OF AN
E-GROCERY MODEL
IN
DUBAI
GAURAV – RAHUL - TEAM

7. OBJECTIVES:
 E-grocery
 problems with current e-grocery models
 4-step model
 SWOT
 Feasibility analysis
 Learning from the experts
 Conclusion

8. 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.

9. TYPICAL ONLINE E-GROCERY MODEL
E-grocer
website
People place
order on the
website .
Order is
received
by the egrocer
Order gets
dispatched
from a single
hub area to
different
places.
The order is
received
typically 3-4
hours after
placing the
order.
Customer
dissatisfaction
due to long
waiting time.

10. PROBLEMS
WITH CURRENT
E-GROCERY MODELS

11. E-GROCERS
VS
CONSUMERS

12. • HIGH OPERATING
COST
• HIGH INVENTORY
MANAGEMENT AND
HOLDING COST
• LONG DELIVERY
TIME
• DELIVERY CHARGE
APPLICABLE
• NO PRICE
ADVANTAGE

13. TRANSFORMING
ADVERSITIES
INTO
OPPORTUNITY

14. THE 4-STEP MODEL

16. HOW IT WORKS…

17. 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

18. 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

19. Strengths
opportunity
4-step model
Threats
Weakness

20. STRENGTH
WEAKNESS
- Fast delivery time
- Reliance on grocery stores
- Quick response time
- Product range
- Meeting customers'
demand
- Maintaining the software
network
- Low operating cost
- Easily replicate
- Low investment
- High market penetration

21. OPPORTUNITY
THREATS
- E-grocery gaining
popularity
- Competitions from big
supermarkets
- High disposable income
- Lack of common fixed
price
- High internet penetration
- Cultural diversity

22. FEASIBILITY
ANALYSIS

23. FUNNEL APPROACH
Target Market
Target customers
Profit
generation
model
$$$

24. DUBAI

25. DUBAI
130
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

26. 1.27 km²
Al Quoz Third
16,861.4/km²
Al Bada
0.82 km²
28600.32
22946/km²
Al Baraha
1.104 km²
11890.96
7,086/km²
Al Buteen
0.07 km²
3593.28
0.125 km²
16561.92
21,451/km²
Al Garhoud
4 km²
6788.32
1,116.5/km²
0.20 km²
10354.24
34,060/km²
4.41 km²
33935.52
5,062 /km²
Al Rigga
0.89 km²
8639.68
6,386/km²
4.5 km²
9562.32
1,398/km²
4.5 km²
9562.32
1,398/km²
7.6 km²
5072.24
439/km²
7.6 km²
5072.24
439/km²
2.87 km²
45823.44
10504/km²
Small
grocery
stores
Supermarkets
22958.08
3
1
4
13 km²
138122.4
6,990/km²
Muhaisanah
Third
13 km²
138122.4
6,990/km²
13 km²
138122.4
6,990/km²
3895.76
6.16/km²
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
Small
grocery
stores
Supermarket
s
11.3/km²
Al Hamriya,
Dubai
0.72 km²
Al Hamriya
Port
0.89 km²
Al Hudaiba
0.84 km²
11702.48
9,165/km²
Al Shindagha
0.26 km²
24.32
70/km²
Al Jaddaf
7.3 km²
4544.8
409.5/km²
Al Twar First
6.8 km²
28054.64
2,714/km²
Al Jafiliya
1.63 km²
17660.88
7,128/km²
Al Twar Second
6.8km²
28054.64
2,714/km²
Nad Shamma
1.36 km²
1836.16
888.34/km²
Al Karama
1.509 km2 69424.48
30,267/km2
Al Twar Third
6.8 km²
28054.64
2,714/km²
Naif
0.561 km²
43427.92
50,928/km²
4
1
Al Khabisi
1.255 km²
10240.24
5,368/km²
Al Warqa'a Fifth
21.6 km²
760
0.23/km²
27502.88
16,155/km²
4
1
0.8 km²
53.2
44/km²
Al Muteena
First
1.12 km²
Al Kifaf
Al Warqa'a First
21.6 km²
760
0.23/km²
Al Mamzar
3.35 km²
3435.2
674.6 /km²
21.6 km²
760
0.23/km²
27502.88
16,155/km²
4
1
2.1 km²
3263.44
1,022/km²
Al Muteena
Second
1.12 km²
Al Manara
Al Warqa'a
Fourth
Al Mina
3.10 km²
6358.16
1,350/km²
Al Nasr, Dubai
1.5 km²
3752.88
1646/km²
Al Mizhar First
11.2 km²
6575.52
386.25/km²
Al Warqa'a
Second
21.6 km²
760
0.23/km²
Port Saeed
1.84 km²
680.96
243.4/km²
Al Mizhar
Second
11.2 km²
6575.52
386.25/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
Al Muraqqabat
0.78 km²
49240.4
41,532/km²
Trade Centre 2
1.91 km²
5096.56
1,755.5/km²
4
1
Al Murar
0.41 km²
30143.12
48,368/km²
Al Wasl
4.76km²
33672.56
4,654/km²
Umm Al Sheif
1.87 km²
9519.76
3,350/km²
Al Sabkha
0.13 km²
3993.04
20,207/km²
Al Waheda
1.41 km²
14981.12
6,990/km²
6730.56
1926/km2
1.12 km²
27502.88
16,155/km²
Ayal Nasir
0.17 km²
19877.04
76,923/km²
Umm Hurair
First
2.3 km2
Al Muteena
Al Nahda First
3.18 km²
912
188.67/km²
Bu Kadra
1.7 km²
296.4
115/km²
6730.56
1926/km2
3.18 km²
912
188.67/km²
Hor Al Anz
4.18 km²
61319.84
9,651/km²
Umm Hurair
Second
2.3 km2
Al Nahda
Second
Hor Al Anz East
4.18 km²
61319.84
9,651/km²
Umm Ramool
3.61 km²
7036.08
1,282/km²
Umm Suqeim
First
7.2 km²
25017.68
2,286/km²
4
2
126.16
20,890/km²
Population
density(/km2)
Nadd Al Shiba
Fourth
1
Population(2012
)
Nad Al Hammar 8.4 km²
2
Area(km2
)
Muhaisnah
First
4
Area Name
Muhaisanah
Fourth
33,771/km²
Al Dhagaya
617/km²
Al Safouh First
32549.28
25412.88
Al Safa Second
Supermarkets
27.1 km²
Al Rashidiya
Small
grocery
stores
Population
density(/km2)
Al Satwa
Abu Hail
Population
density(/km2)
Population(2012)
Al Safouh
Second
Population(2012
)
Area(km2)
Al Safa First
Area(km2
)
Area Name
Al Ras
Area Name
93.25/km²
3
1
Al Warqa'a Third 21.6 km²
Al Quoz First
27.1 km²
25412.88
617/km²
Al Quoz
Industrial First
27.1 km²
25412.88
617/km²
3
760
4
1
0.23/km²
1
4
1
27.1 km²
Al Quoz
Industrial
Second
27.1 km²
Al Quoz Second 27.1 km²
25412.88
617/km²
617/km²
672/km²
Jebel Ali 2
47.1 km²
48083.68
672/km²
Jebel Ali
Industrial
47.1 km²
48083.68
672/km²
Umm Suqeim
Second
7.2 km²
25017.68
2,286/km²
4
2
25017.68
2,286/km²
4
2
40278.48
3,840/km2
Umm Suqeim
Third
7.2 km²
6.9 km2
Jumeira Second
6.9 km2
40278.48
3,840/km2
Warsan First
17.1 km²
2159.92
83/km²
6.9 km2
40278.48
3,840/km2
Warsan Second
17.1 km²
2159.92
83/km²
Al Mankhool
25412.88
617/km²
48083.68
Jumeira Third
25412.88
47.1 km²
Jumeira First
Al Quoz
Industrial
Fourth
Jebel Ali 1
1 km2
24339.76
16,013/km2
Za'abeel First
10 km²
8030.16
528.3/km²
Mirdif
9.2 km²
12334.8
882/km²
55
18
2,063,908

27. DUBAI
130
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

28. ILLUSTRATIONS

29. 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
$190.58
items
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

30. REVENUES – EXPENSES
=
$$$

31. 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

32. 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.

33. UNDERSTANDING
THE
CONSUMERS

34. THE GROCERY
SHOPPING EXPERIENCE
How do you find your grocery shopping
experience?
Hate it
Neutral
Enjoy it
10%
25%
65%

36. DELIVERING BENEFITS
Major benefits of
shopping online
Time-saving
More products variety
Convenience
0
5
10
15
20
25
30
35
40
45

37. IDENTIFYING THE RIGHT PRODUCTS
30
Grocery products intrested to buy online
25
20
15
10
5
0
All of the above
Bul grocery items
Daily need items
personal hygine
products
Speciality items

39. LEARNING
FROM
THE
EXPERTS

40. Technology
Grocery
100%
success
Consumers
Business
Consultant

41. LISTENING
TO THE
GENIUS

42. MR. SANIT JAIN
CEO OF DIGITIZE PORTFOLIO
A website designing and maintenance firm

43. TECHNOLOGY ASPECTS
Domain
name and
online
space
$6,000
USD
Yearly
maintenan
ce cost
$2,000
USD
Web
designing
$4,000
USD
Initial
website cost
$23,000
USD
Staffs for
managing
$6,000
USD
Mobile
app
$4,000
USD
Mobile
messagin
g system
$1,000
USD

44. ACCORDING
TO THE
GROCERY’S
EXPERT

45. FAST DELIVERY
IS
THE
BIGGEST
CHALLENGE
OF E-GROCERY

46. CHOITHRAM & SONS LLC.’S
EXPERTS
Giant retail with
37 supermarkets across UAE
Suresh S. Raja, Deputy Group Procurement Manager

47. FUTURE OUTLOOK
“Positive about growth potential of e-grocery in Dubai”
Choitram entering e-grocery market by year end.

48. RIGHT TRAIN ON
THE WRONG TRACK
NO!
Quality is our priority!
Quality of products vary from store to store.
This model compromise our brand value.

49. THE
MORADIAN
WAY

50. BOMAN MORADIAN
FREELANCE CONSULTANT
Experts in:
 Productivity
 Mathematical Programming
 Marketing

51. “CUSTOMER IS MY
CEO
,WHO PAYS MY SALARY.”
Quality is not negotiable!

52. SHORT TERM SUCCESS
BUT
UNSUSTAINABLE
IN THE LONG RUN
• Backward integration is they key to success
• Transforming into a…
HYBRID MODEL

53. UNDERSTANDING THE CONSUMER’S MIND

54. DIFFERENT PEOPLE DIFFERENT PERCEPTIONS
“Long delivery time disappoints me”
“I’m young. I embraced this
idea!”

55. CONCLUSION
DONE BUT NOT FINISH
GOOD BUT NOT GREAT
COMPLETE BUT NOT PERFECT
There is always room for improvement!

56. TIME IS TOO PRECIOUS TO
BE WASTED ON
SLEEPING…

57. TIME IS TOO PRECIOUS TO
BE WASTED ON
SLEEPING…
GROCERY SHOPPING

58. THANK
YOU
Q&A