Table of Contents

Executive Summary ...................................................................................................................... 4 1. Introduction ........................................................................................................................... 5 1.1 1.2 1.3 1.4 1.5 Introduction ...................................................................................................................... 5 Origin of the Report ......................................................................................................... 6 Justification ...................................................................................................................... 6 Objective .......................................................................................................................... 7 Methodology .................................................................................................................... 8 Type of data obtained: .............................................................................................. 8 Survey and sampling: ................................................................................................ 8 Method of administering the questionnaire: ............................................................. 9 Tabulation and Data analysis: ................................................................................... 9

1.5.1 1.5.2 1.5.3 1.5.4 1.6 1.7 2.

Scope ................................................................................................................................ 9 Limitations ..................................................................................................................... 10

Overview of Online Shopping services and its prevalence in Bangladesh ................... 11 2.1 2.2 2.3 Bangladesh Economy Overview .................................................................................... 12 Market Structure of Superstores ..................................................................................... 13 Internet and Online Shopping in Bangladesh ................................................................. 14

3.

Literature Review ............................................................................................................... 15 3.1 The Fulfillment (Picking) Centre ........................................................................................ 18 3.2 The Last Mile Problem ..................................................................................................... 19

4.

Analysis and Findings ......................................................................................................... 20 4.1 Feasibility Analysis:............................................................................................................ 22 4.1.1 Market Analysis: .......................................................................................................... 22 4.1.2 SWOT Analysis ........................................................................................................... 25 4.2 4.3 Need Analysis: (The Survey Outcome) ......................................................................... 26 Business Model .............................................................................................................. 28

4.3.1 The Building Blocks of a Business Model .................................................................. 29 4.3.2 4.3.3 Operational plan ...................................................................................................... 30 Managerial Plan ...................................................................................................... 34

4.3.4 Financial Plan............................................................................................................... 35 1|Page

4.3.5 Technical Support ............................................................................................................ 38 4.3.6 Marketing Plan ................................................................................................................. 41 4.3.6.1 Target Market: .......................................................................................................... 41 4.3.6.2 Characteristics of target customers ........................................................................... 42 4.4 Challenges of Online Store ............................................................................................ 45 Challenges (to identify potential problems and risk associated with online

4.4.1

superstore in Bangladesh) ..................................................................................................... 45 4.4.2 4.5 5. 6. External environment analysis: PESTEL (Risk)..................................................... 47

Summary of Findings ..................................................................................................... 49

Recommendation................................................................................................................. 51 Conclusion ........................................................................................................................... 52

7. References:............................................................................................................................... 53 8. Appendix .................................................................................................................................. 55 QUESTIONNAIRE .................................................................................................................. 55 Survey Results: ......................................................................................................................... 58

List of Figures
Figure 1 The Market Structure of the retailing industry of Bangladesh. [Source: USDA Foreign Agricultural Service, 2004] ........................................................................................................... 13 Figure 2 Model for e-commerce in Bangladesh........................................................................... 18 Figure 3 Framework of business model ....................................................................................... 18 Figure 4 The Building Blocks of a Business Model .................................................................... 29 Figure 5 Business Model.............................................................................................................. 30 Figure 6 Operational Activity ...................................................................................................... 31 Figure 7 Enterprise Resource Planning ........................................................................................ 32 Figure 8 Partner Network ............................................................................................................. 34 Figure 9 Technical Support .......................................................................................................... 38 Figure 10 Model Website ............................................................................................................. 40 Figure 11 POS Software .............................................................................................................. 40 2|Page

List of Tables
Table 1 Emergence of Online Shopping ...................................................................................... 11 Table 2 Demographic Analysis of the Survey ............................................................................. 20 Table 3 Internet Penetration Rate in Bangladesh ......................................................................... 22 Table 4 Projected Cost Structure .................................................................................................. 37 Table 5 Security Requirements of Online Shoppers .................................................................... 45 Table 6 Projected Population of Bangladesh ............................................................................... 48

List of Graphs
Graph 1 Access to internet........................................................................................................... 21 Graph 2 Purchase of products online ........................................................................................... 21 Graph 3 Preference for shopping online for household goods .................................................... 21 Graph 4 Reasons for not preferring to shop online for household goods. ................................... 21 Graph 5 Internet users as percentage of population .................................................................... 22 Graph 6 Internet users as % of population in different countries of SAARC ............................. 23 Graph 7 Online shopping spending percentage of total monthly spending in Asia Pacific Region ....................................................................................................................................................... 24 Graph 8 Demand of High Security regarding Online shopping .................................................. 27 Graph 9 Demand for preservation of Personal Information regarding online shopping ............. 27

3|Page

Executive Summary
The beginning of Online shopping can be traced as far back as 1994 when Pizza Hut became the first pizza chain to offer online ordering or home delivery services on a test basis in Santa Cruz, California. They were closely followed by amazon.com in 1995, who created a revolution in how people do their shopping Though online shopping has become common place in the western and European countries it has yet to become popular in Bangladesh. There are only a few companies which have started online businesses at a limited scale for Bangladesh. This paper explores the prospects and feasibility of online business in Bangladesh, analyses the risks associated with such businesses and develops a business model for such an operation in Bangladesh. The study reveals a substantial scope for creating an online superstore in Bangladesh. There is a latent demand for such a service which can be realized if security and trust can ensured. The online survey reveals that interested shoppers give maximum importance to safety and security of transactions as well as the variety of products available. A further research must be conducted to design products assortment. The business model for this venture targets the urban young and develops methods for safe and secured transaction and business processes. Security is the most important risks associated with this business. Security risks are found at both the supplier and the user end. The users are most concerned of the security of transaction and their personal information. The suppliers are concerned about the security of their website as the lack of cybercrime control poses increasing risks for any business from hackers, spammers and malware. The use of IP camera will allow potential customers to get a live view of the warehouse by which they can check inventory quality and hence create revolution in the online shopping industry. In conclusion, a online superstore has great prospects in a growing economy like Bangladesh if supported by the countrys infrastructure and macro environmental factors. 4|Page

1. Introduction

1.1 Introduction
E-business is one of the fastest growing business sectors in the world. The usage of Internet around the world has grown over 400% from year 2000 to the year 2010. In Bangladesh, 3.46% of total population, a staggering number of 5,501,609 people is using internet actively which was only 100,000 back in the year 2000. These numbers encourage companies to build websites and to come up with new ways of serving their customers online. In many cases in B2C businesses this means creating an online store or a web store. In addition the number of companies that operate almost fully through the Internet is growing all the time.

The great impact that the Internet has had on the global marketplace is described aptly by Peter F. Drucker: The explosive emergence of the internet as a important, perhaps eventually major, worldwide distribution channel for goods, for services, and, surprisingly, for managerial and professional jobs is profoundly changing economies, markets, and industry structures; products and services and their flow; consumer segmentation, consumer values, and consumer behavior; jobs and labor markets. As lives become busier and fast paced, people look for faster and more convenient ways of accomplishing routine tasks. The task of doing daily shopping to meet day to day household needs is one such task that people seek to simplify. To support this need online shops and superstores are becoming a necessity nowadays. The influence of Globalization has drastically changed the socio-economic structure of Bangladesh in the past two decades. The fast pace of our western counterparts has filtered in to our societies to a certain extent as we try in and compete in a global market. The changing lifestyles, the increasing trend of women in the workforce and the busy roads of the big cities have had significant impact on how households run. As people look for convenience in every 5|Page

aspect of life, the need for services which fulfills this need increases. Online superstores is one such service which can ease the lives of its users by allowing them to complete their household and regular shopping in the comfort of their homes or offices However the concepts of shopping online and online superstores are still new in Bangladesh.

This report will provide an outlook on what type of issues should be taken in to consideration before starting an online superstore in Bangladesh. This report concentrates mainly on the feasibility of the e-business, to conduct a need analysis of such a service in Bangladesh, to develop the business model for an online superstore in Bangladesh based upon the existing superstores in the country and online superstore abroad, to identify potential problems and risks associated with online superstores in Bangladesh.

1.2 Origin of the Report

The report titled An Analysis of the Prospects of an Online Superstore in Bangladesh has been prepared for Mr. Rezwanul Huque Khan, course instructor of Management Information System (K 503) as a partial requirement for the course. The primary goal of this report is to analyze the feasibility and the prospects of an online superstore in Bangladesh and takes it a step further by exploring the features that such a store may include and the risks associated with these kinds of businesses.

1.3 Justification
In Bangladesh there are several websites who provide some features of e-commerce, i.e. getting to know about the product, price, and other attributes of the item to be purchased / sold. However in most cases the buyer and seller will have to meet in person, take the delivery of the product, and make the payment. There are only a limited number of sites selling very specialized products options for automated delivery and online payment. 6|Page

There is a strong possibility that e-commerce is going to be a popular concept in Bangladesh. This study is being conducted to analyze this issue. The justifications are provided as follows: i. Peoples computer literacy and internet accessibility are rapidly increasing these days. They are becoming more prone to surf through different websites and make a purchase decision. ii. Making a purchase online will be convenient for buyers as they dont have to go to the store physically and product delivery will be done at their convenient time and place. iii. The number or credit and debit card users are rising day by day. Thus, it increases the likelihood of online payment. Because of the aspects mentioned above it can be assumed that the concept of online superstore has an explicit demand and this report analyzes the feasibility of such an online superstore.

1.4 Objective
The broad objective of this study is to analyze the feasibility of online superstore and formulate ways to expand the scope of service. The specific objectives of this research are as follows: To analyze the feasibility of an online superstore in Bangladesh To conduct a need analysis of such a service in Bangladesh To develop the business model for an online superstore in Bangladesh based upon the existing superstores in the country and online superstore abroad. This broad objective has the following specific objective: o To design the operational processes needed to deliver the services. o To develop the management plans to start of the business.

7|Page

o To estimate financial costs and revenue generation models of the business o To identify the information technologies that can be used to provide superior and unique services to the customers. o To develop a possible marketing plan for the business. To identify potential problems and risks associated with online superstores in Bangladesh.

1.5 Methodology
Research Methodology is a compilation of all those methods/techniques that are used for the conduction of research. It describes the types of data collected, the processes of data collection and sampling methods used.

1.5.1

Type of data obtained: Both primary and secondary data has been collected for the research purpose. Primary data has been collected from the respondents through the survey questionnaire. Secondary data has been collected from the different e-commerce websites and articles / journals.

1.5.2

Survey and sampling: The key details regarding the survey and sampling are as follows: Sample size: A sample size of 205 has been chosen. Sampling frame: The sampling frame includes job holders, home makers, and students residing in Dhaka metropolitan city. Sampling method: The sampling method used here is convenient sampling.

8|Page

1.5.3

Method of administering the questionnaire: Survey method: The survey has been conducted mainly among job holders, home makers and students residing in Dhaka, Chittagong and Sylhet metropolitan city. The questionnaire was developed using google docs and its link was shared by email and different groups of facebook likely to contain appropriate respondents. Nature of the questionnaire: The questionnaire has been developed to find out more on the research topic, probing into the objectives of research. The questionnaire includes two parts, multiple choice, and Likert scale questions. These questions have been put in the questionnaire in order to attain a more insightful understanding of the views and attitudes of the users regarding online shopping. It contains several questions asking the demographic information about the respondents as well. The questionnaire has been made with simple, direct, and familiar words keeping the respondents in mind.

1.5.4

Tabulation and Data analysis:

Since the questionnaires were created in Google Docs, all the data analysis was done by the program itself. The data sheets will help in taking the research further. From the analysis we will get to know which aspects of ecommerce the users prefer most, which areas need improvement, and which features the users want to include.

1.6 Scope
Our research analyses the feasibility of online shopping from the context of customer needs and feasibility on the basis of legal and technological support. However the financial feasibility of such a business and the adequacy of infrastructural support in terms of logistics such as transportation and road networks are beyond the scope of this report. Currently the wide use of internet is limited to the metros such as Dhaka, Chittagong and Sylhet and hence our survey is limited to respondents in these areas only. 9|Page

Hence the opportunities of such a business in other parts of the country falls outside the scope of this research.

1.7 Limitations
This paper has the following limitations: The authors of these papers are final year students with almost no experience in professional research that may have resulted to errors in data collection process. The concept of online shopping is still relatively new in Bangladesh and hence there was a lack of relevant data. Time and resource constraints did not enable the authors to conduct a rigorous market research. The survey sample was obtained online and is not the true representative of the population demography of Bangladesh.

10 | P a g e

2. Overview of Online Shopping services and its prevalence in Bangladesh

Online shopping or online retailing is a form of electronic commerce whereby consumers directly buy goods or services from a seller over the internet without an intermediary service. An online shop, e-shop, e-store, Internet shop, web-shop, online store or virtual store evokes the physical analogy of buying products or services at a bricks or. The process is called business-to-consumer (B2C) online shopping. When a business buys from another business it is called business-to-business (B2B) online shopping. The largest online retailing corporations are ebay and amazon.com both based in the USA. One of the first known Web purchases took place in 1994. It was a pepperoni pizza with mushrooms and extra cheese from Pizza Hut, a somewhat appropriate purchase for the early days of the Internet. When Amazon came on the scene not long after, selling books online was a curious idea. The timeline below highlights the emergence and evolution of online shopping year by year:
Table 1 Emergence of Online Shopping

1990 Tim Berners-Lee created the first World Wide Web server and browser.
1991 Internet is Commercialized.National Science Foundation releases its grip on the Internet 1994 One of the first products to be sold on line was a pepperoni and mushroom with extra cheese by PizzaHut. 1995 Ebay, Dell and Amazon.com, the future 3 Giants of online shopping were Founded
1998 Paypal starts the first mode of paying online. Yahoo stores are launched Zappos.com the first only online store is launched 1999 onwards an explosion is created with google.com, social networking sites nowadays nothing is offlimits for selling online.

11 | P a g e

2.1 Bangladesh Economy Overview

The economy of Bangladesh is a rapidly developing market-based economy. Its per capita income in 2010 was estimated to be US$1,700 (adjusted by purchasing power parity). According to the International Monetary Fund, Bangladesh ranked as the 43rd largest economy in the world. The economy has grown 5-6% per year since 1996 despite political instability, poor infrastructure, corruption, insufficient power supplies, and slow implementation of economic reforms. Bangladesh remains a poor, overpopulated, and inefficiently-governed nation. Although more than half of GDP is generated through the service sector, 45% of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product. Bangladesh's growth was resilient during the 2008-09 global financial crisis and recession. Retail trade is one of the traditional businesses of Bangladesh. Its expansion is keeping pace with population growth and changes in consumption patterns, which are consistent with the growth of the economy. Of the retail trade, the newest type is the superstores which have only began appearing around the year 2000. Since then, their expansion has been rapid. This expansion has not been structurally organized, because, until recently, retailing had never been perceived as an industry, but rather as an individual or family business entity with a very limited scope of organized expansion. Little to no market information is available on the retail sector, but secondary sources indicate that the size of the food retail sector in Bangladesh could be US$12-14 billion, and the number of retail grocery shops could be around 1 million. Retail is one of the biggest sources of employment (12 percent), and it contributed 13 percent (wholesale and retail trading) to Bangladeshs GDP in 2001/02.The annual turnover of the superstores now stands at around Tk 15.0 billion (1500 crore), according to Bangladesh Supermarket Owners Association (BSOA).

12 | P a g e

2.2 Market Structure of Superstores

In Bangladesh, organized retail outlets are relatively few and remain concentrated in the major cities. The off-take by consumers is limited (less than 5 percent of total food consumption comes from these outlets). They usually procure their products from importers or distributors for imported items, and from distributors or suppliers for the local products. Organized sector retailers normally maintain established supply lines (drawing from establishments with storage capacity) for imported products, and access both established and casual supply lines (once-in-a-while suppliers with no storage) for local products. Depending on the size of the outlets, they engage 200 to 400 distributors or sub-distributors (dealers) for consistent availability of their commodities. Most importers source their goods in mixed containers from the country of origins or from consolidators in Dubai or Singapore, except those that arrive in high volumes, like fresh fruits.

Figure 1 The Market Structure of the retailing industry of Bangladesh. [Source: USDA Foreign Agricultural Service, 2004]

Included in the category of supermarkets, around 30 medium-sized super stores, and 200250 other convenience stores are located in the posh areas of Dhaka and other big cities. The share of imported food products currently handled by these outlets is very small, and items include fruit juice (both powdered or liquid); canned fruits, vegetables, and fish/meat; jam/jelly; sauce/ketchup; edible oil; dry milk powder; salad dressings; spaghetti/vermicelli; olive oil; coffee; fresh fruits; and chocolates, biscuits, and cookies.

13 | P a g e

The biggest constraint facing this sector is the extreme scarcity of space in the appropriate areas: land is almost unavailable and is very costly.

2.3 Internet and Online Shopping in Bangladesh

In 1996, the first VSAT base data circuit was introduced through 2 Internet Service Providers (ISPs) connecting Bangladesh to the world wide web for the first time. By 2005 there were about 180 registered ISPs operating in Bangladesh. The First e-commerce site clickbd.com started operations in 2006 which was the same year that Bangladesh got connected with the latest technology of a submarine optic fiber cable. In 2007, Cellbazar, an MIT Lab project inaugurated operations bringing the bazaar to the hands of 20 million GrameenPhone Subscribers. In 2008, BroadBand and Wimax internet services were first introduced in Bangladesh which improved speed, penetration and user experience An influx of e-business sites opened up BdGiftz.Com Giftinbangladesh.com Deshigreetings.com Hutbazar.com Egiftbd.com Arfigift.com Giftzhaat.com Bangladeshgiftcorner.com Ekhoni.com

14 | P a g e

3. Literature Review

Although food and groceries cannot be digitized, there are several reasons for marketing food on the Web (Burke, 1997). People generally are favorable toward virtual shopping, but their reactions vary greatly by consumer segment. Shoppers appreciate the ability to visit the virtual store at any hour and to conduct other activities while shopping. The weight and bulk of packages are no longer considered as constraints. Delivery charges are objected (Burke, 1997; Sheth and Sisodia, 1997). Women who are affluent, technically literate, and interested in shopping can be favorably disposed toward shopping on the Internet (Jrvenp and Todd, 1997). Shopping (in traditional way) causes stress (Aylott and Mitchell, 1999). Stress factors include time pressure, crowd density, staff attitude and training, store layout/relocation, impulse purchasing pressure, location, product assortment, music and lighting. The advantages and disadvantages of physical efforts and time pressure related to traditional in-store shopping positively influence consumers perception of the characteristics of electronic grocery shopping (Verhoef and Langerak, 2001). A published study on the feasibility of online superstores in the context of Bangladesh could not be found however there were some independent researches which can have an indirect impact on this issue. Independent research by UNDP and Islamic University of Technology, Bangladesh concludes that there is an increasing awareness of information technology amongst the young generation and a surge in E-commerce activities in Bangladesh. The Government is also formulating laws for e-commerce to enhance the business rapidly and smoothly and initiatives such as the introduction of 3G internet, BTTB's implementation of DDN service, linking Bangladesh to global highway through submarine cable are bound to have a positive impact on e-commerce. According to International telecommunication Union (ITU) report, Bangladesh had 450,000 internet users in 2007. In October 20, 2008, number of mobile phone users in Bangladesh stood at 45.09 million. More than 15,000 people are connected in Facebook through Bangladesh channels. All the districts headquarters have cyber cafes. Youth accounting

15 | P a g e

for more than 35% of the total population gives Bangladesh an edge to choose ecommerce. Retailers should design simple ordering and fulfillment procedures that are convenient to consumers and focus on the needs of different segments. Special possibilities and built-in capabilities of the web are not fully utilized, and the value added compared to the conventional form of shopping has to be obvious for a consumer (Raijas and Tuunainen, 2001). The elements of Internet shopping experience and the success at all stages in shopping process is important (Rowley, 1998). There are problems of transactions, security, locating products, quality and technical problems which need to be solved by Internet retailers. Convenience and saving time are the primary reasons for buying groceries online (Morganosky and Cude, 2000). The customers have complained on the selection of items, mistakes in orders, slowness, and cost of service, not to be able to use coupons, information online and how it is presented. However, the customers are quite satisfied with their online grocery shopping experiences, especially mothers with young children and those with physical disabilities. Consumers expect personal service at a reasonable cost with timely delivery and few out-of-stocks and misspeak. The development of online supermarkets has undergone through two major phases. The first phase happened during the Internet boom, when virtual supermarkets were set up in the US. Examples include Peapod, Streamline, Webvan, HomeGrocer and

GroceryWorks. Most of them have been closed down during the Internet bust (e.g., Webvan, Streamline, HomeGrocer). The ones that survived have been bought by brick and mortar incumbents: Peapod was acquired by Royal Ahold and GroceryWorks by Safeway. Soon after the establishment of various virtual supermarkets, a new phase began when established brick and mortar supermarkets entered the online grocery shopping arena by adopting a click and mortar strategy. In the US, there are Albertsons, Safeway, WalMart, Publix, Lowes Food, and Santonis; whilst in the UK there are Tesco, Sainsburys, Asda, and Iceland. These players, by combining the strength of traditional retailing with internet shopping, have achieved rapid growth. In addition, some old brick and mortar

16 | P a g e

retailers also took over their virtual challengers and continued the development of the egrocery business by integrating new concepts with the conventional grocery business (Tanskanen, Yrjola and Holmstrom, 2002).

Business model is the architectural configuration of different key elements of companys value creation system. It explains how a company create value to customers, generate revenue and therefore sustain its viability over a given business environment (e.g., in Chesbrough and Rosenbloom, 2002; Amit and Zott, 2001; Ethiraj, Guler and Singh, 2000; Hamel, 2000; Van der Heidjen, 1996). In the last few years the concept has been used in analysing the impact of Internet on a firms competitive advantages (Ethiraj, Guler and Singh, 2000), evaluating new avenues for innovations in sources of value creation (Afuah and Tucci, 2003; Amit and Zott, 2001), and sharing knowledge of strategic nature and communicating Internet related business strategy to business partners (Osterwalder, 2002). No study on online supermarket strategies and business models could be found in the context of Bangladesh. Most existing studies were conducted in the UK, US or Scandinavian countries where the history of online supermarket is longer. Most studies in the UK have focused on a specific aspect of online supermarket, such as the delivery centre model (Roberts, Xu and Mettos, 2003), the marketing aspect (Murphy and Bevan, 2001), a specific companys operation (usually Tesco) (Delaney-Klinger, Boyer and Frohlich, 2003; Child, 2002; Ring and Tigert, 2001; Seybold, 2001) or the general impact of the Internet on the Industry (DTI and PricewaterhouseCoopers, 2002). The study by Ijaj Md. Laisuzzaman, Nahid Imran, Abdullah Al Nahid, Md. Ziaul Amin, Md. Abdul Alim, 2010, proposes that the following model for e-commerce in Bangladesh.

17 | P a g e

Figure 2 Model for e-commerce in Bangladesh.

This model may prove suitable for e-commerce but for an online superstore Hamel (2000) introduced a framework of business model, which enables the integration of different areas which this study is interested in, such as strategy, business definition , value chain configuration and process design, value offering, revenue generation, pricing model, value network, channel management, and customer relationship (Figure 3.2). As such, this framework will be used as a starting point of our analysis.

Figure 3 Framework of business model

3.1 The Fulfillment (Picking) Centre

A key element of online supermarket is how fulfillment is handled (Boyer, Hult, Splinder and Santoni, 2003; Ellis, 2003). There are three models available. The first is to piggyback on an existing supermarket, which is referred to as in-store picking. The 18 | P a g e

model can be adopted by using stores owned by the online supermarket itself or its partner(s). The second is to serve the online supermarkets customers by building a dedicated picking centre. With this model a company can serve a wider area and reduce the cost of picking. Furthermore, food quality as well as availability can be improved (Roberts, Xu and Mettos, 2003), but this model requires a significant upfront investment (e.g., Webvan spent $25m for each automated picking centre (www.cnbc.com)). A third option is the so called hybrid model - an operational option between in-store picking and a dedicated fulfillment centre (Yrjola, 2001). This model is created by Irene Yousept, Feng Li incorporating Local Distribution Centres into traditional grocery supply chains. This option requires the redesign of the supply chain for various product groups; and in doing so the overall supply chain costs can be reduced by bypassing some stages for the picking for online customers (Tanskanen, Yrjola and Holmstrom, 2002).

3.2 The Last Mile Problem

The problem of home delivery represents a major challenge for any B2C e-commerce (Punakivi and Saranen, 2001; Punakivi, Yrjola and Holmstrom, 2001). An important aspect is the delivery time window offered to customers (Punakivi and Saranen, 2001). There are three delivery concepts: attended or unattended delivery and self-pick-up. In an attended delivery, a customer must wait during an agreed time slot for the fulfilment of delivery in reference to when orders are placed: next day delivery or longer (Murphy and Bevan, 2001; Punakivi and Saranen, 2001; Punakivi, Yrjola and Holmstrom, 2001). In unattended delivery, fulfilment is conducted using reception box and delivery box. Reception box is a refrigerated box which is installed in customers site and delivery box is an insulated box (Kamarainen, 2001; Punakivi and Saranen, 2001; Punakivi, Yrjola and Holmstrom, 2001).

19 | P a g e

4. Analysis and Findings

This section of the report represents the analyses and findings obtained from secondary research and the questionnaire survey conducted online. The demographic analysis of the survey is as follows:
Table 2 Demographic Analysis of the Survey

Number of Respondents Percentage of Male Percentage of Female Income Range

205

73% 27% 25,000 or below 27% 26,000 40,000 22% 41,000 59,000 17% 60,00089,000 13% 90,000120000 12% above 120,000 10%

Age

Less than 25 20%

26 35

36 - 45

46 and above

56%

4%

3% Home maker Selfempl oyed Other

Occupation

Student

Business Executive

Mid Level Top Level Govern Managers Managers ment

Percentage

53%

10%

8%

3%

3%

1%

4%

17%

The survey revealed that while 99% of the respondents use internet regularly only 34% had purchased products online. 59% of the respondents said that they would prefer 20 | P a g e

purchasing their necessary household items online and of the 41% who said that they did not prefer purchasing online around 40% stated that it was because they preferred to examine the products physically and about 15% said that it was because they did not feel secured about sharing their credit card details online as illustrated in the graph 4.1-4.4.

Graph 1 Access to internet

Graph 4 Purchase of products online

Graph 2 Preference for shopping online for household goods

Graph 3 Reasons for not preferring to shop online for household goods.

21 | P a g e

4.1 Feasibility Analysis:

4.1.1 Market Analysis: The number of Internet user in Bangladesh is growing very fast. From a survey conducted by World Bank it is seen that the penetration rate is increasing since 2005. Heres a data from World Bank.

Table 3 Internet Penetration Rate in Bangladesh

Bangladesh Internet Penetration rate

2002 0.14

2003 0.16

2004 0.20

2005 0.24

2006 1.00

2007 1.80

2008 2.50

2009 3.10

2010 3.70

Graph 5 Internet users as percentage of population

22 | P a g e

Graph 6 Internet users as % of population in different countries of SAARC

Our neighboring country India with Internet penetration rate of 7.8% has already started implementing the concept of online shopping in some of their metropolitan cities. Online shopping is solely dependent on Internet. It is predicted that the number of Internet user will increase even higher in Bangladesh in coming few years. The economic growth is one of the factors that play a great role in switching the shopping behavior in the cities. The per capita income level has increased over the past few years in the middle class people. This also changed their shopping behavior. This can be seen by the success of the superstore chain in the city areas in Bangladesh. With this view and also from the user density in the urban areas, it is reasonable to go for the idea of online shopping. Bangladesh has already started some e commerce business. But they are not solely online shopping. While if we look at the percentage spending in online shopping of India, we can see from the following chart is that around 41% of the internet users want to spend less than 5% of their total monthly spending. 33% of the online users want to spend around 6-10%. And 23 | P a g e

around 19% of the Internet users want to spend around 11-25% of their total monthly income. (Source: online shopping trend report). Among these people, most people want to buy books, cosmetics, clothing/accessories/shoes and groceries). From Bangladeshs perspective this may vary.

Graph 7 Online shopping spending percentage of total monthly spending in Asia Pacific Region

For this reason we conducted a survey among a sample of the population. This sample of population has Internet connectivity at their home and they mostly live in the urban areas. Our main objective of the survey was to see whether it is feasible to launch this online superstore shopping in the urban areas of Bangladesh. One of the drawbacks of online shopping in Bangladesh is the use of credit card. There is no online money transaction system with the credit cards. This makes the payment options even narrow. So, the other alternatives to this needed to be implemented. The mobile market in Bangladesh has increased over the past few years. One of the ways to solve this online money transaction is the use of mobile money transfer. Currently there are bKash, Surecash and many other ways to transfer money via mobile. If the mobile banking becomes popular, the payment problem can be solved. Since we are 24 | P a g e

assuming the density of mobile user is very high in urban areas, it will be a very feasible idea to use this as a payment method. There will be few other payment methods that will be discussed later.

4.1.2 SWOT Analysis

SWOT is a common method of analyzing market environment. It helps in measuring the companys resources to the environment in which the company is operating. SWOT stands for strengths, weaknesses, opportunities and threats. Strengths and weaknesses measure the internal environmental factors as the opportunities and threats are external factors. 4.1.2.1 Strengths An Online Store will be able to offer all-consuming goods with a reasonable price due to the fact that the good comes straight from the whole seller, to the consumer. Cost efficiency and customer service play a key role in this organization. Also there is the new concept of selling products using IP camera which was never done before. The hasslefree, time saving, high quality, variety, flexibility are the key strength of this business. 4.1.2.2 Weaknesses We are a new comer in the Online Store business and the situations are unknown to us. It is not easy for a company to start completely a new business especially when the idea of the business is also new. In order to overcome this the business would have to undertake very aggressive promotions initially and create strong a strong mage of trust with its customers and suppliers.

25 | P a g e

4.1.2.3 Opportunities There is a good opportunity to grow as a company in this fairly new market of Online Store in Bangladesh. As an online store the possibilities to expand are endless. In addition, the economic situation is getting better all the time and it is changing consumer behavior and consumption patterns. People are willing to pay more to avoid going physically to the store. The idea of Online shopping is gaining acceptance which gives this business a considerable advantage.

4.1.2.4 Threats The competition of other Online Stores is always a threat. As this is a new concept introduced to the country there will be many unknown barriers. There is always the threat of new entrants who enter the market.

4.2

Need Analysis: (The Survey Outcome)

An online survey was conducted to understand about the current need from online shopping in mostly the urban areas. We wanted to see if the regular superstore shoppers want to switch to online shopping if there are options. And also which criteria should we look into to make it popular among the customers. The people who are surveyed give more importance to certain criterion. Such as, they want variety of products available in the superstores. So, more products will attract more customers. Also, the customers want the superstores to maintain the product quality. Availability is also a priority they mark. Almost 59% of the people we surveyed replied that they feel more convenient in online shopping for regular goods they need. This is a significant percentage. If this online shopping can be made more secure and easy to use, this percentage will surely rise. Those who prefer going to superstore and buying goods do this because they prefer to physically examine the product by themselves before purchasing. This can be managed 26 | P a g e

by offering guarantees for quality and work to build trust through goodwill. One of the main obstacles to online shopping in Bangladesh is the payment method. Credit card is still not so much available to mass people and other payment methods still have security issues. So, if the issues can be resolved it will surely be a boost to online shopping in the urban areas. The online shopping page should be very easy to use, and very secure and up to date and also the customers want very quick response. A strong management team can manage these. Most people would like to have the ordered goods as fast as possible. Again the customers would like to customize their shopping experience. From the survey it can be seen that the expectation from the sample of population is high. People want a very easy-to-navigate site for online shopping. Since the concept of this online shopping is a very new concept, the security of the payment is a concern to most of the people we surveyed. High security 1 2 3 4 5 5 7 15 31 147 2% 3% 7% 15% 72%
Graph 8 Demand of High Security regarding Online shopping

Also, there is a chance of personal information leakage. So, people want the service to be such that they can strongly preserve this information. 1 2 3 4 5 19 44 71 36 35 9% 21% 35% 18% 17%
Graph 9 Demand for preservation of Personal Information regarding online shopping

27 | P a g e

From the findings of the survey it is understood that, the demand for this online shopping is high. There are certain few things customers want from online shopping. One is the payment security. Second thing the customers want is the availability of products. Thirdly, the customers want the products quality to be maintained. The customers prefer going to superstore and checking the products by themselves. It indicates the perishable goods need to be maintained highly so that a trust can be built among the customers.

4.3

Business Model
The business model of a company is a simplified representation of its business logic. It describes what a company offers its customers, how it reaches them and relates to them, through which resources, activities and partners it achieves this and finally, how it earns money. The business model is usually distinguished from the business process model and the organization model. Business models can be described in a more or less formal way. In this manual we use a simple approach that consists of nine basic business model building blocks that allow us describe and draw all the aspects of a business model in a simple way.

28 | P a g e

4.3.1 The Building Blocks of a Business Model A business model can be described by looking at a set of nine building blocks. To get a good picture of our business model we should describe our: Key resources: The key resources on which our business model is built. Key activities: The most important activities performed to implement our business model.

Figure 4 The Building Blocks of a Business Model

Revenue streams: The streams through which we earn our revenues from our customers for value creating and customer facing activities. Partner network: The partners and suppliers we work with. Cost structure: The costs we incur to run our business model. Customer segments: Our groups of customers with distinct characteristics. Value proposition: The bundles of products and services that satisfy our customer segments needs Channels: The channels through which we communicate with our customers and through which we offer our value propositions. Customer relationships: The types of relationships we entertain with each customer segment. 29 | P a g e

The fundamental business model is illustrated below: Technical Support

Operational Regular Managerial Internet User

Financial

Marketing

Offer

Key Resources Key Activities Partner Networks Technical Support

Staffing Planning Implementi ng Controlling Monitoring

Revenue Stream Cost Structure

STP Channels Promotion R&D Customer Relationship

Customer

Figure 5 Business Model

4.3.2

Operational plan

4.3.2.1 Key Resources The key resources needed for operations are Human Resources Information Technology Networks Storage Transportation

4.3.2.2 Key Activities The key activities of operations are as follows To receive orders from customers online. 30 | P a g e

To deliver accurate products to respective customers in nominal time. To receive payment. To maintain the supply of the store on a regular basis. To keep the financial transactions updated.

4.3.2.3 Operational Activity The activities of the business have been organized in a diagrammatic representation as shown by the figure below. The transactions of the business model start when a customer places an order; the information being input is sent to the server where it is processed. The processed data is sent to two places to the customer as an order code and as an order transcript to the manager at the respective warehouse. The manager takes this order transcript and processes this order. Once the order is processed, the data again fed back to the server where control checks are carried out. If any negative feedback is received from the control checks, the order processing step is repeated. If the feedback is positive, the delivery of the processed order is sent to the customer. Once the deliver reaches the customer, the order code needs to be fed in and this automatically updates the server with details of payment, inventory, and customer preferences and so on.

Figure 6 Operational Activity

31 | P a g e

4.3.2.4 Enterprise Resource Planning The entire business process is much more complex than this simple diagrammatic representation and hence requires acute planning. To help the entire system run smoothly and in a coordinated manner, Enterprise Resource Planning (ERP) Systems are set up. ERP systems are independent software modules with a common central database that support basic internal business processes for finance and accounting, human resources, manufacturing and production, and sales and marketing. Enterprise systems add value for businesses by enabling data to be used by multiple functions and business processes for precise organizational coordination and control. The diagram below highlights the processes which will be aided through these ERP systems. The customer relationship management (CRM) system willl help manage customer relationships and improve customer satisfaction and hence customer retention. CRM systems captures and integrates customer data, analyses the data, and distributes these data to customer touch points across the enterprise (e.g. the storefront and delivery of products).

Figure 7 Enterprise Resource Planning

32 | P a g e

The supply chain management (SCM) systems coordinate business processes to speed information, product, and fund flowing up and down a supply chain. SCM systems reduce time, redundant efforts, and minimizes inventory costs. The PowerChain Suite have been studied as a successful SCM system software that has cut down inventory costs of existing companies. The knowledge management systems collects relevant knowledge and makes it available whereever and whenever it is needed. This helps to support business processes and manage decisions. The use of these ERP systems would without a doubt benefit the business as the organization wide coordination would maximize efficiencies and retain customers. However, the challenges of ERP must be mentioned. Management and training of employee and bearing the costs of such softwares are the two main challenges that need to be taken into consideration.

4.3.2.4 Partner Network Partners and Suppliers to work with Suppliers of different products o This business will focus on getting its products from the source, primary whole sellers or through the minimum number of intermediaries Bank o The primary source of financing, banks will also be partners in facilitating customer payments Telecom Companies o These will not only facilitate customer payments but will also act as promotional partners and access points for the business. Logistic Companies

33 | P a g e

o Courier companies with already established logistic systems may be used as partners for making deliveries.

Figure 8 Partner Network

4.3.3

Managerial Plan

The managerial functions are as follows Staffing- Planning Implementing- Controlling-Monitoring

Initially the business is going to be operated with 4 functional divisions of Finance, Marketing, Operation & IT and HR. Experts and highly experienced professionals will be recruited to head each department and they will be asked to form a small team of 2-4 people in each department who are going to form a steering committee that will facilitate the startup phase of the business. This steering committee will undertake the above mentioned functions and organize the business so that it can open up within 6 months of the formation of the committee. Staffing Decide how many people will the business require in its primary phase, secondary phase

and work to recruit, train and manage accordingly.

34 | P a g e

Planning Each department will prepare relevant plans for required resources to start the business.

Implementing Each department will work to implement plans for example Finance- work to accumulate necessary financial resources through bank loans and other modes. Marketing- develop STP plans, Value proposition, branding and promotions and research and development Operation & IT- Organize business processes such as purchase, inventory management, delivery process, Decide on the required Information technology needed and establish it for the business HR- Design recruitment plans, Organization code of conduct, compensation and benefits plans, training and motivation plans amongst others

Controlling and Monitoring- Once the business is in operation each department have to work diligently to control and reduce wastage, secure inventory and deliver superior customer service. 4.3.4 Financial Plan The financial plan section is the section that determines whether or not the business idea is viable, and is a key component in determining whether or not the business plan is going to be able to attract any investment for the business idea. Basically, the financial plan section of the business plan consists of three financial statements, the income statement, the cash flow projection and the balance sheet and a brief explanation/analysis of these three statements. In this case the business expenses are broken into two categories; the startup expenses and the operating expenses.

35 | P a g e

All the costs of getting the business up and running go into the startup expenses category. In the context of a startup online superstore the startup expenses may include:

Business registration fees, licensing and permits Starting inventory Rent deposits Down payments on property Down payments on equipment Payments for software and database

Operating expenses are the costs of keeping the business running. In the context of a startup online superstore the operating expenses may include:

Salaries Rent or mortgage payments Telecommunications Utilities Purchase of inventory Storage Distribution Promotion Loan payments Office supplies Maintenance

36 | P a g e

4.3.4.1 Cost Structure: The expenses for this business for the first 1 years, of which the first half of year 1 is the setup time and the remainder is the initial operation period has been roughly projected as follows:
Table 4 Projected Cost Structure

Infrastructure Cost Human Resource Cost Logistic support Cost Operating Cost Advertising and promotions Working Capital

BDT 6 crores BDT 1 crores BDT 10 Crores BDT 2 Crores BDT 2 Crores BDT 5 Crores

4.3.4.2 Revenue Stream Sales revenue is the only source of business for the first few years and revenues will be received through the following ways: Cash Credit card and Debit Card Payment through SMS Scratch Card Click Card Check Postal Money Order Wire Transfer M-wallet

Customers will be given maximum flexibility of payments so that they can choose the most convenient one.

37 | P a g e

4.3.5 Technical Support

Information technologies that can be used to provide superior and unique services to the customers have to be identified as an ongoing process. The following technical innovations have been identified to part of the initial setup for this business. To ensure Customer Transaction Security HTTPS MD6 Message-Digest Algorithm

For routing OSPF: Open Shortest Path First Cisco 2951 Integrated Services

Network All stores are connected to central server with Linux OS

Delivery: Delivery confirmatory equipment

Figure 9 Technical Support

38 | P a g e

Customer experience optimization IP Camera- providing 24/7 live video of the warehouse/ storage facilities with high image resolution, mobility within the IP network. The IP camera is a very new concept and will be an USP for the firm. As we are selling perishable day to day goods we understand that customers want to inspect them closely before buying those goods. For this reason we give a link to our websites which will take them directly to our physical store through IP camera. The proposed camera can rotate 180 degree so it could cover a wide range of products which are needed to be inspected before buying. As it has a dedicated IP customers can easily access to the camera and find the live view of facilities and zoom in for closer inspection.

Security: The MD5 Message-Digest Algorithm is a widely used cryptographic hash function that produces a 128-bit (16-byte) hash value. This is the latest technology of encryption and we used that to our transaction part of the website. We use CISCO 2951 Integrated service router which is reliable and scalable. Delivery Confirmatory Equipment: This device will be carried by the delivery person to our valued customer. As described earlier every customer received a PIN for his purchase and he have to press that PIN number to the Delivery Confirmatory Equipment and press the enter button. This equipment will send this pin to our server and our server confirms that the delivery has been made to the customer. This is a small feedback tool we use.

Website: The URL of our model website is http://easybazaar.webnode.com/. This is a free domain hosting site where we host our site. The site has almost all the features it needed to fulfill basic elements of a e commerce site.

39 | P a g e

Figure 10 Model Website

POS We also developed a point of sale (POS) software for our inventory management and transaction tracking purpose. Again it has some very basic form which we can develop more widely in near future.

Figure 11 POS Software

40 | P a g e

4.3.6 Marketing Plan

4.3.6.1 Target Market: We try to figure out our target market by looking for the answers to the following four questions. 1. Which customer needs and wants are currently not being satisfied by competitive offerings? From our survey we found out that, most of the customers dont have a regular superstores where they shop regularly, so if they are provided with some convenient option they would switch easily. They use Internet regularly hence, it is very clear that, if there were options of online shopping, they may shop online regularly too. Online shopping may reduce daily workload and may give more free time to the customers. 2. How desired benefits and choice criteria vary among potential customers and how to identify the resulting segments by demographic variables such as age, sex, lifestyle, or some other characteristics? We have seen from the customers that, mostly young people use Internet regularly. Due to the lack of infrastructural support elsewhere the online shopping business will be limited to urban areas only. So, based on the data, the products assortment and catalogue will be designed according to the taste and preferacne for this specific segment of customers. 3. Which segments to target, and which offerings and marketing programs appeal most to customers in those segments? The young people and urban people are the main targeted customers and since the concept is online shopping, the marketing programs will be focused on this. A further market research needs to be conducted to formulate the product assortment and brand preferences of the targeted segment. Social networks will be used as a marketing tool for promoting the business. 41 | P a g e

4. How to position the service to differentiate it from competitors offerings and give the firm a sustainable competitive advantage? The idea is new to this country. If the payment method can be made smooth, it can be easily differentiated from the existing competitors like the superstore chains. 4.3.6.2 Characteristics of target customers Age group: 15 to 50 years Geographical segmentation: Urban people of Dhaka (Initially), Chittagong and Sylhet Income group: Upper middle class and above Regular customers of existing super malls

4.3.6.3 Value proposition The objective of our value proposition will be to Earn credibility among customers Gain customer faith in e-commerce Provide substantial alternative to existing physical shopping

The value proposition will offer the following All the purchasing process will be done online. Online orders will be received 24X7. But the delivery of the products will be done within the delivery time (8.00 am to 12.00 am) Delivery cost will be nominal to nil depending on the amount of purchase and distance from the store. Quality and quantity of goods will be ensured to the highest level with the guarantee of replacing. Variety of products and brands will be available to choose arbitrarily.

42 | P a g e

Keeping in mind with the value proposition a possible name for the online superstore is suggested as Easybazar with a domain name of www.easybazar.com and a slogan was developed (the best
shopping with your hard earned money in the comfort of your home).

4.3.6.4 Channels The mode of communications with the target customers Online advertisements on social networking websites and online newspapers. Advertisements on printed newspapers. Printed flyers and brochures. Digital billboards Advertisements on local periphery. Business promotion through SMS. Road Show. Internet Search Engine Brand endorsement (Celebrity endorsement, Common man/ User

Testimonial, Expert endorsement) The intention is to reach the target customers by these modes of communication so that all the potential customers are aware of this prospective business. Out of these modes, the most efficient and cost effective ones will be given priority. 4.3.6.5 Building Customer Relationship Types of customers for any business are as follows: Loyal Customers Discount Customers Impulsive Customers Need based Customers Wandering Customers

43 | P a g e

In order to retain the different types of customers the following steps will be taken: Loyal customers will be honored with membership. These types of customers want individual attention and that demands polite and respectful responses from supplier. Discount customers will be treated with good importance as they also promote distinguished part of profit into business. Handling Impulsive customers is a challenge as they are not particularly looking for a product and want the supplier to display all the useful products they have in their tally in front of them so that they can buy what they like from that display. These customers will be treated accordingly as there is high probability that these customers could be a responsible for high percentage of selling. Need based customers will be treated positively by showing them ways and reasons to switch to other similar products and brands and initiating them to buy these. Wandering Customers are least profitable customers as sometimes they are not sure what to buy. To grab such customers they will be properly informed about the various positive features of the products so that they develop a sense of interest.

The process of this business is such that internet plays the key role of the business model. In Bangladesh, the socio-economic condition is such that only the upper middle class and above have regular access to internet. Urban people of Dhaka, Chittagong and Sylhet have been selected as main customers because of high internet penetration and higher standards of living compared to the rest of the country. A distinct offer will be proposed to the customers. The services will be prompt and hassle free. All the needs will be fulfilled with the help of just a few clicks. This will emancipate the customers from moving around the busy cities of Bangladesh. Both time and money will be saved for the customers.

44 | P a g e

4.4 Challenges of Online Store

E-Business has a various number of advantages compared to traditional business, but with advantages also come the challenges. Often when thinking of e-business people come up with thoughts of security, convenience and low costs. For an online store it is essential to go over these issues to minimize the risk and maximize the benefits of online shopping.

4.4.1 Challenges (to identify potential problems and risk associated with online superstore in Bangladesh)

Security: One of the biggest problems in online shopping is the security issues. To be more specific, the problems are in ensuring the security of data transaction. Jennifer Rowley writes that the basic security requirements are identification, access, protection and validity.
Table 5 Security Requirements of Online Shoppers

Security requirements

Identification: Are new customers required to register? Do customers register and are they given a password?

Access:

Which users are authorized to change the website?

Protection:

Is customers purchase history and other information only passed to other companies with customers permission?

Validity:

Is the data on the web site correct?

45 | P a g e

The reason why security is challenge for an Online Store is because the transactions happen through the Internet and because of the TCP/IP (Transmission Control Protocol / Internet Protocol) protocol that governs the communication. These protocols are open protocols, which mean that when the data is transmitted from a computer to another, a third party can intercept it. This brings us to the reason why we have encryption. Encryption secures the data by coding is to a different form as it is transmitted.

TLS/SSL (Transport Layer Security/ Secure Sockets Layer) is a protocol, which is used to protect the data flow over different IP addresses. The most common way of securing the flow, for a TSL protocol, is to secure the transmission with HTTPS-protocol (Hypertext Transfer Protocol Secure). This can be seen on your Internet browser when the beginning of the web address turns from http:// in to https://.

Trust: In addition there are the trust issues. Online shopping is still considered to be a bit shady by some people, because of trust. The customer may think: Will I ever get my products? Where does my money go? How is my information used? These are all questions that make the gap between ordering and not ordering, online. Jennifer Rowley has six different steps on how to build trust between the customer and the supplier: Tell people how you are using their information. Allow people to view the information that you are keeping on them. Allow people to change this information. Tell people how you will use the information and with whom you will share it. Embed all of the above points in a privacy policy, which is available on the website. Use branded trust by registering with a trust agency, such as TRUST and display its trust mark on the website Competition: Competition is a difficult one, because it is both an advantage and a threat. This is why we put it last in the list of challenges. For a small start-up business the 46 | P a g e

Internet provides competitive advantage, because on the Internet, the store is almost on an equal level with the online stores of big corporate chains. It is also a challenge, because the costs of putting up an online store are very low, which means that the entry barrier is extremely low for new companies. Shortly, everyone is almost in the same position, but the competition is tough.

4.4.2 External environment analysis: PESTEL (Risk) PESTEL analysis gives a larger picture of the macro-environment, in which the company is operating. The analysis helps the company to prepare itself for changes in the future by taking a glance at the changing factors in the business environment. These issues will have an effect on the decision- making in a company or in this case, the decisions concerning this business plan. The PESTEL model will help by categorizing the macro-environment in to political, economic, social, technological, environmental and legal factors. By analyzing the results of each of the factors, this analysis provides also the information on which of these factors has the most effect on this type of a company. 4.4.2.1 Political Government stability: In Bangladesh the government and political situation is very unstable which has some direct effects to some extent in our proposed business. Taxation policy: For both B2B and B2C the value added tax (VAT) is 15%. VAT is applicable for all items (except some of the unprocessed agricultural products) & thirty five listed services. VAT is leviable at the time of supply of goods and services. Turnover tax @ 2 per cent is leviable where turnover amount is less than 1.5 million taka. Tax returns are to be submitted on monthly or quarterly basis. 4.4.2.2 Economical Inflation: Inflation rate is 9.93% in April 2012. The reason for the rise was mainly for the rise of the food prices. The consumer price index is 270.68. 47 | P a g e

GDP total: $100.00 bn, GDP per capita: $664, Total exports: $16.20, Total imports: $23.74 bn, Total FDI: $0.913 bn, and Forex reserves: $10.700 bn. All data are taken for 2010-2011 fiscal year. This high rate of inflation poses problems for an online store because this means that prices will tend to fluctuate and maycause loss of sales or disgruntled customers. 4.4.2.3 Social
Table 6 Projected Population of Bangladesh

Projected Population Total Male Female Gender Ratio

July 2015 158.96 81.63 77.33 106

July 2019 167.39 85.86 81.51 105.34

As we have a constant growth on population and our country has growing economy there is a huge potential of online superstore. There are some activities going on social networking sites which are providing online product to some extent. We have a total of 5,501,609 people who have internet access. They are potential buyer of online superstore which indicates a huge market of this business Bangladeshi people are getting busier day by day. The time to go to shop for shopping is getting difficult for people like corporate executives. In the metropolitan cities, which are considered in this business model, the corporate executives and other job holder people are more inclined to shoponlinerather thangoing there physically, which provides the potential of a huge market.

48 | P a g e

4.4.2.4 Technological Internet: Bangladesh is one of the emerging countries in Internet usage in the world. The number of IP addresses is proportionate to the number of people. The usage of the Internet has spread through the country and the number of Internet attacks and viruses, is quite low. 4.4.2.5 Environmental In Bangladesh we have natural disasters occurringalmost every year. In the past, the submarine cable which is the back bone of internet connectivity in this country was cut down due to natural disasters. As Bangladesh is connected with only one submarine cable, if it gets cut down then the entire country is disconnected from the world. We have limited connectivity through VSAT but on rainy days even that would not provide a solution. Hence natural disasters will have a tendency to cause major disruptions to online shopping. 4.4.2.6 Legal There are no legal issues for online shopping till now. Online Stores will be regulated with the laws of normal local stores. As the legal infrastructure to stop online fraud and cybercrimes is yet to be developed both the business of online stores and its customers will face risks of being exposed to such incidents.

4.5 Summary of Findings

As the rate of penetration of internet users grows at a vigorous pace accompanied by a steady growth of the economy the opportunity for exploring e-business increases. This is reflected in the survey conducted for this research where most of the population showed interest in doing shopping online.

49 | P a g e

The survey reveals that interested shoppers give maximum importance to safety and security of transactions as well as the variety of products available. A further research must be conducted to design products assortment.

The business model for this venture targets the urban young and develops methods for secured transaction and business processes. Security is the most important risks associated with this business. Security risks are found at both the supplier and the user end. The users are most concerned of the security of transaction and personal information. The suppliers are concerned about the security of their website as the lack of cybercrime control poses increasing risks for any business from hackers, spammers and malware.

The use of IP camera will allow potential customers to get a live view of the warehouse by which they can check inventory quality and hence create revolution in the online shopping industry.

50 | P a g e

Recommendation

Some suggestions for the proposed online superstore business are: The concept of online superstore in Bangladesh is in its nascent period, it is suggested that any business model working with online superstore should start with hybrid superstore in its introductory phase. Even though, cash was kept as a mode of payment (Business Model), but only as a partial payment. This is because some amount should be kept beforehand as security money. To gain trust of customers, the quality should be ensured at the highest standard with a guarantee of replacement or repayment. Since there is a higher penetration of mobile phone browsing, the company website should also have a mobile version. There should be an option in the company website to take constant customer feedbacks.

51 | P a g e

Conclusion

With a burgeoning tech savvy population and rising income in urban areas, e -business as whole is here to stay at Bangladesh. This research looked into the feasibility of online business and its need in Bangladesh commerce, the survey report showed something really interesting; even through people do have reservation about shopping online a large population is willing to adapt. With a proper business model and right strategy online shopping can create its niche in initial stages, then catching on as the business get credibility. For that to happen many major issues are to be addressed; like security and customers trust. With constant upgrading of technologies and proper management; it is not that far, that most people would be doing business online, redefine conventional way of shopping altogether.

52 | P a g e

7. References:
1. Aylott, R. and Mitchell, V- W. 1999. An exploratory study of grocery shopping stressors, British food Journal, Vol. 101, No. 9, pp. 683-700. 2. Boyer, K., Hult, T., Splinder, M. and Santoni, R., (2003): Bridging the Last Mile: Online Shopping in UK and US, MIT Sloan School of Management 3. Burke, R. R. 1997. Real shopping in a Virtual Store, Peterson Robert A. ed. Electronic Marketing and the Consumer. Thous and Oaks: Sage Publications. 4. Chesbrough, H. and Rosenbloom, R. S., (2002): The Role of Business Model in Capturing Value from Innovation: Evidence from Xerox's Corporation's Technology Spinoff Companies. Industrial and Corporate Change Vol. 11, No. 3 pp. 1-40. 5. Ethiraj, S., Guler, I. and Singh, H., (2000): The Impact of Internet and electronic technologies on firms and its implications for competitive advantage, Knowledge at Wharton. 2002. 6. Islam, ASM Nazrul (2005) Prospect of IT in Bangladesh, Sustainable Development Networking Gazzette. UNDP. 7. Jrvenp, S. L. & Todd, P. A. 1997. Is There a Future for Retailing on the Internet? Peterson Robert A. ed. Electronic Marketing and the Consumer. Thousand Oaks: Sage Publications. 8. Journal of Engineering and Technology, Islamic University of Technology (IUT), The Organization of The Islamic Conference, Vol. 1, No. 1, January June 2002. 9. Laisuzzaman ,Ijaj Md.; Nahid, Imran; Nahid,Abdullah Al ; Amin,Md. Ziaul ; Alim, Md. Abdul (2010) The Framework for implementing E-commerce: The role of Bnk and Telecom in Bangladesh. Journal of Telecommunications, Vol. 1, No. 1, February 2010. 10. Kamarainen, V., (2001): The reception box impact on home delivery efficiency in e-grocery business. International Journal of Physical Distribution & Logistics Vol. 31, No. 6 pp. 414-426.

53 | P a g e

11. Markides, C., (1997): Strategic Innovation. Sloan Management Review Vol. 38, No. 3 pp. 9-23. 12. Morganosky, M and Cude, B. J. 2000. Consumer response to online grocery shopping, International Journal of Retail & Distribution Management, Volume 28, Number 1, pp. 17-26. 13. Murphy, R. and Bevan, J., (2001): The nature of value created by UK online grocery retailers. International Journal of Consumer Studies Vol. 25, No. 4 pp. 270-289. 14. Punakivi, M., Yrjola, H. and Holmstrom, J., (2001): Solving the last mile issue: reception box or delivery box. International Journal of Physical Distribution & Logistics Vol. 31, No. 6 pp. 427-239. 15. Raijas, A. and Tuunainen, V. K. 2001. Critical factors in electronic grocery shopping, The International Review of Re tail, Distribution and Consumer Research, 11:3 July, pp. 255-265. 16. Roberts, M., Xu, X. M. and Mettos, N., (2003): Internet Shopping: Supermarket Model and Customer Perceptions. Journal of Electronic Commerce in Organizations Vol. 1, No. 2 pp. 32-43. 17. Rowley,J.(2002): E-Business,Principles&Practice. 18. Sheth, J. N. & Sisodia, R. S. 1997. Consumer Behavior in the Future, Peterson Robert A. editor. Electronic Marketing and the Consumer. Thousand Oaks: Sage Publications. 19. Tanskanen, K., Yrjola, H. and Holmstrom, J., (2002): The way to profitable Internet grocery retailing -- six lessons learned. International Journal of Retail & Distribution Management Vol. 30, No. 2 pp. 169-178. 20. Verhoef, P. C. and Langerak, F. 2001. Possible determinants of consumers adoption of electronic grocery shopping in the Netherlands, Journal of Retailing and Consumer Services, 8, pp. 275-285.:

54 | P a g e

8. Appendix
QUESTIONNAIRE
We are a group of MBA students at IBA, DU. This questionnaire is part of an academic research to explore customer needs and feasibility of online superstores in Bangladesh. The identity of our respondents shall remain anonymous and the responses shall be used for academic purposes only. The survey has 16 questions and should take about 5 minutes to answer. In multiple choice questions please tick to indicate your chosen answer. Thank you for taking your time to answer this questionnaire. 1) Please indicate your age: Below 25 years 26-34 years 35-44 years 45 years and above 2) Please indicate Gender: Male Female 3) Please indicate estimated monthly household income?

a. Less than BDT 25000 d. 60000-89000

b. 25000-40000 e. 90000-120000

c. 41000-59000 f. > BDT 120000

4) Your occupation is Student Business Executive Mid-level managers Top level managers Professionals (Doctor, Architect) (please mention) _______________ Govt. employees Home maker Self employed Other (please specify) ______________ 5) Do you have access to use internet for personal work on a regular basis? Yes No 6) How regularly do you go to malls for shopping? Monthly Weekly Whenever required, there is no particular pattern

55 | P a g e

7) Do you usually go to a particular shopping mall each time? Yes No 8) Have you ever purchased any goods or service online? Yes No 9) Rate the following criteria according to their importance to you in choosing to purchase from a shopping mall. (1 being the least important and 5 being most important)

1 2 3 4 5 Low prices Keeps a variety of goods to choose from Product quality is always in check Regular promotions Product availability The brand name of the grocery store
10) Do you think that the option of buying everyday goods online would be a very convenient one for you? Yes No 11) If no, why not? I prefer physically examining the goods I purchase I do not feel secure sharing my credit card details online I do not find it a hassle to go to the shopping malls Others. Please specify: ______________________________ 12) Are you familiar with making purchases using credit cards? Yes No, but I will use if found suitable No, not interested 13) If yes on above, what are your concerns (if any) regarding using the credit card for online shopping? Security Accuracy Probability of fraud Others (please specify)____________________________________________________ 14) Have you heard on the online payment system, PayPal? Yes No, but I will use if found suitable No, not interested

56 | P a g e

15) Do you use mobile payment system (BKash, Surecash, Blinks Remittance transfer etc.)? Yes No, but I will use if found suitable No, not interested

16) If you were to able to purchase regularly needed goods online, please rate the following criteria according to their importance to you in satisfying your purchasing experience.

1 2 3 4 5 Navigation of website Ease of purchasing process Fast response time High security Up-to-date information Responsive service Customization of shopping experience
17) Do you like to conduct an online research on products or services before purchasing? Yes No 18) In the following section of the questionnaire, please score the statements according to your opinion based on the scale provided.(1 indicates very strongly disagree and 5 indicates very strongly agree)

1 2 3 4 5 I think that learning to use online shopping would be easy. I think that interaction with online shopping does not require a lot of effort. I believe transactions though internet would be secure. I believe payments though internet would be smooth I believe my personal information will be kept confidential if I use online facilities. Online shopping services may not perform well and process payments incorrectly.
19) If you have any other criterion of importance or any suggestions for an online
shopping site for Bangladesh, Please provide it below (Optional)

______________________________________________________________________________ ______________________________________________________________________________ -: Thank you:-

57 | P a g e

Survey Results:
1) Please indicate your age:

25 years or less 26-34 years 35-44 years 45 years and above

40 115 8 6

20% 56% 4% 3%

2)

Please indicate Gender:

Male Female

149 56

73% 27%

3)

Please indicate estimated monthly household income?

Less than BDT 25000 25000-40000 41000-59000 60000-89000 90000-120000 Greater than 120000

55 46 34 26 24 20

27% 22% 17% 13% 12% 10%

58 | P a g e

4)

Your occupation is-

Student Business Executive Mid-level managers Top level managers Govt. employees Home maker Self employed Other

108 21 16 7 6 3 9 35

53% 10% 8% 3% 3% 1% 4% 17%

5)

Do you have access to use internet for personal work on a regular basis?

Yes No

202 3

99% 1%

6)

How regularly do you go to malls for shopping?

Monthly Weekly Whenever required, there Is no particular pattern

20 23

10% 11%

162

79%

59 | P a g e

7)

Do you usually go to a particular shopping mall each time?

Yes No

91 114

44% 56%

8)

Have you ever purchased any goods or service online?

Yes No

70 135

34% 66%

9)

Rate the following criteria according to their importance to you in choosing to purchase from a shopping mall. (1 being the least important and 5 being most important)

Low prices 1 2 3 4 5 14 31 73 58 29 7% 15% 36% 28% 14%

Keeps a variety of goods to choose from 1 2 3 4 5 4 11 47 69 74 2% 5% 23% 34% 36%

60 | P a g e

Product quality is always in check 1 2 3 4 5 2 5 34 50 113 1% 2% 17% 24% 55%

Regular promotions 1 2 3 4 5 19 53 71 45 17 9% 26% 35% 22% 8%

Product availability 1 2 3 4 5 5 8 38 66 88 2% 4% 19% 32% 43%

The brand name of the grocery store 1 2 3 4 5 20 23 62 54 46 10% 11% 30% 26% 22%

61 | P a g e

10)

Do you think that the option of buying everyday goods online would be a very convenient one for you?

Yes No

120 85

59% 41%

11)

If no, why not?

I prefer physically examining the goods I purchase I do not feel secure sharing my credit card details online I do not find it a hassle to go to the shopping malls Other 12 112 6% 55% 14 7% 67 33%

12)

Are you familiar with making purchases using credit cards?

Yes No, but I will use if found suitable No, not interested

114

56%

62 29

30% 14%

62 | P a g e

13) If yes on above, what are your concerns (if any) regarding using the credit card for online shopping?

Security Accuracy Probability of fraud Other

87 4 40 74

42% 2% 20% 36%

14)

Have you heard on the online payment system, PayPal?

Yes No, but I will use if found suitable No, not interested

175

85%

21 9

10% 4%

15)

Do you use mobile payment system (BKash, Surecash, Blinks Remittance transfer etc.)?

Yes No, but I will use if found suitable No, not interested

22

11%

132 51

64% 25%

63 | P a g e

16)

If you were to purchase everyday goods online, please rate the following criteria according to their importance to you in satisfying your purchasing experience.

Navigation of website 1 2 3 4 5 9 10 51 63 72 4% 5% 25% 31% 35%

Ease of purchasing process 1 2 3 4 5 5 9 24 44 123 2% 4% 12% 21% 60%

Fast response time 1 2 3 4 5 4 5 26 45 125 2% 2% 13% 22% 61%

High security 1 2 3 4 5 5 7 15 31 147 2% 3% 7% 15% 72%

64 | P a g e

Up-to-date information 1 2 3 4 5 5 4 32 50 114 2% 2% 16% 24% 56%

Responsive service 1 2 3 4 5 4 9 22 50 120 2% 4% 11% 24% 59%

Customization of shopping experience 1 2 3 4 5 7 20 46 67 65 3% 10% 22% 33% 32%

17) Yes No

Do you like to conduct an online research on products or services before purchasing? 166 39 81% 19%

65 | P a g e

18)

In the following section of the questionnaire, please score the statements according to your opinion based on the scale provided.(1 indicates very strongly disagree and 5 indicates very strongly agree)

I think that learning to use online shopping would be easy. 1 2 3 4 5 4 13 48 76 64 2% 6% 23% 37% 31%

I think that interaction with online shopping does not require a lot of effort. 1 2 3 4 5 7 26 56 72 44 3% 13% 27% 35% 21%

I believe transactions though internet would be secure. 1 2 3 4 5 14 33 92 41 25 7% 16% 45% 20% 12%

I believe payments though internet would be smooth 1 2 3 4 5 7 33 66 62 37 3% 16% 32% 30% 18%

66 | P a g e

I believe my personal information will be kept confidential if I use online facilities. 1 2 3 4 5 19 44 71 36 35 9% 21% 35% 18% 17%

Online shopping services may not perform well and process payments incorrectly. 1 2 3 4 5 25 44 74 46 16 12% 21% 36% 22% 8%

67 | P a g e