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RATION-WALE

Category: Profit and People. Team: Prayas Team Members: All from Welingkar Institute of Management development and Research. Parveen Kumar, parveen.dangwal@hotmail.com, 07676663798.User ID: Dangwal. Puneet Singh Verma, Punit.thakur4209211@gmail.com, 08880757247. Harmanpreet Singh Anand, bonu.anand@gmail.com, 07204297754.

Executive Summary The success stories of Wal-Mart internationally and Big Bazaar domestically has turned retail sector into a gold mine. According to Institute of Grocery distribution, IGD a UK based nonprofit organization, Indian grocery retail market was worth US$ 299.2 billion in the year 2008. Every big Indian business house from Ambanis to Birlas and more wants to claim its share of the retail sector. Ration-wale is attempt to revolutionize phone retailing of groceries through an inclusive, service oriented and profitable plan. We intend to target people who either do not like visiting a grocer or just do not have time for their groceries. We understand that people still order grocery through phone at local kirana stores or at their more sophisticated counterparts likes More or Reliance mart. But, retailing only and directly through phone will be a much more evolved business model and our order taking, delivery and customer service model will set us apart from other retailers in the market. This is a brick and mortar set up where technology is used where necessitated by operations. The idea is crude yet simple and that is where our strength lies. We also want to uplift poor sections of society, especially women, by making them part of this business model. They will be trained and employed by Ration-wale in various capacities like front line operators, warehouse operatives and supervisors etc. Women are naturally adept at talking about and picking up groceries so, they can be a great asset to our business. Use of technology in retrieving past order and delivering order within promised time will lend a touch of personalization and great customer service. Though, these details are minute but they are indispensable in our business plan.

Opportunity Kirana stores and organized retailers are proving an alternate of taking order on phone and delivering it to the customer but it remains an alternate not a primary business model. Their primary business comes from customer walking into the stores and doing shopping which requires a lot of infrastructural investment and that too at expensive areas frequented by people. Our model does not require showcasing of the goods and therefore, paying rent of an expensive and strategically located trading area can be done without. This can give us a significant cost advantage over other retail players. Online grocers cannot penetrate through the masses because internet users in India still make up for 8.5% of the total population. Illiterate people are out of their reach for obvious reasons and sometimes even the literates are more comfortable talking to someone than browsing through a sea of options. Local departmental stores sometimes take more than 24 hours to deliver the goods whereas we will handle everything professionally and keep our delivery promise. We will take time from the customer instead of appearing at his place at our whims. Apart from generating revenue we are also very keen on improving lives of the poor. Most of our workforce will come from slums. They will be given training on computer and on communication skills for operators job. Similarly, for warehouse operation they will be provided appropriate training. Even the delivery boys or girls will be trained to talk politely and patiently with the customers.

Target Audience and Market Size We plan to start operations of Ration-wale in Chandigarh. The reasons for doing it include familiarity with the market and demographics. According to a 2010 CII study total number of households in Chandigarh are 2,06,465, out of which 89.8 live in urban areas. Number of workers are 3,40,422 out of which 2,84,419 are males and 50,003 are females. Some of the key observations about grocery shopping in Chandigarh are listed below: A typical household shops for entire months grocery at once. In majority of households, grocery shopping is done by women who have to be dependent either on husband or children to buy and carry the grocery home. Working couples are reluctant to take time out to visit a grocer for such a basic and mundane need.

Most of items on a grocery list are same every month, therefore desire to touch and feel the product before buying it is really not there. Items that may vary from month to month are items bought lose like rice, flour, spices etc. People prefer to fix a grocer and may stick to him for years. Convenience of free delivery is a major value addition.

Considering the above mentioned points we intend to target following segments: Housewives dependent on someone in the family to buy grocery. Working couples who do not have time for visiting a grocer. Paying guests, generally people who are clear about which products and brands they use every month.

Product/Service Description and Value Proposition Our focus is to get people shop for their grocery over the phone instead of visiting a departmental store. Right from taking the order to delivering it we will make it a delightful and personalized experience for the customer through great customer service. An account will be created for the first time callers so, that it is easy to keep track of their routine items. The next time they call operator will already have much of their grocery list. Which will increase efficiency of the overall system and save time of the customer. Operator can also read out various categories which customer might have missed. Operator will then send the copy of the order to the warehouse, where the order will be assembled, packed and loaded on the delivery truck. We estimate the initial delivery time to be less than 6 working hours and we intend to cut it down to 3 hours as the business grows. Customers will be also be given the freedom to change the delivery time if for any reason they might have. Many customers buy lose and not branded commodities. Rice, flour and spices are examples of such commodities. The service will be customized for such customers. Most available varieties of these items and weight balance will be there on the truck all the times to cater to such customers. Customer will generally call us when they are free because grocery shopping is never a on top to do list of anybody. To cover maximum free time of the customers, whether it is before going to

the office, after sending children school, after coming from the office or after dinner we will take orders from 8 am to 10 pm. From this model customers are getting flexible order timings, timely delivery and convenience of having grocer at door-step. They also do not have to make a new list every month and in case they forget anything operator is always there to help them out.

Competitive Landscape The local departmental stores and players in organized retail are all competition for us. But the possibility of a direct clash with competition is very bleak initially because they will all wait and watch for reaction to the offering. E-grocers like groceryshop.in and others have limited market accessibility. There is no such limitation for a business done over the phone because according to TRAI number of mobile phone users in country has already reached 764 million and it is only increasing. Through phones we also easily reach illiterates. Even for literates ordering something over the phone is quicker, convenient and uncomplicated. As organized retail players, Landmark, Big Bazaar etc. still have just 2% of the market, there is enough chance to establish yourself without clashing head-on with another player.

Team Composition and Structure The structure of the company is very decentralized. Number of centers in a city depend upon the size of the population and ease of navigation through an area. Centers within a state can be operated from the state unit which in turn can be operated from zonal unit. Our target is to give as much autonomy as possible at every level of organization. So, that even the smallest unit selfreliant and profitable. At the present moment we are talking about starting our operations in a single city. Various operations can be run and controlled by a single center. Workforce engaged in the center is given as below. Sr.no 1 2 3 4 5 Designation Operator Warehouse staff Driver Delivery boy Supervisor No of people 4 8 4 4 2

Sales and Distribution Model Though we will develop a website for Ration-wale from where customers can order grocery it will not be a primary revenue generator. Site mainly will increase visibility of Ration-wale and direct customer to our phone number. Majority of sales will happen over the phone. Once the customer has placed the order it will be delivered by company owned delivery tempo or truck within 6 hours initially and then gradually we plan to cut it short to 3 hours.

Revenue Model and Pricing We are doing pure retailing. Grocery will be sold at MRP. We do not want to slash the prices because that way business itself does not remain profitable and therefore sustainable. Many eretailing websites are facing the same situation today. They offered heavy discounts for capturing more market share and because of that ran into losses. Customer is already getting superiors service and convenience of door-step grocer so, he will not have any problem paying the same amount that he pays to a grocer i.e. MRP. Growth and Scalability We plan to grow in a very orderly fashion, in phases to be specific. We are targeting northern India in the first phase. As mentioned already operations will start from Chandigarh. Gradually we will expand operations in industrial cities of Haryana and Punjab like Ludhiana, Patiala, Panipat. Delhi is an important market for us because it is a metropolitan and people still buy grocery in a very traditional Indian way. Getting our brand accepted in a metropolitan will open other A-grade cities for us as people will already have the awareness of and confidence in our brand. After establishing Ration-wale at the household level we want to cover hotels, restaurant and dhabas. For that we will have to deliver better turnaround time. Many a time an eatery runs of ration stock all of sudden and then they are in urgent requirement of the new stock. Therefore, once we have smoothened our logistics we will start focusing on these establishments as well.

Financials We do not intend to make huge infrastructural investments so, we will rent office and warehouse rather than buy them. Following is the break-up of initial investment (this the investment in a single center, during expansion we will have to account for technological investments for intercenter and inter-unit connectivity).

Investments Office rent Warehouse rent Tempo(on hire) operators supervisor Warehouse staff Driver Delivery boy Fixed cost Miscellaneous Total

Cost 25000 10000 10000 4000 8000 4000 6000 5000 400000 500000

Number 2 4 2 8 4 4

Time 12 12 12 12 12 12 12 12

Total 300000 120000 240000 192000 192000 384000 288000 240000 400000 500000 2856000

Without being overconfident about our marketing strategies we hope to start making profit in the first year itself. Our target is to receive 100 calls in a day on a average. Average order per caller 1000 Rs So, revenue for one day should be 100000 and therefore for one year will be 3,60,00,000 Rs. Even by a very conservative profit margin of 10% we should be able to make a profit of 3600000 Rs. in the first year itself. Break-even point should be crossed in 10 months.

References: http://www.mycii.in/image/eventimages/eventmainimages/E000003069_CII%20Chandigarh%20 Fair%20Bk%20Paper.pdf CII study of the demographics of Chandigarh-2010. http://www.internetworldstats.com/asia/in.htm www.internetworldstats.com http://articles.economictimes.indiatimes.com/2011-01-25/news/28433753_1_subscriber-basewireline-market-user-base Philip Kotlers Marketing Management.

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