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A college project of evaluating an ecommerce company. localbanya.com evaluated in terms of : porter's five forces Business Dynamics Matrix (Complementary asset availability vs Model Imitability) Key challenges
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localbanya.comrajat @localbanyaprateek @localbanyasaurabh @localbanya
Source : Booz and Company
Team of LocalBaniya.com(Launched in 2012) Amit Naik (CEO) MBA
from IIM Lucknow Rashi Choudhary
(COO) MBA from SP Jain Singapore
Karan Mehrotra (CFO) Engineer from IIT
History of LocalBaniya.comPersonal experience with not having enough time to go out and do grocery shopping after a long day of work.
Too tired to deal with going to the store to pick up groceries, waiting in long lines and dealing with the journey involved.
The traditional Banya would most likely be shut or be out of stock of what we needed.
Increased the base to Thane and Navi Mumbai very recently
Facts about LocalBaniya.com Over 10,000 registered users, Average 400 orders per day
Sales in FY 2013, Q1 of Rs. 1 cr
Avg Cart Size now exceeds Rs 1500
Typical Customer is a working professional of age band 25-40 years
Undisclosed investment by BCCL’s Springboard fund, and recently, a Series A funding from real estate developer Karmvir Avant Group
36,800+ FB likes
Team size of over 80
Launched Print/Digital Media campaigns as of July 2013 on prestigious media publications
Over 10,000 Skus.
Over Rs 10 million in monthly revenues
Distributor Broker Model Value Proposition : Providing high quality products without wasting customer’s time or energy .
Revenue Model : Transactional
Pricing Strategy : Variable Discounts, markup pricing
Target Market : End Customers
Sustainability Strategy : On time, efficient and hassle free delivery of high quality products to customers.
Expansion in other cities to achieve economies of scale.
Inventory and Supply Chain Low Inventory Model used existing warehouse for FMCG non perishable items
Tie-ups with wholesalers and cash-and-carry partners for perishable items
Tie-ups with retailers for unreachable and distant places
Tie-ups with niche stores Breadkraft, Bagelwala and Shor Sharaba
Some delivery vehicles outsourced
Company employees for packaging, processing and delivery - On time delivery is 97%
Karan has a family business which included distribution for Hindustan Lever and catering services to BPOs which they leveraged for localbaniya.com also
Marketing StrategyOffer discounts to acquire customers
Customer Relationship well managed under dedicated team led by founding member
Mobile advertising on company vehicles
Print Ads on Mumbai based Newspapers like Economic Times
Started off the business in the most busy city of Mumbai
Order over website and Facebook
Swot Analysis for LocalBaniya•Increasing Customer Base•Strong Distribution networks and expertise•User friendly website.•Ontime delivery rate 97%•Only 2-3% is returned. (No questions asked returns policy)
Strength Weakness
• Easy replicable by distributor/ wholesellers• Less Profit Margin
Opportunity Threats
•Business Expansion in other Tier I cities•Improve customer and Merchant Relationship•Tie ups with more retailers for better distribution.
•New Entrants•Intense competition from traditional retailers•Maintaining repeat customers•May not find investors to fund operations anymore.
Porter’s Five Forces
1. Threat of New Entrants: • Distributor relationships hard
to establish• Supply Chain difficulties• Distributor “Areas”
2. Buyer’s Bargaining Power:• Switching costs are near zero or
psychological.
3. Supplier’s Bargaining Power:• Depends on the size of the
distributor.
4. Threat of Substitutes:• Mom ‘n’ pop stores, Big Bazar
5. Interfirm Rivalary• Since there are no e-grocery
stores yet, there is little industry rivalary
Rivalary New Entrants
Buyer’s Bargaining
Power
Supplier’s Bargaining
Power
Substitutions
1. Medium
2. High
3. Medium
4. Very High 5. Low
asdf
Business DynamicsComplementary Assets:
• Warehouses• Logistics equipment, like
delivery vans, fork lifts• Distribution Relationships
and expertise.• IMPORTANT
Imitability:• Any Distributor may start
up a website, only technical knowledge required.
• HIGH
Difficult to make money
Holder of Complementary Assets
Inventor Makes Money
Party with both technology and assets or with bargaining power makes money
Im
it
ab
il
it
yLo
wH
igh
C o m p l e m e n t a r y A s s e t s
Freely Available/ Unimportant Important
Key ChallengesMargins as low as 2%
Supply Chain hard to replicate
Many Items are perishable
Scaling up is difficult
Competetion from Big Retail
Key Challen
ges
Achieving Scalabilit
y
Building Customer Base
Supply Chain
Stiff Compet
etion
Thin Margins
Comparison with other playersBigBasket.com
In December 2011, V S Sudhakar, Hari Menon, Vipul Parekh and V S Ramesh launched BigBasket in Bangalore
AaramShop.com
Vijay Singh founded AaramShop in 2011. Originally serving 162 local shops in Delhi
Value Addition by LocalBaniya.com
Value Addition by LocalBaniya.com
Value Addition by LocalBaniya.com
Recommendations Start in-house brands which will give more margins
Do not highlight discounts for premium products . Eg – Diet Soya
Social media advertising for Mumbai based social communities. Currently very low presence on social media
Tie-Ups with distributors & wholesalers in other cities
Tie ups with retailers to check inventory of product in proximity, instead of sending from warehouse.
Make an app, have hoardings with barcodes for products all over the monorail premises. Eg: Tesco in Korea.
Future Expansion:◦ Pune (Aundh, Baner)◦ Kolkata (Salt Lake, Ballygunj)◦ Gurgaon (Except Old Gurgaon )◦ Noida, Greater Noida ◦ South Delhi
THANK YOU