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Table of Contents Executive Summary ...................................................................................................................... 4
1. Introduction ........................................................................................................................... 5
1.1 Introduction ...................................................................................................................... 5
1.2 Origin of the Report ......................................................................................................... 6
1.3 Justification ...................................................................................................................... 6
1.4 Objective .......................................................................................................................... 7
1.5 Methodology .................................................................................................................... 8
1.5.1 Type of data obtained: .............................................................................................. 8
1.5.2 Survey and sampling: ................................................................................................ 8
1.5.3 Method of administering the questionnaire: ............................................................. 9
1.5.4 Tabulation and Data analysis: ................................................................................... 9
1.6 Scope ................................................................................................................................ 9
1.7 Limitations ..................................................................................................................... 10
2. Overview of Online Shopping services and it’s prevalence in Bangladesh ................... 11
2.1 Bangladesh Economy Overview .................................................................................... 12
2.2 Market Structure of Superstores ..................................................................................... 13
2.3 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 Need Analysis: (The Survey Outcome) ......................................................................... 26
4.3 Business Model .............................................................................................................. 28
4.3.1 The Building Blocks of a Business Model .................................................................. 29
4.3.2 Operational plan ...................................................................................................... 30
4.3.3 Managerial Plan ...................................................................................................... 34
4.3.4 Financial Plan............................................................................................................... 35
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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
4.4.1 Challenges (to identify potential problems and risk associated with online
superstore in Bangladesh) ..................................................................................................... 45
4.4.2 External environment analysis: PESTEL (Risk)..................................................... 47
4.5 Summary of Findings ..................................................................................................... 49
5. Recommendation................................................................................................................. 51
6. 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
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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
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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 country’s infrastructure and macro environmental factors.
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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
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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.
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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. People’s 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 don’t 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.
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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.
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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.
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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.
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2. Overview of Online Shopping services and it’s 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.
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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
Bangladesh’s 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).
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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 200-
250 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.
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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
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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 (Järvenpää 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
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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 Albertson’s, Safeway, Wal-
Mart, Publix, Lowes Food, and Santoni’s; whilst in the UK there are Tesco, Sainsbury’s,
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
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retailers also took over their virtual challengers and continued the development of the e-
grocery 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 company’s
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 firm’s 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 company’s 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.
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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
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model can be adopted by using stores owned by the online supermarket itself or its
partner(s).
The second is to serve the online supermarket’s 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).
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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
205
Percentage of Male 73%
Percentage of Female 27%
Income Range 25,000 or
below
26,000 –
40,000
41,000 –
59,000
60,000-
89,000
90,000-
120000
above
120,000
27% 22% 17% 13% 12% 10%
Occupation
Percentage
Student Business
Executive
Mid Level
Managers
Top Level
Managers
Govern
ment
Home
maker
Self-
empl
oyed
Other
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
Age Less than
25
26 – 35 36 - 45 46 and above
20% 56% 4% 3%
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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.
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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.
Here’s a data from World Bank.
Table 3 Internet Penetration Rate in Bangladesh
Bangladesh 2002 2003 2004 2005 2006 2007 2008 2009 2010
Internet
Penetration
rate
0.14 0.16 0.20 0.24 1.00 1.80 2.50 3.10 3.70
Graph 5 Internet users as percentage of population
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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
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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 Bangladesh’s
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
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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
company’s 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 hassle-
free, 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.
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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
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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 5 2%
2 7 3%
3 15 7%
4 31 15%
5 147 72%
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 19 9%
2 44 21%
3 71 35%
4 36 18%
5 35 17%
Graph 8 Demand of High Security regarding Online shopping
Graph 9 Demand for preservation of Personal Information regarding online shopping
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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.
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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.
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.
Figure 4 The Building Blocks of a Business Model
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The fundamental business model is illustrated below:
Regular Internet User
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.
Operational Managerial Financial Marketing
Offer
Customer
Key Resources
Key Activities
Partner Networks
Technical Support
Staffing
Planning
Implementing
Controlling
Monitoring
Revenue Stream
Cost Structure
STP
Channels
Promotion
R&D
Customer Relationship
Technical Support
Figure 5 Business Model
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• 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
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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
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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
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o Courier companies with already established logistic systems may be
used as partners for making deliveries.
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.
Figure 8 Partner Network
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• 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.
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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
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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 BDT 6 crores
Human Resource Cost BDT 1 crores
Logistic support Cost BDT 10 Crores
Operating Cost BDT 2 Crores
Advertising and promotions BDT 2 Crores
Working Capital 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.
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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
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• 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.
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• 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 10 Model Website
Figure 11 POS Software
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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 don’t 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.
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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.
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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 ‘কষ্টের উপার্জ ষ্টে শ্রেষ্ঠ বার্ার এখে ঘষ্টর বষ্টেই’ (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
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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.
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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?
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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
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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.
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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 July 2015 July 2019
Total 158.96 167.39
Male 81.63 85.86
Female 77.33 81.51
Gender Ratio 106 105.34
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.
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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.
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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.
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5 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.
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6 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
customer’s 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.
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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. Järvenpää, 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.
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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.:
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8. Appendix
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?
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
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.
a. Less than BDT
25000
b. 25000-40000 c. 41000-59000
d. 60000-89000 e. 90000-120000 f. > BDT 120000
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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
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15) Do you use mobile payment system (BKash, Surecash, Blink’s 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:-
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Survey Results:
1) Please indicate your age:
25 years or less 40 20%
26-34 years 115 56%
35-44 years 8 4%
45 years and above 6 3%
2) Please indicate Gender:
Male 149 73%
Female 56 27%
3) Please indicate estimated monthly household income?
Less than BDT 25000 55 27%
25000-40000 46 22%
41000-59000 34 17%
60000-89000 26 13%
90000-120000 24 12%
Greater than 120000 20 10%
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4) Your occupation is-
Student 108 53%
Business Executive 21 10%
Mid-level managers 16 8%
Top level managers 7 3%
Govt. employees 6 3%
Home maker 3 1%
Self employed 9 4%
Other 35 17%
5) Do you have access to use internet for personal work on a regular basis?
Yes 202 99%
No 3 1%
6) How regularly do you go to malls for shopping?
Monthly 20 10%
Weekly 23 11%
Whenever required, there
Is no particular pattern 162 79%
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7) Do you usually go to a particular shopping mall each time?
Yes 91 44%
No 114 56%
8) Have you ever purchased any goods or service online?
Yes 70 34%
No 135 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 14 7% 2 31 15% 3 73 36% 4 58 28% 5 29 14%
Keeps a variety of goods to choose from
1 4 2% 2 11 5% 3 47 23% 4 69 34% 5 74 36%
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Product quality is always in check
1 2 1% 2 5 2% 3 34 17% 4 50 24% 5 113 55%
Regular promotions
1 19 9% 2 53 26% 3 71 35% 4 45 22% 5 17 8%
Product availability
1 5 2% 2 8 4% 3 38 19% 4 66 32% 5 88 43%
The brand name of the grocery store
1 20 10% 2 23 11% 3 62 30% 4 54 26% 5 46 22%
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10) Do you think that the option of buying everyday goods online would be a very convenient one
for you?
Yes 120 59%
No 85 41%
11) If no, why not?
I prefer physically examining
the goods I purchase 67 33%
I do not feel secure sharing
my credit card details online 14 7%
I do not find it a hassle to go
to the shopping malls 12 6%
Other 112 55%
12) Are you familiar with making purchases using credit cards?
Yes 114 56%
No, but I will use
if found suitable 62 30%
No, not interested 29 14%
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13) If yes on above, what are your concerns (if any) regarding using the credit card for online
shopping?
Security 87 42%
Accuracy 4 2%
Probability of fraud 40 20%
Other 74 36%
14) Have you heard on the online payment system, PayPal?
Yes 175 85%
No, but I will use
if found suitable 21 10%
No, not interested 9 4%
15) Do you use mobile payment system (BKash, Surecash, Blink’s Remittance transfer etc.)?
Yes 22 11%
No, but I will use
if found suitable 132 64%
No, not interested 51 25%
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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 9 4% 2 10 5% 3 51 25% 4 63 31% 5 72 35% Ease of purchasing process 1 5 2% 2 9 4% 3 24 12% 4 44 21% 5 123 60% Fast response time 1 4 2% 2 5 2% 3 26 13% 4 45 22% 5 125 61% High security 1 5 2% 2 7 3% 3 15 7% 4 31 15% 5 147 72%
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Up-to-date information 1 5 2% 2 4 2% 3 32 16% 4 50 24% 5 114 56% Responsive service 1 4 2% 2 9 4% 3 22 11% 4 50 24% 5 120 59% Customization of shopping experience 1 7 3% 2 20 10% 3 46 22% 4 67 33% 5 65 32% 17) Do you like to conduct an online research on products or services before purchasing? Yes 166 81% No 39 19%
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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 4 2% 2 13 6% 3 48 23% 4 76 37% 5 64 31% I think that interaction with online shopping does not require a lot of effort. 1 7 3% 2 26 13% 3 56 27% 4 72 35% 5 44 21% I believe transactions though internet would be secure. 1 14 7% 2 33 16% 3 92 45% 4 41 20% 5 25 12% I believe payments though internet would be smooth 1 7 3% 2 33 16% 3 66 32% 4 62 30% 5 37 18%
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I believe my personal information will be kept confidential if I use online facilities. 1 19 9% 2 44 21% 3 71 35% 4 36 18% 5 35 17% Online shopping services may not perform well and process payments incorrectly. 1 25 12% 2 44 21% 3 74 36% 4 46 22% 5 16 8%
