After an extensive study of the operating models of different e-commerce companies, LocalBanya

decided against a heavy capital investment. It opted for a lean set-up with the following features:
1. It decided against both marketplace model and inventory based model. The rationale behind
the move is to maintain the quality image of the brand and at the same time protect the firm
from any demand fluctuations. A mix of warehousing and sourcing from wholesalers,
distributors and Cash-and-Carry stores along with a partial Just-In-Time ensures that the
initial capital investment is reduced by as much as 70%. The feeder vehicles accumulate all
the orders at the warehouse. From there individual vehicles deliver the products. Multiple
modes of sourcing are also key in improving product availability. LocalBanya now has just-intime partners to provide fresh vegetables and fruits apart from 100 strategic tie-ups with key
retailers across Mumbai. They also have partnered with niche offline retailers like
Breadkraft, Bagelwala & Shor Sharaba. Local Banya has a differential revenue-sharing model
with each retailing partner, depending on the brand and category purchased. EkStop buys
directly from manufacturers while BigBasket follows a marketplace model.
2. Efficient structuring and mapping of the delivery area to enable effective coverage across
areas.
3. Use of leased delivery vehicles instead of purchasing a fleet upfront. This allows substantial
initial savings.
4. In-house delivery personnel. This improves the control of the firm on the last leg of the
delivery.
5. Heavy use of data analytics for predictive modelling to forecast supply demand patterns,
especially groceries procured from local vendors.
6. Constant monitoring of the entire product stock by maintaining all inventory online.
LocalBanyas delivery radius is from Colaba to Dahisar, Mulund to Deonar in Mumbai, Hiranandani to
Kalwa in Thane and from Dighe to Seawoods in Navi Mumbai. The warehouses are strategically
located at Goregoan and Rabale in Navi Mumbai. A third warehouse is being planned at Kurla from
the recent fresh round of funding.

Today, Local Banya has just-in-time partners for fresh fruits and vegetables, and 100 strategic tie-ups
with retailers across the city. They also partner with offline retailers such as Breadkraft, Bagelwala
and Shor Sharaba, which are niche stores. Local Banya has a different revenue-sharing deal with

each retailing partner, depending on brand and category. It has warehouses in Goregaon (E) and
Rabale in Navi Mumbai. The funds will be deployed across 18 months for technological innovation in
handling the supply chain, setting up a third warehouse in Kurla (in Mumbai) and distribution

Mix of warehousing & Cash and Carry

lean procurement set-up, use of leased delivery vehicles, in-house delivery personnel (for ease of
management) and a well-structured region mapping that enables effective coverage of the city have
helped the start-up cut down on costs
LocalBanya's feeder vehicles source the accumulated orders at a warehouse.
Maintaining a standard quality in case of Veggies
Multiple sourcing

This requires a lot of data analytical work as well when it comes to forecasting supply demand
patterns, especially in the case of perishable groceries.
We currently have a fleet of over 20 tempos that handle all daily deliveries across the city.
While Ekstop and Bigbasket buy directly from manufacturers or follow a marketplace model (where
it acts as a facilitator between sellers and buyers), Localbanya buys from FMCG firms, wholesalers
and others.
Here's the really tricky part - surviving in a failed market. After extensive market research, Local
Banya decided against an inventory-based model, nor would it invest in delivery vehicles.

LocalBanya has adapted a lean business model that relies on a convenient mix of warehousing and
cash-and-carry. This has reduced the start-up's dependence on capital-intensive operations and
enabled it to put in place a thoroughly efficient supply chain.
"People come to us for a wide selection of goods (otherwise, they will have to visit 2-3 stores to
make a purchase), convenience and great pricing. We deliver that convenience with exceptional
levels of customer service, preferred delivery times, same-day deliveries, fresh produce and efficient
& reliable suppliers. We also take product suggestions from our customers and ensure that the
products are online in a fortnight," details the LocalBanya team. The procurement model includes a
convenient mix of warehousing and just-in-time (JIT) deliveries from a host of suppliers including
FMCG companies, cash-and-carry outlets and other distributors
But what matters most is the lean infrastructure set-up for reducing asset liabilities.
Competition abounds in online grocery retail space but containing cash-burning is most crucial when
it comes to inventory, supply chain and logistics. Streamlining the supply chain and inventory
management is an uphill task but a lean procurement set-up, use of leased delivery vehicles, inhouse delivery personnel (for ease of management) and a well-structured region mapping that
enables effective coverage of the city have helped the start-up cut down on costs.

LocalBanya's feeder vehicles source the accumulated orders at a warehouse.

Maintaining a standard quality in case of Veggies
Multiple sourcing
LocalBanya offers over 8000 in stock products on our website. Obviously, we cannot inventorize all
of them. We have to be smart and figure out which products to warehouse ourselves and which
ones to procure just-in-time. So from day one we knew we had to run this part of our business in a
very cost effective manner.
We have a mix of both inventory and no inventory. Our breads, fruits and many other items are
bought on a daily basis. The other items are stored in a central warehouse. We maintain our entire
inventory online and are closely monitoring the stock movement. Each bill is handpicked by the
packaging team and we know beforehand if we need to call for last minute orders with our
suppliers. Every single aspect of our business has to be process driven and streamlined. In short, we
have to build a sustainable/scalable technology eco-system that can manage both our biggest
vendors to the smallest to ensure we are able to get the products when we need them every single
time.
Inventory Management: LocalBanya had an uphill task of streamlining the supply chain and
inventory management techniques to cater effectively to an online ordering audience. The solution
was found in a leaner operational setup with a warehouse and partial Just In Time (JIT) process. This
requires a lot of data analytical work as well when it comes to forecasting supply demand patterns,

especially in the case of perishable groceries.

Logistics: A challenging domain as is, logistics for an e-tailing business seemed to be a daunting task.
The solution was found in leasing a fleet of delivery vehicles (reducing capital investments), in-house
team of delivery boys (ease of management) and a well-structured region mapping which allowed
for effective coverage of the city.
Institutional clients including restaurants, corporate houses, co-operative societies and any other
organisation requiring groceries in bulk have seen the advantage of e-grocery and 29% of the
business comes from these channels.
We handle our own delivery logistics. This is the only way to ensure we can get orders to people at
their selected time slots. Delivery is the last step in the process but one that has to be flawless.
People will simply not order again if delivery is not up to standards. We currently have a fleet of over
20 tempos that handle all daily deliveries across the city.
While Ekstop and Bigbasket buy directly from manufacturers or follow a marketplace model (where
it acts as a facilitator between sellers and buyers), Localbanya buys from FMCG firms, wholesalers
and others.
Here's the really tricky part - surviving in a failed market. After extensive market research, Local
Banya decided against an inventory-based model, nor would it invest in delivery vehicles. "Instead,
we decided we would hold a very small inventory and forge tie-ups with wholesalers and cash-andcarry partners across the city. This brought down our capital investment by 70 percent as we did not
have to spend on warehousing or setting up a retail outlet. Our only major cost to begin with was
our server," reveals Mehrotra.
Today, Local Banya has just-in-time partners for fresh fruits and vegetables, and 100 strategic tie-ups
with retailers across the city. They also partner with offline retailers such as Breadkraft, Bagelwala
and Shor Sharaba, which are niche stores. Local Banya has a different revenue-sharing deal with
each retailing partner, depending on brand and category.
The e-grocer currently offers 4,500 products and intends to take its product suite to 10,500 by
March 2013. As for delivery and dispatch, it has 14 delivery boys and four vehicles that are
outsourced. It operates out of only warehouse in the western suburb of Goregaon, where dispatch
takes place twice a day. Delivery to customers takes place in five time slots, between 9 am and
midnight.
It has warehouses in Goregaon (E) and Rabale in Navi Mumbai. The funds will be deployed across 18
months for technological innovation in handling the supply chain, setting up a third warehouse in
Kurla (in Mumbai) and distribution