Documente Academic
Documente Profesional
Documente Cultură
Karachi, Pakistan
A Major Project
Prepared by
0173KKNKKN0815
The retail industry of Pakistan is one of the least concentrated industries of the world as there are
only few supermarkets dominating most of the market (Board of Investment, 2016), (Economist
Intelligence Unit, 2016). Most of the people in Pakistan shop for their daily provisions in nearby
stores and markets which are also known as Kiryana stores. These stores are spread out all over
the country which means that the modern format of retail outlets, like supermarkets, is still in
their initial stage in the country.
One study shows that the e-commerce industry of Pakistan is expected to reach USD 600 million
by 2017 and the number of users are expected to rise from 30 million today to up to 56 million
users by 2019 (Business Recorder, 2016). The demographics of the country confirms as most of
the population is of age 18-34 years old; this means that most of the population is tech-savvy
consisting of youth who are looking to try new and innovative products and services. The timing
to enter into the e-commerce industry is perfect at the moment and the only way is up from here.
This project is about opening up a new online supermarket in Karachi, Pakistan known as
Easymart. Currently, there are only a few online shopping stores in Pakistan mainly because of
trust issues of the customers which is one of the major issues in this industry. But this gap is
exactly what needs to be catered in order to differentiate from other online stores. Building up
credibility, gaining customers faith and reaching out to potential market are the major challenges
together with opportunities to tap the market. We can get an idea of this by looking at the fact
that 95% of the purchases online are made on Cash-on-Delivery (COD) (Business Recorder,
2016).
Hence, as there is an opportunity in this market this project would be aiming to cater to this
untapped demand which exists. This project is going to be conducting thorough research by
conducting surveys and questionnaires along with using secondary data to prove the hypothesis
we are presenting. Other than that, even though we are largely optimistic about our projects
topic at hand to succeed by there are several risks and potential core competencies which can
impact the business. So, these are also discussed in detail along with its mitigants as well.
Contents
Executive Summary.........................................................................................................................3
1.0 INTRODUCTION................................................................................................................9
1.4.3 FRAMEWORK............................................................................................................12
2.1. MARKETING....................................................................................................................12
2.1.2 DEMOGRAPHICS.......................................................................................................13
2.1.3 PSYCHOGRAPHICS...................................................................................................13
2.2 COMPETITION..................................................................................................................18
2.3 OPERATIONS.....................................................................................................................21
5.2.1 Channels..................................................................................................................42
6.2 Objective.........................................................................................................................45
6.3 Marketing Plan................................................................................................................45
7.0 References..............................................................................................................................69
8.0 Appendix................................................................................................................................74
List of Tables
Figure 1 - Framework................................................................................................ 12
Figure 2 : Market Segmentation................................................................................14
Figure 3 : The 4 P's................................................................................................... 15
Figure 4: Product Levels............................................................................................ 16
Figure 5 - Marketing Mix........................................................................................... 24
Figure 6 - Research onion process............................................................................25
Figure 7: Strategic Growth........................................................................................ 49
Figure 8: Customer Correlation................................................................................. 50
Figure 9: Organization Chart..................................................................................... 52
Figure 10: Balanced Score Card................................................................................ 54
1.0 INTRODUCTION
The retail industry of Pakistan, having annual sales of USD 105 billion, is one of the least
concentrated industries of the world as there are only few supermarkets dominating most of the
market (Board of Investment, 2016), (Economist Intelligence Unit, 2016). Most of the people in
Pakistan shop for their daily provisions in nearby stores and markets which are also known as
Kiryana stores. These stores are spread out all over the country which means that the modern
format of retail outlets, like supermarkets, is still in their initial stage in the country. The retail
formats in Pakistan are as follows:
1. Small Retailers: These are the Kiryana stores which dominate most of the market share in
Pakistan. These are clustered largely in rural areas and form part of mainly the informal
sector of Pakistan. However, in major cities like Karachi, Lahore and Islamabad people are
starting to prefer the modern format retail outlets. According to Nielsen (2016), the number
of Kiryana stores per thousand populations declined over the past 10 years.
2. Supermarkets and Wholesale Centers: These are beginning to emerge in the country
starting from largely the major cities of Karachi, Lahore and Islamabad. Over the past few
years international outlets like Makro, Metro Cash & Carry and Hyperstar have also been
launched successfully in the country.
The demand drivers of the retail sector are largely the household size, average monthly
household income, household size and convenience and ease of shopping. These drivers explain
the recent trends of this sector in Pakistan moving towards one stop shopping solution from
needs-based purchases.
Other than that, there is also a trend in Pakistan of online shopping over the past few years. One
study shows that the e-commerce industry of Pakistan is expected to reach USD 600 million by
2017 and the number of users are expected to rise from 30 million today to up to 56 million users
by 2019 (Business Recorder, 2016). The demographics of the country confirms as most of the
population is of age 18-34 years old; this means that most of the population is tech-savvy
consisting of youth who are looking to try new and innovative products and services. The timing
to enter into the e-commerce industry is perfect at the moment and the only way is up from here.
To explore the need of an online retail supermarket in Karachi, Pakistan that consists of scope of
profitability, sustainability, welfare and social service within its business model.
Specific Objectives
Marketing
Marketing
Mix
Mix
New
Competitio online Market
segmentati
n supermar on
ket
Operations
Operations
and
and
Systems
Systems
Figure 1 - Framework
2.1. MARKETING
Market segmentation is not only limited to the demographics of the potential customers, but also
through psychographic factors such as personality traits, values, attitudes, interests, and lifestyles
of consumers which is a great help in identifying a future customer (Lois Schneider Farese,
2002).
2.1.2 DEMOGRAPHICS
Easymart.com is an online supermarket which serves the Karachi population with ages between
16-35 years old, who are tech savvy and slowly being open to shopping online. This will include
mostly females, but there will also be presence of male audience too. The income level will be of
PKR 50,000 plus, which will target lower to upper middle class who are invested in decisions
relating to their daily groceries. The online supermarket will target Karachi only, and other
metropolitan cities will be added to the list depending on the level of success in Karachi,
Pakistan (Limited, June 2010).
When looking at the demographics of the online business, advertising is an integral part of the
business and should be executed in a way that it gets the most out of the target segment of the
business (Bradtt, 2010). The online shopping market is relatively new and the business should
adopt a brand image which eases the potential customer's route to buying on the website. The
website should not only offer products and brands which are readily available in the stores
located near the customer, but also offer some famous international brands and products which
are not readily available in Karachi. The website should offer promotional deals and offers which
are also readily available in the supermarkets in Karachi.
2.1.3 PSYCHOGRAPHICS
Lower to upper middle class is the main targeting audience of the website, who now have access
to online connectivity through computers, cell phones or tablets. Lifestyle is built through the
psychographics, and the target market will be experiencers who are not afraid of trying out new
experiences and look forward to express themselves (Blackwell, Miniard, & Engel, 2010). The
online shopping business is relatively new, and the target market should be focused towards
people who are not afraid and look forward to something new.
It is important to analyze the customer's behaviour beforehand, and try to implement in the
business. In the start, customers will be displaying complex buying behaviour towards the online
supermarket due to their unfamiliarity with the business and with the notion of online business
not being trustworthy (Chakravarti, 2006). Easymart.com has to build upon its reputation, not
just in the online business world but also with their products and delivery service in Karachi's
market. The online business has to work towards the customers behaviour changing from
complex buying behaviour to a more habitual buying behaviour which requires the consumer
involvement to be low and the customer does not place much significance over the difference in
the brand. For example, the customer will feel less involved if he is to shop online or go out and
physically buy a product from a store. This will lead to regular habit, and the online supermarket
will become the customer's leading choice for daily/weekly/monthly shopping (Vision
Advertising, 2014).
2.1.5.1 PRODUCT
The needs of the target market should be satisfied from the product being offered in a
geographical area. Several questions have to be asked before launching the product in the market
such as, what is the problem which the product caters to? Who are the people which the product
caters to? How is the product beneficial to the customers (Kotler & Armstrong, Principles of
Marketing, 2015).
There have been frequent debates on the type of relationship a customer has with the product.
The relationship is mostly expressed through how the product benefits the customer, which is
divided into three levels (Berkowitz, 2010).
Core benefit level is the first level, where the purchase by the customer is based on the functional
benefit they achieve from the product. Expected benefit level is the second level where the
customers assess the product's features, quality and style. Augmented benefit level is the third
and last level, where the customer evaluates the post purchase benefits of the product.
When it comes to supermarkets, it should have a broad categories of products, and in these
categories, it should have most of the brands that customers see in their day to day life and are
accustomed to. The categories which are mostly available in a supermarket are:
1. Food items
2. Frozen food
3. Beverages
4. Health and Beauty
5. Baby items
6. Household items
7. Stationery
8. Medicines
2.1.5.2 PRICE
Price is an important marketing tool, it refers to how much money customer spends on a specific
product. The target market is important in deciding upon the level of prices being charged to the
customers (Kotler & Armstrong, Principles of Marketing, 2011). High end supermarkets charge
high prices to the customers, large supermarkets and hypermarkets charge lower price in large
quantities, while the 'kiryana' stores charge a small premium over the retail price of the product.
Supermarkets tend to charge affordable prices distributed all over its products except for some
unique and international brands which are not readily available in other supermarkets. The target
customers are on the lookout for affordable options in the market, which means that the
supermarkets established in Karachi have generally high sales due to their affordability and the
quality of products it offers. Easymart.com will have various prices depending on the product
category and the availability of the product/brand in the market. Market oriented pricing will be
used as the prices will be according to the Market Retail Price being offered in general products
and brands which are readily available, but will charge premium over the unique brands or
products.
2.1.5.3 PLACE
Place is another marketing tool in the marketing mix, which includes the location, channels of
distribution, logistics available for the product (Kotler & Armstrong, Principles of Marketing,
2015). The questions to be asked while making the decisions related to place are, is the product
readily available for the customer in the area? Is the area ideal for the channels of distribution? Is
the target market being catered to in the area? These questions have to analyzed in order to fulfill
the needs of the target market (Cant, Strydom, & Jooste. C. J., 2012).
The online supermarket is a business dealing with just the retailing of grocery items in Karachi.
This will require a warehouse which is likely to be located in S.I.T.E area which will be used to
store the products inside it, divided into the different product categories the online supermarket
is offering. The head office will be located in a business tower or building which will look after
the purchase, sales, marketing, finance, operations, customer service departments of
Easymart.com. The warehouse is contacted through the head office with the orders, and the head
office makes sure that the delivery is being made to the final customer within the time allocated
with the quality of the products intact.
2.1.5.4 PROMOTION
Promotion is the last marketing tool of the marketing mix, which is the communication between
the product and the target market, displaying the benefits of the product and using those benefits
to convince the customers to buy the product (Kotler P. , Armstrong, Ang, Leong, Tan, & Tse,
2013). This communication is not limited to the product but it is a two way communication, in
the sense that the customers also want their opinions and feelings to be heard (Berkowitz, 2010).
1. Advertising
2. Public Relations
3. Digital Marketing
4. Sales Promotion
These channels will help the Easymart.com, as these are the most customizable and
straightforward channels. Advertising and Digital Marketing is the most important in creating
awareness and interest amongst the target segment for the product, and potential customers have
to be analyzed over online and offline for maximum sales.
2.2 COMPETITION
When business existing in the current market of an economy, explore and launch new strategic
solutions to win over new customers and retain the loyal ones, this process is called competition.
Competition has an important role in the current market and the free economy. This ensures that
globalization comes into play and makes sure that all the intermediaries involved in the system
receive or gain some sort of benefit (Brue, 2009). Not only this, competition forces companies to
work towards producing higher quality products at affordable prices for the people in the
economy. Businesses are on the lookout for better strategies which help them to develop exciting
products and also connect customers with those products (Lois Schneider Farese, 2002).
There are many grocery or 'kiryana' stores opened up in every area, and it is hard to keep track of
them, especially in a metropolitan city like Karachi. However in the supermarket side, there are
several well known supermarkets located all over Karachi in different areas and different
residential hubs. When it comes to online, there are only a handful number of websites available
in Karachi which provide grocery items to your doorstep.
IMTIAZ SUPERMARKET
o This is a supermarket chain which is located in five different residential areas of
Karachi.
o The supermarket has been successful by catering to the middle class people and
customers have been successful in identifying its nature.
o The supermarket has opened up a new branch and has adding more in other cities
in the near future.
o Imtiaz offers one of the most diverse portfolio of products among its competitors
NAHEED SUPERMARKET
o This supermarket has one branch in the affluent area of Bahudarabad in Karachi.
o The supermarket caters to the middle class and also some of the upper class, due
to its various international products which are available.
o This supermarket has high brand loyalty to be thankful for its overall success.
AGHA'S SUPERMARKET
o The supermarket is located in a residential area but attracts customers from other
several surrounding areas.
o The supermarket is known for catering to the upper class customers and attracts
them by offering well known international brands.
o This supermarket is generally highly priced than other supermarkets but maintains
loyalty through its unique brands unavailable elsewhere.
EBCO SUPERMARKET
o This supermarket is located inside a shopping mall in Karachi.
o The supermarket is generally famous for its easy access and friendly customer
service.
o The supermarket caters to upper middle and upper class, and its selling point is its
location.
o Most of the shopping mall people traffic end up there due to its ideal location for
a supermarket.
TazaMart.pk
o This website is the most popular among the other online supermarkets.
o This website is however second in terms of traffic in the country
o It is the leading in the level of inventory beating the other competitors with
around 10,000 products.
o This is also the most affordable in the online supermarkets compared to others.
Mycart.pk
o This sets us a minimum Rs. 1000 purchase for free delivery which is lower than
what other websites offer.
o This website goes the extra mile to get the products which are not listed on their
website for customers.
o The website is the most pleasing when it comes to presentation and appearance.
QnE
o The website sits in second when it comes to website rankings due to it being a
leader in social media presence.
o The minimum order quantity of Rs. 500 for free delivery is the lowest on offer
among other websites.
o QnE uses the live chat feature effectively and reply within the allotted two hours.
It is still very early for these online supermarkets, but the level of competition is gradually
increasing in the market. This has caused these companies to work upon their service and the
products it offers, to establish themselves as the frontrunner in the market. Each company has its
pros and cons when it comes to the market, but TazaMart.pk has shown the greatest potential
when it comes to the online supermarkets through its current performance in the current segment,
but lacks upon the operational effectiveness. The company has set its position as market leader,
but due to the various companies emerging, the level of competition will be intense in a couple
of years down the road in the future (Qureshi, 2016).
2.3 OPERATIONS
The labour force related to online businesses is still relatively low, compared to the people
working in grocery shops and supermarkets in Karachi. There is still shortage of trained
individuals in this field who have the required training and education in this industry.
Easymart.com needs to realize the importance of trained staff who can offer on the job trainings
to other employees, and more Training and Development sessions and seminars can be arranged
for the employees and managers, which will ensure a healthy future and a revenue stream in the
coming five years (Fabi, 2014).
Due to the nature of the company being an online business, Easymart.com will be using different
virtual and digital platforms for the running of the business. This means that data mining has to
take place, due to the data being digital and analyzed thoroughly as all the of the potential
customers reside online. Today's world has become a digital world, where most of the
communication is done digitally, and Easymart.com being a pure click company will use E-
queue for online shopping, SAP to monitor its supply chain and sales, bio metric tool to discover
potential customers, E-data base, Google Analytics and ERP solutions which make the
management of the labour force much easier. Pakistan is abundant in IT technicians, and the
operations will be largely based upon these platforms run by them working smoothly.
The research onion process of Saunders (2015) has classified research systems into two segments
i.e. Quantitative and Qualitative. This paper has utilized quantitative strategies where by each of
the component will be sorted in every section and tests will be utilized as a part of lines therefore
a framework is shaped which Saunders' has alluded as Data Matrix.
The research depends on quantitative and qualitative techniques and has picked questionnaire
design for quantitative investigation and in-depth interviews for qualitative investigation. The
point of both research techniques is same; to gauge responses from the customers regarding the
need for an online shopping store, other players that are currently pursuing similar business
ventures, offering value added services that cater to the needs and wants of the customers and
finally getting to know the level of training and development needed to build a conducive
working environment for the staff. The frame work of the research is mentioned in the table
below;
The secondary research utilizes number of structures, for example, marketing mix, Ansoff
network, BCG matrix and operations framework to extricate important results from officially. In
this paper, a number of such techniques were used to highlight market segmentation, product
categories, purchasing power, and marketing landscape and supply chain opportunities. The
survey used cross sectional study as primary research methodology which ensures timelines to
collect responses and analyses those responses. In order to collect data in a span of time,
Sounders famous Onion method was used to bifurcate each survey in many directions and to
pull meaningful outcomes from it. This tool can also be referred as pragmatism. (Saunders M.,
2012).Remenyi et al., (Doing Research in Business and Management: An Introduction to Process
and Method, 1998) called this pragmatism as a tool to gauge or scan the most accurate and
relevant response a respondent gives in answer of a particular question (Saunders , Lewis, &
Thornhill, 2009). Hence, it would be justified to say that the research sued descriptive and
critical approach to compile meaningful thoughts from secondary data.
Market Psychographi
Segmentation c Needs
Market
Market Demographic
Needs s
Figure 6 -
Research onion
process
People who prefer convenience when shopping, are tech savvy and open to change are the
primary target audience of this research, for convenience and effective analysis; this study will
target 150 respondents from Karachi.
The first set of questions from the survey help us understand the demographic dimensions of our
audience whereby we know the gender, age group, employment status and an estimate of the
respondents monthly income (in rupees).
The survey results show that it has been responded by more women than man. This does make
the responses received more suitable for our survey as it is mostly the women of the house who
handle groceries for the household in this part of the world.
The age group distribution shows that the largest group belongs to the 21-25 years age group.
This is then followed by the 31-35 years old age group. Receiving responses from the fairly
younger population help us understand what the population expects from e-commerce in the
coming years. This age group will soon in at the steering wheel leading all walks of life.
Another important element is taken up in this next question which is whether the person is
employed. The responses receive show that thought 40% are still students but the majority 41%
are employed. This helps adds more value to our survey as firstly people who are already in the
cycle of running a household have responded with their feedback. Second plus point is the fact
that students who are next in line to be employed and take up the charge have also shared their
expectations.
Important information is dealt with in this question as it helps in assessing what portion of the
household income can be spend by each on groceries. This could at a later stage also assist in the
selection of goods and brand which will be maintained within our catalogue.
The next section now caters to questions related to the project at hand.
As can be seen from the results, a majority of 73% have never purchased groceries online. This
shows that by using the correct combination, our aim should be to attract population who has
never done their groceries online.
Here we see that since majority of our audience hasnt taken up charge of the household, the
results show compliments this by revealing a 32% saying they are not the decision makes when it
comes to purchase of groceries.
As revealed in the next questions, 41% of the population goes to the supermarket store as
compared to 20% going to the kiryana store. This already shows a shift from the old days to
facilities which are available in the City now. With the advent of online supermarket, we could
very well expect people to move to the new more advance and convenient method for carrying
our grocery shopping.
As expected the results from the survey validate the fact that currently majority (34%) of the
households do not opt for online grocery shopping. A positive trend of people doing online
groceries occasionally further compliments the possibility of growth in this sectop. With new
attractive offers, new comers and occasional visitors can both be made regular customers to our
online supermarket.
Our directions can be steered based on the feedback received from responses of this question.
Mostly all have highlighted free home delivery and discount offer to be factors they look out
for when if they were to do their grocery shopping online.
This response reveals what the people would look for when using the online grocery website.
While detailed product information is one aspect, security and Mobile Ready Appliaction are
something which the majority people would want to be available at the online supermarket
website.
In this area we reached out to the people seeking the opinion they have regarding online grocery
shopping. We received the highest number of agreements for the fact that it will save lot of time.
Also saving travel cost was selected by nearly all the respondents.
Results here stress once again on the fact that if people opt for online grocery shopping, the
biggest aspect for them would be free home delivery. Freshness of products along with having
the groceries being delivered in a timely manner are the subsequent desires from customers who
are willing to take up online grocer shopping.
This here seeks personal thoughts of the customers regarding online grocery shoping. Results
show a neutral trent mostly all questions asked however the perception of unreliability and
possibility of products not being same as shown at the website is an area which has received
maximum number of agreements. This is something to watch out for when our website gets
launched.
This final analysis about what the population plan to do regarding possibility of online shopping
in the near future. Though 26% still prefer the old way of physically going to the supermarkets or
kiryana store, a large majority have shown interests and positivity towards the possibliy of
venturing into online grocery shopping.
- The first set of questions help us understand the demographics of our target population.
Likewise it will be of great help to know whether our population would be more male or
more female. Though the general principle states that it is mostly females who take up
household grocery shopping, times are expected to change. With the onset of more nuclear
families with both parents working, the concept of men taking up household management
including grocery shopping is no longer a taboo. With 67% respondents being female, the
37% male is also a number which seems promising for this part of the region.
- The next question shows more details of the age group. The good thing is that 44% are in the
age group of 21-25 years while the next are between 31-35. Having a larger group who are
young adults gives a lot of information as to what we should cater to, the marketing strategies
which should, the prices and even the use of website and the final delivery mechanisms.
- Even though the results from the next question show 41% are employed, having a 40%
portion as students gives us the heads-up to plan accordingly for the next couple of years.
These students would soon enter their practical and professional lives. If the correct
combination is in developing our online supermarket, it will be these students of today
become the most active users of our service by tomorrow.
- The beginning of this section first understands what percentage of the population shops
online at the moment. As expected, a large chunk of audience does take up online shopping.
With the extensive penetration of network even to the remotest part of the Country along
with the combination of fast and top quality connections, are factors which readily encourage
the masses to do their shopping online. Also with more security measures put in place, more
and more people are not starting to move to online shopping rather than physical visits to the
store. To our surprise, the results show a staggering 74% confirming that they have done
online shoppings before.
- With the fact that people do use online websites for shopping established, the next questions
studies what is usually bought through online portals. Clothes come in first at 31%, which
makes all sense as a number of ladies have setup their own websites selling designer ware at
reduced cost when compared to the proper shops. Next come airplane tickets and fast food
both at the same proportion of 30%. While jewelry and books shopping fall between 20 to
15% its worth to note that a good 21% dont shop at all through online portals.
- This next question was a surprise revelation to us as it shows that 27% of the population
already does online grocery shopping. What this tells us is people are aware of the concept in
fact some are even doing it already. What we now need to do is to improve the service
offered, making it more convenient for the end user and above all make the whole process
more secure to remove any inhibitions the customer might have regarding online grocery
shopping.
- It is important to know who really calls the shots when doing grocery shoping. Though 17%
claim they are the decision makes, a majority of 32% claim they dont have much say when it
comes to buying groceries. This high percentage could be attributed to the fact that a majority
of our audience we still in the 21 to 25 age group. This does work in our favor as in the
coming years; this age group could be and most frequent customers.
- Where exactly do the masses carry out their grocery buying chors? Well this question reveals
just that. While most (41%) do their shopping at the supermarket, 11% do it at existing online
groceries. This again shows, there is awareness amongst the masses, we just need to turn
things around and make online supermarket most used medium for grocery shopping.
- In this question it was asked to know which factors are important when doing online grocery
shopping. Not to our surprise, free home delivery is definitely what people really long for
when carrying out grocery shopping through online supermarkets. Also discount offers is
something wish to see more when doing online grocery shopping.
- This question seeks input as to what the end user expects from the website. Security and
availability of the website on mobile devices are some things which are most eagerly sought
by the masses.
- We reached out to the audience to get their thoughts as to what their opinion is regarding
online grocery shopping. Nearly all have shared their view that it would save them time and
some have also pointed out that it would be more efficient as compared to physical visits to
the supermarket. We will need to concentrate on establishing a very robust delivery
mechanism which should be swift as well as safe. Keeping in mind the changing dynamics of
the city due to political unrest, unexpected situations and other factors not in our control, our
delivery mechanism should be able to adapt to the dayss situation without letting the quality
of work getting impacted.
- The last question of this survey reveals interesting result. It was asked to know if people plan
to start online grocery shopping. A combination of people eager to find out more and eager to
discuss with family on this proposal show a whopping 47%. It also reveals that 27% intended
to take up online grocery shopping. What this means to our business is that the people who
are still thinking of taking up online grocery shopping can and should be convinced to start
doing so. By employing the best practices and principles we are bound to grasp this majority
as well. Grocery shopping is not a luxury that will be enjoyed by a selected few belonging to
limited income groups. It is a necessity and requirement of every household no matter which
income group they belong to. Every household needs vegetables, meets, bread, oil, fruits, etc
on a daily basis. All household do their shopping either at the corner store or big
supermarkets or hypermarkets. We just need take steps to route those everyday buyers to our
online supermarket and cater to the basic needs. By providing a safe environment and
ensuring our product lines are vast enough to cater to people from all walks of life; we are
bound to become the single stop shop for online grocery shopping in the city.
5.0 Business Model
Business Model Canvas is a visual tool to presenting the basic building blocks of a business
model. It is a kind of mind map which can be used to manage, review an existing business model
or (as in our case) define a new one.
Revenue Streams
Cost Structure
Revenues would primarily be
Setup Cost is expected to be $350,000
Cash inflow for Year 1 is expected to be $105000 generated by the online sales of
Payback is expected to be recovered by mid of the second
available products
year and profits can be expected from the beginning of the Secondary streams would be
3rd year. through companies willing to put an
advertisement on our website.
Table 2 Business Model Canvas
5.2.1 Channels
The supply chain gets defined in this section. For Online Supermarket, the chain starts with the
whole sale suppliers and distributors which are expected to be both local and global. The supply
chain would also have active involvement by logistics team responsible for transportation of
goods. Next we expect to have a robust mechanism for marketing of our website. This would
involve extensive marketing through social groups. A dedicated team would be responsible to
cater to the requirements. TV commercial would also be used but plan is to initiate this if case
other mediums for marketing fail to bring the required revenues. Sponsorshop of local melas and
exhibitions would also help in spreading the message to the masses
Vision
The vision of our new e-commerce venture is to setup an online supermarket which would cater
to all the groceries requirements for any household. A wide range of products of local and
international brands and help promote the e commerce industry in Pakistan. The website would
be one having the most secure payment environment second to none in Pakistan along with a
product line which removes all social-economic segregation when doing shopping through
online portals.
Mission
Mission is to provide online shopping services through easy to use website and within a very
secure environment for every household who wishes to procure any items for their requirements.
All customers should feel welcomed to the user friendly web portal, should feel the personalized
feeling when procuring from our website. They would also feel the peace of mind that the entire
environment of our setup whether its payment for the purchases made or the delivery of
groceries to their desired location is all done with utmost important and care given to the
security.
Core Values
- Customers feedback has prime importance. Learn and improve cycle to be the principle
followed at all times.
- Delivering business objective through staff. Educated staff means a healthy work
environment. Stress on adequate and timely trainings for staff in all their respective work
streams.
- Always have prompt and customer friendly after sales service. This becomes the single
success factor in business which belongs to the services industry.
- Robust exchange and refund policy within a minimum turn over time.
6.3 Objective
- Introduction of one stop shop for all grocery shopping in Pakistan.
- Develop an easy to access online supermarket to enable masses to carry out their household
grocery shopping online.
- Provide a secure environment for all users to make online purchases using either their debit
cards or their credit cards whether Visa or Master ( also American Express in the near
future)
- On time delivery at the location requested by the user
- Achieve pay-back within 2.5 years
- Expand services to neighboring countries and regions.
Demographics
Easymart will be an online grocery buying website which is expected to be accessed by
households belonging to all economic backgrounds. Initially the plan is for easymart to begin its
operations from Karachi as this is the city which generates the maximum amount of revenue for
the country. This is where all multinationals have their establishments created. This is also the
city which has the maximum number of e-commerce users in its population. Since our venture is
an e-commerce venture, would be fairly less complex in terms of physical setup and also in
terms of the budget required for expansion to other centers. Hence plans on expanding its
operations to Lahore and Islamabad would be taken up in due course of time. Activities are
planned to be limited to these cities initially primary due to ease of availability of logistics
services within these cities.
In terms of life Style as well, the new venture does not have any plans to limit our
offerings to people from any specific group. It will be created to address the shopping
requirements of all and sundry. The product line to be hosted at our site is expected to
cater to people from all walks of life. Whether an individual wishes to buy the day to day
bakery items of one seeks to procure international brand of self-grooming products. Our
website will be designed to be able to cater to all household requirements.
Targeting
Targeting refers to the strategy and mechanism which will be involved to reach out to our
customers. As our target audience includes students, salaried people, retired folks, youngsters,
housewives and all those who wish to buy a product from our online supermarket, we will be
using all means and mediums available to spread our message. Our objective would be pull our
customers towards are offerings, we will rely heavily on social marketing. However since social
media might reach only the segment of population who are active on this platform, we might not
be able to reach to percentage which are not very avid participants of such technology. For this
segment we will be using TV commercials as well as print media. By using these mediums we
would be successfully reaching out to a sheer 95% of our customers.
Positioning
Acknowledging the fact that our e-commerce venture is not the first within this industry, our
position would be at a higher altitude because of the offerings we will have in our portfolio.
Firstly our online supermarket is expected to cater to all households without any limitations
based on the socio economic status to which they might belong. Currently there are a few sites
functioning within this portfolio however so far they only cater to preferred clientele which is
primarily the upper class bracket. Our product line however as has been mentioned earlier is
expected to encompass the basic necessities to luxury high end brand products and anything and
everything in between. Second aspect which makes our setup more competitive is commitment
we offer in terms of making sure of very robust and prompt delivery systems. The existing
players can boast quality of product however not any can match can our level of promptness in
ensuring the items bought online get delivered to the customers as early as humanly possible.
Producut
Market Develpmen Existing Market
Penetration t
Easy Mart
Easymart online supermarket objective is to make online grocery shopping very convenient for
all the households in Pakistan. We will be introducing a new more advanced way of online
retailing in an existing yet limited market. Though the basic agenda of making online grocery
shopping easy and accessible for all, there are a few measures we will be to taking to ensure we
an edge over our competitors.
Prompt Delivery
While existing business might have been in the market since long but we would bank on our
objective to have the goods delivered at the earliest possible time and date. By deploying a
robust mechanism for having the goods which have been procured online delivered at the
customers side will ensure customers return to our online supermarket again and again. Few
aspects we will consider during the delivery process are speed of delivery. Safety of products
while delivering, maintaining freshness of perishable grocery items and care to handle breakable
or damageable goods.
Customer Service
The kind of services which we offer to the customers becomes the foundation of our business.
The quality of customer services really makes or breaks a business. Proper management of
customer services ensure long lasting and substantial growth in business. The four pillars
necessary to ensure proper steps and in are place for high quality customer service as depicted in
the diagram below
With the above four aspects properly addressed, the business is surely en route to achieve high
levels customer satisfaction which in return will help in revenue generation.
Satisfaction
This reflects the customers feeling of contentment towards the services offered to the customer
and becomes the perfect ingredient for customers to return. We will be engaging a cycle of
learning what the customers look for and then improving our way of operations by employing
better practices based on those learning will.
Loyalty
This aspect holds a lot of importance in any services sector company. Since the customers
experiences the offerings directly from us, gaining their loyalty would help in making sure he or
she returns to our website again and again. Also with one loyal customer, the word of mouth
would surely introduce more family members, friends, colleagues, etc.
Trust
As mentioned earlier in this report, there are a number of organizations already providing similar
offering to customers. However based on a market anaylsis, the environment by them has a
number of loop holes in terms of their security. This single factor alone is making online
shopping customers to either stop this practice or seek other ventures which provide better
security. With our state of the art security system for our online payment with more than three
layers of security checks we are surely headed towards a better level of trust than any competitor
within this industry. Even our delivery system would adhere to protecting customer interests as
top priority.
Commitment
This is the relation between the business and customer which makes the customer return to the
business after the first time of use. This principle benefits both the customers as well as the
business. It is coupled with the a high level of trust the customer has gained on the business and
also the satisfaction felt when carrying out earlier interactions with the services offered by the
business. The commitment can be attained by using a well designed and carefully thought about
post sales strategy to pay attention to the fact that customers are receiving what they expect from
our business.
OWNER/CEO
General
Manager
Website Marketing
Manager Manager
Developers Logistics
Manager
The proposed Org structure has been designed to setup the the new online supermarket. The org
chart defines the reporting hierarchy and the position of each job in the organization. The
owner/CEO is sitting at the top of the pyramid and holding the sole decision making powers. The
General Manager reports to the Owner / CEO and is responsible for the smooth running of
operations. The Website and Marketing managers come next in line and are responsible for their
teams in their respective domains. Both of these roles are of key importance to the success of our
business. The Logistics Manager also holds are key role in the organization. It is through this
Manager that the business commits it high level of customer satisfaction.
Shared Objective
Our business does not need a very complex team structure. What could help us deliver more
effectively is to ensure we promote team culture where by employees are encouraged to help
each other out even if the scope of deliverable is not really within an individuals stream of work.
Friendly culture will be encouraged within the organization where colleagues will call each other
by their names and be able to enjoy the time spent in office as if at leisure rather than someone
where they would be expected to be formal and observe the prerequisites of hierarchy during
communication with their peers and colleagues.
Balanced Score Card System
Staff Strategy
Easymart
Income Statement
For the forecasted period 2017-2019
Easymart
Income Statement
For the forecasted period 2017-2019
2017F 2018F 2019F
Revenue 5,653,800 5,936,490 6,245,187
Cost of Sales (4,805,730) (5,046,017) (5,308,409)
Gross Profit 848,070 890,474 936,778
Administration expenses 150,000 157,500 165,375
Selling and Distribution expenses 113,076 118,730 124,904
The above income statement shows the revenue stream and cash flows for the next three years
for the firm. The revenue has been linked with the GDP of the country which is growing at a fast
pace of 4.7% as per IMF forecasts whereas the Cost of Goods sold has been linked with the
inflation figure which is growing at an even faster rate of 5%. Since we are assuming GDP to
grow at an increasing rate as compared with Inflation, the net effect gives us positive Gross
Profits. Talking about Expense section, for a retail business, administration takes the bigger
chunk and it has been assumed that Administration expense will be 3 percent of the sales
whereas selling and distribution expense will be 2 percent of the sales. At a net effect, the net
profit margins will be 10% Year on Year.
6.6.2 3- YEAR FORECAST BALANCE SHEET
COSTS
Cost is an important and integral part of financial analysis. It does not only help in revenue
forecast but also highlights areas where cost cutting measures can be implemented. Easymart is a
retail business store that will change the landscape of Pakistan. With an expansion plan, the
company needs to calculate its costs first. To make things easier, a retail store cant forecast costs
for each item, we have divided the retail store into 5 categories including frozen items, dairy
products, vegetable section, packaged food, spices etc. An estimate volume of 1000-5000 units
for different categories has been taken with an average selling price ranging between PKR 50-
500. The cost structure is increasing year on year due to increasing transportation cost, inflation
and observant competition in the market.
Table 9 - Costs
Pri
ce
pe Uni
r ts
uni sol Total
Category t d cost
50 50 25000
Frozen Items 0 00 00
30 25 75000
Dairy Products 0 00 0
50 25000
Spices 50 00 0
15 50 75000
Packaged Food 0 00 0
10 50 50000
Vegetables 0 00 0
4,750,
Total Cost 000
Cost Forecast for Year 2
Pri
ce
pe Uni
r ts
uni sol Total
Category t d cost
52 50 26000
Frozen Items 0 00 00
35 25 87500
Dairy Products 0 00 0
50 35000
Spices 70 00 0
15 50 75000
Packaged Food 0 00 0
10 50 50000
Vegetables 0 00 0
5,075,
Total Cost 000
Pri
ce
pe Uni
r ts
uni sol Total
Category t d cost
52 50 26000
Frozen Items 0 00 00
35 25 87500
Dairy Products 0 00 0
50 35000
Spices 70 00 0
16 50 80000
Packaged Food 0 00 0
12 50 60000
Vegetables 0 00 0
5,225,
Total Cost 000
SALES
The revenue of Easy mart has been linked with the GDP of the country. Since forecasting sales of
each product out of thousands of items is impossible, we have categorized the whole store into 5
major categories that have been explained above i.e. Packaged Food, vegetables, Dairy products
and Spices. Taking an estimate of GDP of 4.7% as per IMF forecast, we have assumed the
Revenue to grow at an estimated figure of 5% Year on Year.
We have used GPD per capita as a measure to forecast sales of the company, as per the World
Bank reports, an average Pakistani spends 27% of the income on Food items, hence taking an
assumption of PKR 100,000 as Average per capita income with 27% income spend on foods,
sales forecast have been calculated.
27,000
FINANTIAL RATIOS
Three important financial ratios have been chosen to evaluate the performance of Easymart in
coming years. These financial ratios are Gross Margin, Quick ratio and acid ratio. The gross
margins gives an idea of how much gross sales contributes to the total income. Whereas quick
and acid ratios are god measures of liquidity. From the below calculation, the Gross Profit
margin is coming out to be 15%. This means that the gross profit is 15% of the total sales and
only 40% goes out in costs and expenses. The 60% trend is good in coming three years as the
company will be able to generate enough return on equity in these years with continuous trend of
increasing revenues.
The second type of ratios are acid and quick ratio. Both of these ratios help in understanding
liquidity position of the company by comparing current assets with current liabilities. Both ratios
give a basic idea of how well the organization can pay its short term liabilities from its short term
assets (Cooperatives, n.d.) Analyzing quick ration gives the value of 5.16 which shows that the
organization
The third ratio used in this study is Return on Equity which shows how efficiently a company
can use the investors money and can generate returns from the investment. The ratio also
predicts the future of the organization and tells how far the money invested brings return in the
organization. Currently, the Return on Equity for Fashionista is 26% which means that by the end
of third year of operations, the company will be able to pull most of its invested cost of capital
from the venture.
Current Asset-
Quick Ratio Inventory
Current Liability
Return on
Equity= Net Income
Shareholders
equity
Return on
Equity 0.069
7%
6.7
6.6 Implementation Schedule - Gantt chart
Technology
Since our new venture is solely based on technology, its imperative that the most advance level
of technology be used in our Business. Development of out web site and mobile application will
be done on the most dynamic platform available in the industry. Together with continuous
improvements and adaptability of new technology will help us maintain our momentum well
ahead of the others. Our online secure payment would be state of the art solution like no other in
the Country. Providing a secure environment is one of the key highlights of our business which
will give us the edge over other competitors.
Customer Services
Customer services and after sales services are also key areas which would be critical to achieve
the success the business aims for. Word of mouth is already considered as one of the channels for
the marketing. Having a satisfied customer would help the business immensely. Highly trained
individuals will be part of the customer services team. Prompt response in terms of refund or
exchange facility will also ensure the customer loyalty will be promised.
6.8 Risk Mitigation / Contingency Plan
Every new venture whether its a small setup or a massive investments will always have a set of
risk along with the parcel. Whatever the industry, whatever the location, some risks will always
need to be taken to move to the next steps. The good aspect of Risk Mitigation is that by
analyzing the risks, their probability and their triggering factors, we better prepare ourselves in
situations where the risk might actually materialize. Rather than losing track of business
objective, being prepared for any untoward situation helps us response in the most effective
manner.
Financial Risk
Will this new setup allow the stakeholders the returns they have been promised based on the
analysis we have carried out. This is one of the biggest risks we will be taking when setting up
this new e-commerce venture. Currently there is a soft recession which no industry has clearly
admitted. However with random job cuts, reduced employee benefits and the persistently low Oil
prices, end users might not have enough cash to procure luxury items.
We will be mitigation this risk by ensuring our product line covers the grocery items required by
every household on a daily basis. Though in case of further financial crisis, the profits might be
less but there wont be a loss to our business. Return on investment could take longer but the
profits will keep coming in.
Operation Risk
Since our business solely depends on how successfully the website is developed, this will
become our biggest operations risk. We need to ensure proper standards are followed while
developing the website and mobile application. Frequent testing and Quality checks at every
milestone will help us mitigate any risks associated with coding. Also care would need to be
taken during the Pilot deployment phase where rigorous testing of the website and mobile
application will be carried out.
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8.1 Appendix