Download - Easy Buy
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EASYBUY.COMFor all your monthly needs
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Change the way hostel students shop!!
Business Model
Need Identification
Competitor Analysis
Market Sizing & Financial Analysis
Value for Investors
Target the under targeted segment: Hostel students and unmarried professionals
Online shopping platform for your monthly purchases
Huge catalogue of personal care products, branded foods, home care products etc.
Fix your monthly shopping list once and forget about monthly purchases
Add or delete at any time Convenient payment & delivery options
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The business model Each customer has to choose a unique
login id The web portal offers a range of
personal care products, beverage, branded foods and household items
The orders can be placed or changed throughout the month till the order is frozen 5 day before the delivery window
Standing order can also be made The delivery window of 5 days per city,
one day per zone Products are procured from the
distributors with an average margin of 3%
The remaining 20 days in the month are used for marketing initiatives
A faulty product would be replaced within 30 days
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Moving from 4 Ps to 4 Es
Product to Experience Website is user friendly, easy to browse
through products, add products to wish list Unique feature- option to create a standing
order Quality of products never compromised, 30
day replacement guarantee for faulty products
Good packaging Convenient payment options- credit/debit
cards, net banking, cash on delivery Free delivery for orders above Rs.350 Wish-list for products not in catalogue
Place to EveryPlace Metropolitan cities with large proportion of
students (high density group) and working professionals (high propensity to pay)
Delivery across a 5-day window Orders handled through a central warehouse Instead of interrupting people, today we want
to intercept them and make contact when they are most receptive to engaging with us as they go about their day
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Moving from 4 Ps to 4 EsPromotion to Evangelism Tie ups with colleges, select campus
ambassadors to promote our brand Make presentations in offices, distribute
pamphlets or flyers in food courts, canteens Promote brand awareness through social
media- Facebook, Twitter Obtain a strong number of followers, and
promote our digital content Internet/web strategy- use Google Ad-words,
blogs, e-mail campaigns Create a brand experience that inspires
customers to engage with us Share their enthusiasm with others, word of
mouth to social networking
Price to Exchange Consumers only pay the competitive price Competitive pricing Consumers not just pay a price, but are willing
to give us precious things like their attention, their engagement and their permission
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Need identification Scalability of the modelFunctional Needs Ease of ordering
Ease of payments
Time-saving
Timely delivery of desired products
Emotional Needs More time in hand
Avoid long queues
Aspirational Needs Social: Seen as modern and tech-
savvy
Show-off: Seen as innovator who tries new products
Salient Feature Outcome
Low fixed costs and initial investment
Replication across multiple locations cheap
Only 10 days spent per cluster
20 days spent for promotions Once stabilized, 3 clusters can be
served by 1 fixed asset Only marginal costs need to be
covered to serve additional cluster
Criteria for choosing a cluster:- Population of students/young unmarried professionals- Availability and usage of internet- Major chunk of purchases as monthly purchase- Not many kirana stores in vicinity
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Customer Needs : KANO Model
Must-be
Linear satisfierDelighter
Customer satisfaction
Characteristic
High
Low
AbsentFully implemented
Customer NeedsTactile
shoppersInspiration
seekersFirst-timers
Low price/Discounts Delighter Delighter Delighter
Ease of selecting items/Convenience
Must have Must have Must have
Quality Must have Must have Must have
Standing orders Delighter Delighter DelighterVariety of offerings Must have Must have Delighter
Special offer section Linear satisfier Linear satisfier Delighter
Low delivery time Delighter Delighter DelighterNew offering section
Linear satisfier Delighter Delighter
Privacy Must have Must have Linear satisfier
INFERENCES:For our users, the Must have needs are mainly Convenience, Quality and Good overall experience
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Competitor Offerings: Need-Gap Analysis
Need A B Easybuy.com
Convenience/Ease of purchase
Special offer section
Access to hard-to-find items
Competitive prices
Wide product offerings
Overall experience
Attractive and uncluttered design
Privacy
NEEDS ADDRESSED BY OTHER E-RETAIL PLAYERS
Currently, e-retail vendors are providing
Low prices with an interface which is not user
friendlyhowever customers actually
look forEase of purchase and good
overall experience with user friendly interface
Top 2 Players : A: Healthkart.com ; B: Bigbasket.com
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Market Size Identification Market Size Estimation Office employees (per city) 5,00,000
Students (per city) 15,00,000
Total potential customers (per city)
20,00,000
No. of cities 5
Total potential customers 1,00,00,000
% willing to order online 72%
Per capita monthly order size Rs. 350
% adoption 0.4%
Market size estimation (revenue)
Rs. 12,09,60,000
Targeted surveys at potential clients in all five cities (Bangalore, Mumbai, Hyderabad, Delhi, Pune) students and office employees
Also conducted a focus group study to understand customer needs and preferences
Survey sample size of 700, across all five cities
Estimated the following metrics from the surveys and the focus groups: % of respondents interested in online purchases
Average per capita monthly spend
Average number of students and office employees per city
Adoption assumed to be 0.4%
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Key Financial Metrics
Year 1 Year 2 Year 3 Year 4 Year 5Total Expenses 8,73,536 11,85,608 19,21,064 22,59,752 25,98,440Total Income 3,62,880 10,88,640 23,95,008 33,86,880 42,33,600Gross Profit -5,10,656 -96,968 4,73,944 11,27,128 16,35,160Profit Margin -4.22% -0.27% 0.65% 1.16% 1.35%RoCE -85.11% -13.85% 59.24% 140.89% 204.40%Investments
: from Investors 3,00,000 1,00,000 1,00,000 0 0: from Founders 3,00,000 0 0 0 0
Cumulative Investment 6,00,000 7,00,000 8,00,000 8,00,000 8,00,000
Assumptions
Shipping costs: 0.8% of order value in Yr 1; decreases to 0.7% by Yr 5 as economies of scale take effect
%-age of the total market size at Yr 5 as achieved in each of the first 4 years: 10%, 30%, 60% and 80%
Average margin on product: 3% in Yr 1; increases to 3.5% by Yr 5 since bargaining power with suppliers will increase as volumes increase
Major Cost Heads
Warehouse rent
Packing Employee Wages
Shipping & Delivery costs
Website maintenance
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Highlights from the financial analysis
Securing long term deals with manufacturers
Ability to work on a negative cash cycle
Low initial investment of only Rs. 5,00,000 + Rs. 3,00,000
Low fixed costs
Low risk
Operating margins of 1% in the fifth year
Positive cash flow in the 3rd year with break-even in the 1st quarter of 4th year
RoCE is very high
NPV of Rs. 13,13,942 in 5 yearsFinancial Analysis
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Whats in it for you!
Low initial investment and fixed costs (6 Lakhs INR)
Fast break-even (3 years and 3 months)
Low running costs involved
Scalability high provided target clusters are identified correctly
Can also charge manufacturers for advertising new arrivals
Note: All calculations have been based on extremely conservative estimates and actual returns are expected to be better.
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APPENDIX: Financial Calculations
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Expenses Year 1 Year 2 Year 3 Year 4 Year 5Warehouse rent 3,00,000 3,00,000 6,00,000 6,00,000 6,00,000Shipping cost % 0.8% 0.8% 0.7% 0.7% 0.7%Shipping costs, inbound 96,768 2,90,304 5,08,032 6,77,376 8,46,720Delivery cost % 0.8% 0.8% 0.7% 0.7% 0.7%Delivery costs, outbound 96,768 2,90,304 5,08,032 6,77,376 8,46,720Employee wages (packing) 2,40,000 2,40,000 2,40,000 2,40,000 2,40,000Website development 75000 0 0 0 0Website maintenance 15,000 15,000 15,000 15,000 15,000Sales and Marketing expenses 50,000 50,000 50,000 50,000 50,000Total expenses 8,73,536 11,85,608 19,21,064 22,59,752 25,98,440IncomePercentage of final market size 10% 30% 60% 80% 100%Market size estimation (revenue) 1,20,96,000 3,62,88,000 7,25,76,000 9,67,68,000 12,09,60,000Average margin on product 3.00% 3.00% 3.30% 3.50% 3.50%Income from product sales 3,62,880 10,88,640 23,95,008 33,86,880 42,33,600Profit -510656 -96968 473944 1127128 1635160Operating margin -4% 0% 1% 1% 1%RoCE -85% -14% 59% 141% 204%Investment from investor 3,00,000 1,00,000 1,00,000 0 0Investment from founders 3,00,000 0 0 0 0Total investment 6,00,000 1,00,000 1,00,000 0 0Cumulative investment 6,00,000 7,00,000 8,00,000 8,00,000 8,00,000
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