Doorstep: Home Delivery of FMCG Goods
Executive Cover Memo
To: Z. Rehman
U R Gautam
This is to recommend the immediate construction and operation of website selling FMCG (Fast Moving Consumer Goods) to tap the latent demand in market. BACKGROUND:
As per recent survey done by ASSOCHAM, online retail industry is likely to be worth of Rs.7000 crores by 2015. Current status of online retail industry is worth Rs.2000 crores with annual growth rate of online retail industry is 35%. As per Boston Consulting Group, online retail will be 4.5% of total retail market by 2016. Also, the recent decision of government to allow 51% FDI in Multi brand retail will pump a lot of foreign players in the market. Hence this boom in online retail industry should be tapped immediately. RECOMMENDATION:
The growing market can be tapped by setting up an online portal for daily shopping of grocery and FMCG products. The goods will be home delivered, for which a dedicated team of delivery boys will be employed. The initial investment will cost Rs. 50 lacs and the break even will be realized in 3rd year of investment with profit of _______.
Our warehouse will be rented in the centre of Noida city – Sector 11 by March 2012. Inventory worth of 11 lacs will be acquired. 2 delivery boys will be employed at the initial stage for home delivery of the orders.
Situation Assessment and Analysis
For the past few years, the Indian retail sector has been witnessing tremendous growth, and contributing significantly to the country’s GDP. Though the country’ retail sector is highly unorganized, organized retailing is growing at a rapid pace to grab a considerable market share. According to research report by ASSOCHAM, with the growth in organized retailing, the online retail segment is emerging as a new platform in the market. It is estimated that the online retail market will grow at a compound annual rate of around 39% during FY 2013 to FY 2016.
The report, “Indian Online Retail Market Analysis”, finds that online retail has been growing in the country at an unprecedented rate. With the rising internet penetration and broadband availability, and growing culture of Smartphones and tablets, people have started buying products online. As per our study, the major reasons driving the online buying is cash-on-delivery facility, and discounts & offers provided by the online retailers. The busy lifestyle in metros is also propelling people to buy products online. On studying the latest trends and drivers, we observed how the growing sales of kids’ products and grocery are expected to boost the online retail market in India.
As per our research, online retail account for less than 1% of the total retail market in India, and thus, presents a huge growth potential for international retailers. Domestic players are also expanding their reach to the online customers. ASSOCHAM Social Development Foundation (ASDF) revealed that metros or tier-I cities have more awareness about online retailing as compared to tier-II & III cities. It was also found that electronic products are most popular among online buyers. The survey also analyzed buying habits, major reasons for online shopping, purchase preferences, and spending patterns under different price bands.
The government is supporting the growth of organized retailing, and has allowed 100% FDI for single brand retail outlets, and 51% for multi-brand retail outlets. The report provides an insight into the government policies and regulations (cyber laws), and various industry roadblocks which will help clients understand the market structure. In order to study the competitive landscape, we have done a SWOT analysis. We are hopeful that this comprehensive research work will provide better insights.
1. Competitive Pricing: Providing the best possible...
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