A college project of evaluating an ecommerce company. localbanya.com evaluated in terms of : porter's five forces Business Dynamics Matrix (Complementary asset availability vs Model Imitability) Key challenges

1. localbanya.com
rajat @localbanya
prateek @localbanya
saurabh @localbanya

2. Source : Booz and Company

3. Team of
LocalBaniya.co
m
(Launched in 2012)
 Amit Naik (CEO) MBA
from IIM Lucknow
 Rashi Choudhary
(COO) MBA from SP
Jain Singapore
 Karan Mehrotra
(CFO) Engineer from
IIT

4. History of
LocalBaniya.co
m
Personal experience with not
having enough time to go
out and do grocery shopping
after a long day of work.
Too tired to deal with going
to the store to pick up
groceries, waiting in long
lines and dealing with the
journey involved.
The traditional Banya would
most likely be shut or be out
of stock of what we needed.

5. Facts about LocalBaniya.com
Over 10,000 registered users, Average 400 orders per day
Sales in FY 2013, Q1 of Rs. 1 cr
Avg Cart Size now exceeds Rs 1500
Typical Customer is a working professional of age band 25-40 years
Undisclosed investment by BCCL’s Springboard fund, and recently, a Series A funding from real estate
developer Karmvir Avant Group
36,800+ FB likes
Team size of over 80
Launched Print/Digital Media campaigns as of July 2013 on prestigious media publications
Over 10,000 Skus.
Over Rs 10 million in monthly revenues

8. Distributor Broker Model
Value Proposition : Providing high quality products without wasting customer’s time or energy .
Revenue Model : Transactional
Pricing Strategy : Variable Discounts, markup pricing
Target Market : End Customers
Sustainability Strategy : On time, efficient and hassle free delivery of high quality products to
customers.
Expansion in other cities to achieve economies of scale.

9. Inventory and Supply Chain
Low Inventory Model used existing warehouse for FMCG non perishable items
Tie-ups with wholesalers and cash-and-carry partners for perishable items
Tie-ups with retailers for unreachable and distant places
Tie-ups with niche stores Breadkraft, Bagelwala and Shor Sharaba
Some delivery vehicles outsourced
Company employees for packaging, processing and delivery - On time delivery is 97%
Karan has a family business which included distribution for Hindustan Lever and catering
services to BPOs which they leveraged for localbaniya.com also

10. Marketing Strategy
Offer discounts to acquire customers
Customer Relationship well managed under dedicated team led by founding member
Mobile advertising on company vehicles
Print Ads on Mumbai based Newspapers like Economic Times
Started off the business in the most busy city of Mumbai
Order over website and Facebook

11. Swot Analysis for LocalBaniya
Strength
•Increasing Customer Base
•Strong Distribution networks and expertise
•User friendly website.
•Ontime delivery rate 97%
•Only 2-3% is returned. (No questions asked
returns policy)
•Business Expansion in other Tier I cities
•Improve customer and Merchant Relationship
•Tie ups with more retailers for better
distribution.
Opportunity
Weakness
• Easy replicable by distributor/ wholesellers
• Less Profit Margin
•New Entrants
•Intense competition from traditional retailers
•Maintaining repeat customers
•May not find investors to fund operations
anymore.
Threats

12. Porter’s Five
Forces
1. Medium
New Entrants
1. Threat of New Entrants:
•
•
•
Distributor relationships hard
to establish
Supply Chain difficulties
Distributor “Areas”
2. Buyer’s Bargaining Power:
•
Switching costs are near zero or
psychological.
4. Very High
Substitutions
5. Low
Rivalary
3. Supplier’s Bargaining Power:
•
Depends on the size of the
distributor.
4. Threat of Substitutes:
•
Mom ‘n’ pop stores, Big Bazar
Supplier’s
3. Medium
Bargaining
Power
5. Interfirm Rivalary
•
Since there are no e-grocery
stores yet, there is little
industry rivalary
asdf
Buyer’s
Bargaining
2. High
Power

13. •
•
•
•
Warehouses
Logistics equipment, like
delivery vans, fork lifts
Distribution Relationships
and expertise.
IMPORTANT
High
Low
Complementary Assets:
I m i t a b i l i t y
Business
Dynamics
Difficult to make
money
Inventor Makes
Money
Holder of
Complementary
Assets
Party with both
technology and assets or
with bargaining power
makes money
Imitability:
•
•
Any Distributor may start
up a website, only
technical knowledge
required.
HIGH
Freely Available/ Unimportant
C o m p l e m e n t a r y
Important
A s s e t s

14. Achieving
Scalability
Key
Challenges
Margins as low as 2%
Supply Chain hard to replicate
Many Items are perishable
Thin Margins
Key
Challenges
Building
Customer
Base
Scaling up is difficult
Competetion from Big Retail
Stiff
Competetion
Supply Chain

15. Comparison with
other players
BigBasket.com
In December 2011, V S
Sudhakar, Hari Menon, Vipul
Parekh and V S Ramesh
launched BigBasket in
Bangalore
AaramShop.com
Vijay Singh founded
AaramShop in 2011.
Originally serving 162 local
shops in Delhi

16. Value Addition by LocalBaniya.com

17. Value Addition by LocalBaniya.com

18. Value Addition by LocalBaniya.com

19. Recommendations
Start in-house brands which will give more margins
Do not highlight discounts for premium products . Eg – Diet Soya
Social media advertising for Mumbai based social communities. Currently very low presence on social media
Tie-Ups with distributors & wholesalers in other cities
Tie ups with retailers to check inventory of product in proximity, instead of sending from warehouse.
Make an app, have hoardings with barcodes for products all over the monorail premises. Eg: Tesco in Korea.
Future Expansion:
◦
◦
◦
◦
◦
Pune (Aundh, Baner)
Kolkata (Salt Lake, Ballygunj)
Gurgaon (Except Old Gurgaon )
Noida, Greater Noida
South Delhi

20. THANK YOU