Description
A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
Webforyou.com would be an online hypermarket which would enable the web users to place their order for goods and get it delivered at home for a lesser price. It would deal in all grocery products and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods and much more at prices which will be much lower than other hypermarkets. Webforyou.com would design a website which would enable the user to sign in and select from the large variety of goods. We would not buy and stock those goods in large volumes with us. We would tie up with the local distributors and place the orders when we receive order from the customers. Now the distributors would not sell us goods in less volume but the orders will be placed through the internet so the number of buyers would be more and so the orders would be huge. So when we receive the order from our customers, we would place the order to our suppliers. Now if we don’t stock the goods, we don’t need the warehouse nor do we need a retail space as we are selling it online. So this would decrease our costs as we don’t have those huge fixed costs of land, building, infrastructure nor do we have huge variable costs of inventory, administrative salaries, maintenance cost etc. So our cost of goods would be lower than that of other hypermarkets. This would help us to sell our goods at a low price and that too at their doorstep. We would try and deliver the goods to the customers as soon as possible (within 72-96 hours) depending on the terms decided with our suppliers. However we would make them prepaid members and collect the cash well in advance. This would help us to buy the goods from our suppliers in cash. This would further decrease our cost of goods. Once the website is popular, we would approach the companies of various products we deal and ask them to pay for their advertisements. We would also charge them for keeping their product above other competitive products (i.e. when someone searches for toothpaste, if close-up wants its name to be displayed first we would charge them). We would have to invest in a small land for warehouse for keeping the goods for a couple of days and also invest in transportation cost. We would have to install mini ERP software to manage our inventory which would be connected to our suppliers. The ERP would place the order automatically once it receives the order from the customer. Moreover the system would also keep track of the customer behavior
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and their buying trends. The software can store the data of each and every customer and help the customer in making the buying decision based on early purchases.
Market Feasibility
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Industry Analysis:We are in the business of online hypermarket. So the industry we deal in is online service industry along with retail industry. In an online service industry, the player who remains innovative wins. The website can be imitated very soon so one has to remain innovative and continue creating new ventures. The website should be user friendly and easy to use so that the end users can make use of our website. The market is also huge as the transactions will be carried on the internet so people from any corner of the world can access the website. However the website may not prove to be helpful to the people outside India as the area of operations are limited to India. The designing department should take care that the website designed should be able to take care of the load of users at any point of time. The Indian masses are getting used to purchase goods online. However the online transactions are very less as compared to other western countries like USA and Canada. Moreover there are many drawbacks in the usage of credit cards and debit cards. There are so many frauds and fake transactions. So the people are afraid of using plastic money for online transactions. The Indian online industry may reach the inflection point in the next 18-24 months when the country is expected to have 80 million internet users. It will be the time when most of the internet companies will start making profit. Availability of local language content could play a major role in increasing the internet penetration in India. But that’s easy said than done. Comparing the internet scenario in China with that of India, in China there is one local language. But in India, there can be no single language. And though English is the major language used in Indian websites, that language cannot be sufficient to bring a vast majority of the country’s citizens to internet. Now, talking about the retail market, India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. An increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural
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consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. Shopping in India has witnessed a revolution with the change in the consumer buying behavior and the whole format of shopping also altering. Industry of retail in India which has become modern can be seen from the fact that there are multi- stored malls, huge shopping centers, and sprawling complexes which offer food, shopping, and entertainment all under the same roof. India retail industry is expanding itself most aggressively, as a result a great demand for real estate is being created. Indian retailer’s preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. It is expected that by 2010, India may have 600 new shopping centers. In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of non- branded items.
Porter’s 5 Force Model
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Bargaining power of Suppliers:As discussed earlier, the organization lies in two different industries namely • • Online Service Industry Retail Industry Talking about the online service industry, the bargaining power of suppliers is low. The main element required in a website providing services is Manpower. There is an abundance of supply of human resources who are experts in web designing. Moreover we also need web space for hosting our websites. That is also available and there is a fierce competition among them. So the prices for web hosting are also low. Thus the bargaining power of suppliers is low. Now, talking about the retail industry, there are many wholesalers who are ready to provide the goods. So we can negotiate with all of them and purchase the goods at a lower rate. This would help us to provide the goods at a lower price to our customers which would increase our sales and further would increase our profit margins.
Bargaining power of Customers:L.J.I.M.S. 5
The target market is the people of India. The goods are to be sold on the website. The goods will be provided to them at a low rate than other hypermarkets. They will be given some schemes at regular intervals but would not be allowed to bargain directly with the website. So the bargaining power of the customers will be lower.
Threat of New Entrants:The transactions would be carried on the internet. The designing of the website does not require huge capital investment. Moreover the time taken to design the new website is also short. So new competitors can easily enter the market and increase the competition.
Threat of Substitute Products:Webforyou.com is an online hypermarket. We will provide the goods online and deliver the goods at their doorstep. However the price of goods will be lower than other hypermarkets as we do not have to store the inventory and does not have to incur administrative expenses like other hypermarkets. However the cost of transportation and maintenance of website has to be taken care of. Otherwise people would continue buying the goods by their own by visiting the store.
Competitive rivalry within an industry:As discussed earlier, the competitors can enter easily into the market and increase the competition. Entering the market is easy but sustaining in the market is very difficult. One has to remain competitive otherwise the next competitor will take away the share. The websites has to keep on innovating in order to attract the attention of its user. The interface should be attractive and the website should be easy to use so that the users can make use it.
Critical Success Factor:-
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Webforyou.com is an online hypermarket. India is a developing country. People are getting used to buying goods online. Moreover the goods will be delivered at their doorstep and that too at a cheaper rate. The customers may be afraid of using their credit cards or debit cards for small transactions, so we have brought in the system of prepaid cards which would enable the users to make their transactions safely and easily. Transportation also plays an important role for the success of the organization. We will divide the areas of the city and allot the areas to the transporters. They would be paid on contract basis. They would collect the goods from the main warehouse where the goods will be supplied by the suppliers and then deliver the goods to the customers. This would reduce the load of transporting for the company.
Core Competency:Webforyou.com is an online hypermarket. The main aim is to keep the cost lower than other hypermarkets. We will not be storing the inventory and selling to the goods to the final customer. The website seems to be an online retail but in reality we would behave as online trading website. This would reduce the cost of goods and would enable us to sell the goods at a lower price.
Major Customer Groups:The main customers of Webforyou.com would be the final customers. However Webforyou.com would also provide goods to the business clients like the hotels, caterers and restaurants. They can buy our products in bulk and can procure the goods at a lower cost.
Target Market:-
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The website would target the housewives as well as the working women who do not want to spend much time on visiting the grocery store and want to make things easy. The website would also target the hotels, restaurants and caterers who want to buy the goods in bulk at a cheap rate. The target market would be mainly the urban population above the age of 19 years who have the knowledge of internet. The website would target the urban population of 10 cities namely Ahmedabad, Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Coimbatore and Baroda. In case of household users the women would mainly act as a purchasing decision makers and men may act as the influencers in the purchase decision making process. However in case of hoteliers, the management/owner would be the purchase decision makers and the staff/employees would act as the influencers.
Primary Market size:The website will be operating in the ten cities having the population of over five million people. So the total number of people targeted in the ten cities are fifty million. According to the market research an average of 12.15% people use internet. So the total number of internet users are around six million. If we assume 5 members in a family then the total number of families having one internet user would be around 1.2 million. We have assumed that 10% of the internet users make online transactions. So the number of families making online transactions are one lakh twenty thousand people. Out of those families we assume that only five percent of those families would purchase the goods from us i.e. six thousand people buy our products every month. The grocery is usually bought once in every month. So the total number of customers in a year would be around seventy two thousand. We have made 3 different divisions of the purchase size. The first division A comprises of all the transactions below Rs.750. The second division B comprises of all the transactions between Rs.750 and Rs.2500. The third division C comprises of all the transactions having value more than Rs.2500. The average transaction is Rs.1612.5.
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The market growth of online retailing ranges between 25-35% annually. However to be on a conservative side, we have assumed our growth rate to be 25% annually.
Pricing/gross margin targets:The website is an online retail grocery store. However it would act as a trader of goods between the wholesaler and the final customer. We would list all the products on the website and the customer would order the goods. We would then forward the orders to our wholesalers and then dispatch the goods to the customers. We do not have to store the inventory in the whole transaction. This would reduce the cost of our goods. So this would enable us to give discounts and offer low price goods to the customers. We can list the lower price of the goods and can offer discounts to the customers on heavy volumes. We can also introduce various schemes for promotion of new products in order to increase the sales. Moreover the customers would buy the prepay coupons in advance so we have the option to purchase the goods for cash. This would also help us to procure the goods at lower cost. The goods will be traded on heavy volumes so we would keep the profit margins lower than other traders. The turnover would be high so it would help us to earn good profit.
Lead Time:The customers visit the website and view the various products available. They may select those products and would place the order. Then the customers would make the payment from the prepay.com website.
After receiving the order, the website would transfer the order to the Ahmedabad Headquarters. The headquarters would then forward these orders to the respective cities. The city
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office will place the order with their distributors two time everyday at 12 pm and 6 pm. The distributors will then deliver the goods at the local warehouse by next day till 12 pm. The 2 nd day will be utilized in packing the various goods for the customers. The local office would keep updating the status of the orders and the headquarters would monitor that all the orders are worked upon. The packages of different customers will be prepared on the 2 nd day. The goods will be ready to dispatch on the 3rd day. The respective transporter would then collect the goods from the warehouse and deliver the goods in their allocated areas. Maximum time required would be 72 hours (3 days).
Competition:There is no other website providing grocery online in India. So we will have the advantage of the first movers. So we will be able to grab the major market share. However with the success of the business venture, competitors are bound to enter this business. As the entry barriers are low in this industry, it will be very easy for new competitors to enter. New competitors would enter the market in the next 6-9 months. We will be facing a direct competition from the online retailers and there will be always an indirect competition from the local grocery stores and the hypermarkets.
STRENGTHS: New concept:L.J.I.M.S. 10
The concept of an online hypermarket in India is relatively new.
Zero Inventory:We are in the business of online hypermarket. We will tie up with the suppliers to deliver the goods after we receive the orders from the online customers. This would help us in storing zero inventory which would help us in reducing our administrative expenses.
Prepaid Cards:The customers will have to purchase the cards from the vendors and recharge their accounts with that balance. This will give us the advantage of purchasing for cash which would decrease the cost of goods. Moreover the customers also feel it safe unlike other online transactions like credit cards or debit cards.
Transportation:The transportation plays a crucial role in the success of the organization. As the Indian market is massive, we may not be able to deliver the goods on our own. We may appoint regional transporters for the logistics function. This would reduce the burden of transporting the goods to all the customers and enable the company to focus on other managerial functions.
WEAKNESS:
Difficult use of Prepaid cards:L.J.I.M.S. 11
The website will be designed in such a manner that a layman can also purchase the goods from the website. But the transaction done in the prepaid card is difficult. One may face some problems and might face some difficulties in recharging the balance.
Barriers to enter the Market:The barrier to enter this industry is relatively low. The reason for the low entry barriers are:• • • • Less Investment Less time required Technology easily available Less burden of trademarks and patents
STRAREGIES Marketing Penetration Strategy:-
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We will be giving our advertisements on various websites. We can search for websites which are visited by working women, housewives and men living alone. We can give the advertisements on such sites which would help us in targeting our customers. We will also announce various promotional schemes in the initial 2 months in order to increase the customer base.
Growth Strategy:We can also start taking bulk orders from various restaurants, hotels and caterers. This would be beneficial for both of us. We would be able to increase our sales and the relationship would be long term, while they would be able to procure the goods at a cheaper rate and it will be delivered at their door step.
Distribution Channel:We will be appointing marketers who would be good in negotiation skills. They would approach the wholesalers and distributors of different products in different cities. We would fix a deal about supplying the goods at a fixed rate. The quantity of our ordering would be high so we can ask them for low price. Moreover the transactions will be on cash basis so we can avail the benefits of discount. We will sell the goods at a lower margin of 10-15%. The website acts as an intermediary between the customer and the wholesaler.
PRODUCT DESCRIPTION
Webforyou.com will be a retail hypermarket on the internet. The idea of the online hypermarket is unique in India. Moreover the tie-ups with the wholesalers and distributors will enable us to
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keep zero inventory and follow a just-in-time inventory method. So we do not have to pay for the inventory maintenance. As it is an online hypermarket, we do not have huge administrative expenses like salaries, electricity, rent etc. Moreover we are making our customers pay through prepaid card, which means that we can collect the payments well in advance. So we have the advantage of buying the goods from the wholesalers in cash. All these factors would help us in reducing our cost of goods. The mode of payment in this website is through prepaid cards. There will be another website prepay.com which would handle the payment division. The registration of users will be free. We will print the prepaid cards of different values ranging from Rs.10 to Rs.1000. The customers can buy the prepaid card from any pan-wala and scratch it and find the 2 registration numbers. The customer has to enter the registration numbers in this website and can increase the balance in his account. We will allow the members to view all our products and its prices on webforyou.com. When he wants to buy he can select the product and add to the shopping list. He would be given the notification of the total amount to be paid. Now the user has to log in prepay.com and generate an online cheque of that amount containing 16 digit numbers. Then that 16 digit number would be entered in webforyou.com and verified from prepay.com. After the verification the customer will be given an online bill which would include the details of the product and a specific bill number which can be used for further inquiry. Then the amount of goods bought would be deducted from the account in prepay.com. The remaining balance would be remaining in his account and can be use for future transactions. Once the channels of distribution are strong, we can extend our areas of operations in other cities also. Webforyou.com has the main business of selling grocery products and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods online. However it also has a complementary business. The mode of payment is only through prepaid cards. This would help us to create a big business. Firstly, the prepaid cards will be available with the pan-walas so anyone can buy. Moreover the transaction done in this way is less risky as compared to transactions done on credit cards. The risk is very low and limited.
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The prepaid cards can also be used on other websites for their payment and we can charge 1% or 2 % on their transaction. Other payments like credit cards, debit cards, paypal etc are very popular but it not so popular with the teenagers. But in case of prepaid cards, it is available everywhere and they can buy through the prepaid cards. They have paper money and not plastic money. Today the teenagers in India spend a lot of money on gaming. They spend a lot on offline gaming. However with the introduction of prepay.com they can even pay for online games. There are a lot of unexplored opportunities which can be explored through the medium of prepay.com.
OPERATIONS Production and service delivery procedures:L.J.I.M.S. 15
Flowchart of the Business processes followed by the Website
repay cards
Recharge Process Shopping Process Payment Process Processing Order Transportation Process
INTERNAL PROCESSES:-
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Recharge Balance:Visit Website Register Id Recharges Balance
After buying the prepay cards from the vendor, the customer visits the website www.prepay.com and registers the Id. If he is an existing user, he may log in his username and password and enter his account. Then he will scratch the prepay cards and enter the two hidden 16 digit numbers. This would increase the balance of the customer by the value of the prepay cards.
Shopping process:Visit Website Find Goods Select Goods Final Amount
After
recharging
the
balance
in
the
account,
the
customer
visits
the
website
www.webforyou.com. He views the goods and various schemes offered by the website and select the goods required by him. He is given the final amount of payment to be made.
Payment Process
Prepay.com
Enter amount
16 digit numbers
Enter the numbers
Verify
After getting the final amount, the customer visits the www.prepay.com and enters the amount to be paid. He gets two 16 digit numbers and these numbers are to be filled in the www.webforyou.com. The website would check the balance with the customer and if everything is satisfactory, it would accept the order.
Processing of Order:L.J.I.M.S. 17
Transfer to HQ
Transfer to city
Place order with supplier
Supplier delivers
Packaging
After receiving the order, the website would transfer the order to the Ahmedabad Headquarters. The headquarters would then forward these orders to the respective cities. The city office will place the order with their distributors two time everyday at 12 pm and 6 pm. The distributors will then deliver the goods at the local warehouse by next day till 12 pm. The 2 nd day will be utilized in packing the various goods for the customers. The local office would keep updating the status of the orders and the headquarters would monitor that all the orders are worked upon.
EXTERNAL PROCESSESrepay Card Process:-
Printing
Distributors
Vendors
Customers
This process starts with the printing of Prepay cards. The prepay cards will be printed of different denominations like Rs.10, Rs.50, Rs.100, Rs.500, Rs.1000.The prepay cards will be distributed to the vendors through the various distributors. The vendors would stock the prepay cards of various denominations according to their requirement. The customers can visit our vendors and buy the prepay cards according to their shopping requirement.
Transportation:-
Ready packages
Transporter collect
Deliver
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The packages of different customers will be prepared on the 2 nd day. The goods will be ready to dispatch on the 3rd day. The respective transporter would then collect the goods from the warehouse and deliver the goods in their allocated areas.
Operating Competitive Advantage:Techniques:Webforyou.com is an online hypermarket which will take the orders from the online users and deliver them goods in a span of 72 hours. We will tie up with distributors of various products in different cities. When the user places the order of the goods, the goods will be ordered to the respective distributor of the respective city. Then the goods will be received at the warehouse and will be packed in accordance with the orders placed by the customers. This would enable us to save our cost in maintaining the inventory. We would be able to save our cost as we are buying the goods for cash. This technique of taking the order and fulfilling the order will be one of the competitive advantages.
Economies of Scale:The website would earn profit on large volumes. We would work on low margins but the quantity would be massive. Moreover it would be difficult for us to survive if we do not receive enough orders for any city. The reason is that the fixed cost would be high for any region and so our cost would be covered only if we procure large orders. Economies of scale would be achieved if we sell optimum quantity of goods.
SUPPLIERS:Identification of the suppliers of critical elements of production
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The website will be functioning in different cities. We will search for distributors of different products in each city. We would negotiate the terms and conditions and the price of various products. We would also negotiate the time frame between placing the order and procuring the goods.
Lead time requirements:The website would claim that the goods will be delivered within 72 hours. So maintaining the time is a very important factor. We would have to negotiate with the distributors and force them to give us first priority in delivering the goods. We will receive the orders from the customers and place the orders with the distributors two times a day at 12 PM and 6 PM. The distributors are required to deliver the goods on the next day early morning. The 2 nd day will be spent for packaging and as soon as the goods are packed, they will be ready for dispatch.
Evaluation of the risks of critical element shortages:The website claims that the goods will be delivered in a span of 72 hours. However if the goods could not be procured on time from the distributors, it would be difficult for us to further deliver the goods to the final customer. This would be a problem to us as we have already collected the cash for the goods and are not able to deliver them on time. This would also lead to an image loss for the website.
Management Feasibility
Organization Chart:-
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Proprietor
Marketing Division
Website Division
Warehouse Division
Negotiation with Distributors
Designing the website
Transportation
Searching New products in market
Technical Support
Packaging
Explanation:There will be 3 divisions under the proprietor namely:1. Marketing Division 2. Website Designing Division 3. Warehouse Division
Marketing Division:
It would look at all the marketing functions in the organization. The company will have to negotiate the price and time of delivery of goods with the local distributors. So we will have the hire a marketing team who are good at negotiation. We will also appoint marketers who roam in the market and search for new products. They would also conduct the market surveys when required.
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Website Division:We will hire the web designers who have an experience in this field. The website should be designed in such a way that even a layman can operate it and can make the transaction on our website. Moreover the website division should update the various schemes and promotions on the website.
Warehouse Division:The warehouse division has a tedious job of packing the goods for the customers. The customer would have ordered goods of different companies in different denominations. So the job of the warehouse people is to bring all the goods together and pack them as per the order of the customer. The warehouse staff should also ensure that the goods are dispatched in time and should be in constant touch with the transporters.
Skill Set Matrix:Skill Set Matrix Key Personnel Skills Web Designing Punctuality Web Designers ? Transporter s ? Marketing Purchase Team Dept
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Market knowledge Creativity Finance Negotiation Power IT Skills
? ? ? ?
? ? ?
? ? ?
KEY PERSONNEL REQUIRED:Web Designer:Webforyou.com is an online hypermarket. We need people to design the website and also for its regular maintenance. The designers should be expert in their field and should have the experience in this business. They should build the website in such a way that it has a user friendly interface. The website should be attractive and built in such a way that it loads faster. They also need to have the knowledge of market so that they can add new features to the website and make it more competitive. We are into the business of online retail grocery. The entry barriers are very few and competitors are bound to follow soon after success of the website. So we have to remain competitive to sustain in the market. Moreover we also need creative people who would suggest new ideas and help the website to remain innovative.
Transporters:Webforyou.com will deliver the goods at the place of the customers within 72-96 hours. The orders taken from the customers will have to processed faster and we will have to procure the goods from the suppliers. Moreover the goods will have to be dispatched quickly in order to meet the time standards. So we will need punctual people who could enable the company to deliver the goods in time. Moreover they also should have the knowledge of IT as we will be implementing various software which would help us in order management and its transportation.
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Marketing team:Webforyou.com is an online hypermarket. The concept of an online hypermarket is relatively new for the people of Ahmedabad. So we will have to create an awareness for the website. We need the marketing team to help us in making the website popular and installing the habit of buying grocery online. Moreover they should also take care of various new products introduced in the market. They should also try knowing the tastes and preferences of customers for various products.
Purchase Department:“Finance is the lifeblood of any business”. We will have to take great care of the finance in the organization. We are selling the goods at a lower rate than other hypermarkets. So we will have to work on small margins. We have brought in the concept of prepaid cards for the reason of getting advance cash from the customers and buying the goods for cash. However we will have to take care that the goods are available at a cheaper rate and the suppliers are paid on time. As discussed earlier we will work on small margins. However the quantity would be huge so that would help us in earning more. So the primary aim would be to procure the goods for a price as low as possible. This would be a tedious job. So we need people who have good negotiation power. They would negotiate with the suppliers and procure the goods at a lower price.
Funds Required and their Uses:Current Funding Requirement:The company will develop the website, software and warehouses for its operation. The total fund required in the initial period to start the business is Rs.6030000. The fund would be required in the beginning itself as the fund will be required to develop the software and website. Moreover the warehouses would include computers, air conditions, refrigerators and furniture.
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The website would also require funds for initial marketing. 10% of the total project cost would be kept aside as miscellaneous and over that 5% would be kept aside as contingency. The total fixed assets with the company include computer, furniture, refrigerator, and air conditions worth Rs.2700000. So the bank may give the debt of Rs.2400000 at the rate of 14%. The remaining Rs.3630000 would be equity capital.
Use of Funds:Capital Expenditure:The company would invest Rs.4020000 for capital expenditure like domain name, computers, furniture, website development, software package, refrigerators, air conditions and deposits of rent.
Working Capital:The company has the strategy of buying the goods on cash. So the working capital would be required for the day to day operational expenses only. So the requirement of working capital would be low. However the company will use Rs.802000 as working capital for the day to day operational expenses.
Debt Retirement:The company will borrow the debt of Rs.2700000 from the bank @ 14%. The company plans to repay the debt within the next 5 years.
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doc_967835939.doc
A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
Webforyou.com would be an online hypermarket which would enable the web users to place their order for goods and get it delivered at home for a lesser price. It would deal in all grocery products and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods and much more at prices which will be much lower than other hypermarkets. Webforyou.com would design a website which would enable the user to sign in and select from the large variety of goods. We would not buy and stock those goods in large volumes with us. We would tie up with the local distributors and place the orders when we receive order from the customers. Now the distributors would not sell us goods in less volume but the orders will be placed through the internet so the number of buyers would be more and so the orders would be huge. So when we receive the order from our customers, we would place the order to our suppliers. Now if we don’t stock the goods, we don’t need the warehouse nor do we need a retail space as we are selling it online. So this would decrease our costs as we don’t have those huge fixed costs of land, building, infrastructure nor do we have huge variable costs of inventory, administrative salaries, maintenance cost etc. So our cost of goods would be lower than that of other hypermarkets. This would help us to sell our goods at a low price and that too at their doorstep. We would try and deliver the goods to the customers as soon as possible (within 72-96 hours) depending on the terms decided with our suppliers. However we would make them prepaid members and collect the cash well in advance. This would help us to buy the goods from our suppliers in cash. This would further decrease our cost of goods. Once the website is popular, we would approach the companies of various products we deal and ask them to pay for their advertisements. We would also charge them for keeping their product above other competitive products (i.e. when someone searches for toothpaste, if close-up wants its name to be displayed first we would charge them). We would have to invest in a small land for warehouse for keeping the goods for a couple of days and also invest in transportation cost. We would have to install mini ERP software to manage our inventory which would be connected to our suppliers. The ERP would place the order automatically once it receives the order from the customer. Moreover the system would also keep track of the customer behavior
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and their buying trends. The software can store the data of each and every customer and help the customer in making the buying decision based on early purchases.
Market Feasibility
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Industry Analysis:We are in the business of online hypermarket. So the industry we deal in is online service industry along with retail industry. In an online service industry, the player who remains innovative wins. The website can be imitated very soon so one has to remain innovative and continue creating new ventures. The website should be user friendly and easy to use so that the end users can make use of our website. The market is also huge as the transactions will be carried on the internet so people from any corner of the world can access the website. However the website may not prove to be helpful to the people outside India as the area of operations are limited to India. The designing department should take care that the website designed should be able to take care of the load of users at any point of time. The Indian masses are getting used to purchase goods online. However the online transactions are very less as compared to other western countries like USA and Canada. Moreover there are many drawbacks in the usage of credit cards and debit cards. There are so many frauds and fake transactions. So the people are afraid of using plastic money for online transactions. The Indian online industry may reach the inflection point in the next 18-24 months when the country is expected to have 80 million internet users. It will be the time when most of the internet companies will start making profit. Availability of local language content could play a major role in increasing the internet penetration in India. But that’s easy said than done. Comparing the internet scenario in China with that of India, in China there is one local language. But in India, there can be no single language. And though English is the major language used in Indian websites, that language cannot be sufficient to bring a vast majority of the country’s citizens to internet. Now, talking about the retail market, India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. An increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural
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consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. Shopping in India has witnessed a revolution with the change in the consumer buying behavior and the whole format of shopping also altering. Industry of retail in India which has become modern can be seen from the fact that there are multi- stored malls, huge shopping centers, and sprawling complexes which offer food, shopping, and entertainment all under the same roof. India retail industry is expanding itself most aggressively, as a result a great demand for real estate is being created. Indian retailer’s preferred means of expansion is to expand to other regions and to increase the number of their outlets in a city. It is expected that by 2010, India may have 600 new shopping centers. In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of non- branded items.
Porter’s 5 Force Model
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Bargaining power of Suppliers:As discussed earlier, the organization lies in two different industries namely • • Online Service Industry Retail Industry Talking about the online service industry, the bargaining power of suppliers is low. The main element required in a website providing services is Manpower. There is an abundance of supply of human resources who are experts in web designing. Moreover we also need web space for hosting our websites. That is also available and there is a fierce competition among them. So the prices for web hosting are also low. Thus the bargaining power of suppliers is low. Now, talking about the retail industry, there are many wholesalers who are ready to provide the goods. So we can negotiate with all of them and purchase the goods at a lower rate. This would help us to provide the goods at a lower price to our customers which would increase our sales and further would increase our profit margins.
Bargaining power of Customers:L.J.I.M.S. 5
The target market is the people of India. The goods are to be sold on the website. The goods will be provided to them at a low rate than other hypermarkets. They will be given some schemes at regular intervals but would not be allowed to bargain directly with the website. So the bargaining power of the customers will be lower.
Threat of New Entrants:The transactions would be carried on the internet. The designing of the website does not require huge capital investment. Moreover the time taken to design the new website is also short. So new competitors can easily enter the market and increase the competition.
Threat of Substitute Products:Webforyou.com is an online hypermarket. We will provide the goods online and deliver the goods at their doorstep. However the price of goods will be lower than other hypermarkets as we do not have to store the inventory and does not have to incur administrative expenses like other hypermarkets. However the cost of transportation and maintenance of website has to be taken care of. Otherwise people would continue buying the goods by their own by visiting the store.
Competitive rivalry within an industry:As discussed earlier, the competitors can enter easily into the market and increase the competition. Entering the market is easy but sustaining in the market is very difficult. One has to remain competitive otherwise the next competitor will take away the share. The websites has to keep on innovating in order to attract the attention of its user. The interface should be attractive and the website should be easy to use so that the users can make use it.
Critical Success Factor:-
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Webforyou.com is an online hypermarket. India is a developing country. People are getting used to buying goods online. Moreover the goods will be delivered at their doorstep and that too at a cheaper rate. The customers may be afraid of using their credit cards or debit cards for small transactions, so we have brought in the system of prepaid cards which would enable the users to make their transactions safely and easily. Transportation also plays an important role for the success of the organization. We will divide the areas of the city and allot the areas to the transporters. They would be paid on contract basis. They would collect the goods from the main warehouse where the goods will be supplied by the suppliers and then deliver the goods to the customers. This would reduce the load of transporting for the company.
Core Competency:Webforyou.com is an online hypermarket. The main aim is to keep the cost lower than other hypermarkets. We will not be storing the inventory and selling to the goods to the final customer. The website seems to be an online retail but in reality we would behave as online trading website. This would reduce the cost of goods and would enable us to sell the goods at a lower price.
Major Customer Groups:The main customers of Webforyou.com would be the final customers. However Webforyou.com would also provide goods to the business clients like the hotels, caterers and restaurants. They can buy our products in bulk and can procure the goods at a lower cost.
Target Market:-
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The website would target the housewives as well as the working women who do not want to spend much time on visiting the grocery store and want to make things easy. The website would also target the hotels, restaurants and caterers who want to buy the goods in bulk at a cheap rate. The target market would be mainly the urban population above the age of 19 years who have the knowledge of internet. The website would target the urban population of 10 cities namely Ahmedabad, Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Coimbatore and Baroda. In case of household users the women would mainly act as a purchasing decision makers and men may act as the influencers in the purchase decision making process. However in case of hoteliers, the management/owner would be the purchase decision makers and the staff/employees would act as the influencers.
Primary Market size:The website will be operating in the ten cities having the population of over five million people. So the total number of people targeted in the ten cities are fifty million. According to the market research an average of 12.15% people use internet. So the total number of internet users are around six million. If we assume 5 members in a family then the total number of families having one internet user would be around 1.2 million. We have assumed that 10% of the internet users make online transactions. So the number of families making online transactions are one lakh twenty thousand people. Out of those families we assume that only five percent of those families would purchase the goods from us i.e. six thousand people buy our products every month. The grocery is usually bought once in every month. So the total number of customers in a year would be around seventy two thousand. We have made 3 different divisions of the purchase size. The first division A comprises of all the transactions below Rs.750. The second division B comprises of all the transactions between Rs.750 and Rs.2500. The third division C comprises of all the transactions having value more than Rs.2500. The average transaction is Rs.1612.5.
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The market growth of online retailing ranges between 25-35% annually. However to be on a conservative side, we have assumed our growth rate to be 25% annually.
Pricing/gross margin targets:The website is an online retail grocery store. However it would act as a trader of goods between the wholesaler and the final customer. We would list all the products on the website and the customer would order the goods. We would then forward the orders to our wholesalers and then dispatch the goods to the customers. We do not have to store the inventory in the whole transaction. This would reduce the cost of our goods. So this would enable us to give discounts and offer low price goods to the customers. We can list the lower price of the goods and can offer discounts to the customers on heavy volumes. We can also introduce various schemes for promotion of new products in order to increase the sales. Moreover the customers would buy the prepay coupons in advance so we have the option to purchase the goods for cash. This would also help us to procure the goods at lower cost. The goods will be traded on heavy volumes so we would keep the profit margins lower than other traders. The turnover would be high so it would help us to earn good profit.
Lead Time:The customers visit the website and view the various products available. They may select those products and would place the order. Then the customers would make the payment from the prepay.com website.
After receiving the order, the website would transfer the order to the Ahmedabad Headquarters. The headquarters would then forward these orders to the respective cities. The city
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office will place the order with their distributors two time everyday at 12 pm and 6 pm. The distributors will then deliver the goods at the local warehouse by next day till 12 pm. The 2 nd day will be utilized in packing the various goods for the customers. The local office would keep updating the status of the orders and the headquarters would monitor that all the orders are worked upon. The packages of different customers will be prepared on the 2 nd day. The goods will be ready to dispatch on the 3rd day. The respective transporter would then collect the goods from the warehouse and deliver the goods in their allocated areas. Maximum time required would be 72 hours (3 days).
Competition:There is no other website providing grocery online in India. So we will have the advantage of the first movers. So we will be able to grab the major market share. However with the success of the business venture, competitors are bound to enter this business. As the entry barriers are low in this industry, it will be very easy for new competitors to enter. New competitors would enter the market in the next 6-9 months. We will be facing a direct competition from the online retailers and there will be always an indirect competition from the local grocery stores and the hypermarkets.
STRENGTHS: New concept:L.J.I.M.S. 10
The concept of an online hypermarket in India is relatively new.
Zero Inventory:We are in the business of online hypermarket. We will tie up with the suppliers to deliver the goods after we receive the orders from the online customers. This would help us in storing zero inventory which would help us in reducing our administrative expenses.
Prepaid Cards:The customers will have to purchase the cards from the vendors and recharge their accounts with that balance. This will give us the advantage of purchasing for cash which would decrease the cost of goods. Moreover the customers also feel it safe unlike other online transactions like credit cards or debit cards.
Transportation:The transportation plays a crucial role in the success of the organization. As the Indian market is massive, we may not be able to deliver the goods on our own. We may appoint regional transporters for the logistics function. This would reduce the burden of transporting the goods to all the customers and enable the company to focus on other managerial functions.
WEAKNESS:
Difficult use of Prepaid cards:L.J.I.M.S. 11
The website will be designed in such a manner that a layman can also purchase the goods from the website. But the transaction done in the prepaid card is difficult. One may face some problems and might face some difficulties in recharging the balance.
Barriers to enter the Market:The barrier to enter this industry is relatively low. The reason for the low entry barriers are:• • • • Less Investment Less time required Technology easily available Less burden of trademarks and patents
STRAREGIES Marketing Penetration Strategy:-
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We will be giving our advertisements on various websites. We can search for websites which are visited by working women, housewives and men living alone. We can give the advertisements on such sites which would help us in targeting our customers. We will also announce various promotional schemes in the initial 2 months in order to increase the customer base.
Growth Strategy:We can also start taking bulk orders from various restaurants, hotels and caterers. This would be beneficial for both of us. We would be able to increase our sales and the relationship would be long term, while they would be able to procure the goods at a cheaper rate and it will be delivered at their door step.
Distribution Channel:We will be appointing marketers who would be good in negotiation skills. They would approach the wholesalers and distributors of different products in different cities. We would fix a deal about supplying the goods at a fixed rate. The quantity of our ordering would be high so we can ask them for low price. Moreover the transactions will be on cash basis so we can avail the benefits of discount. We will sell the goods at a lower margin of 10-15%. The website acts as an intermediary between the customer and the wholesaler.
PRODUCT DESCRIPTION
Webforyou.com will be a retail hypermarket on the internet. The idea of the online hypermarket is unique in India. Moreover the tie-ups with the wholesalers and distributors will enable us to
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keep zero inventory and follow a just-in-time inventory method. So we do not have to pay for the inventory maintenance. As it is an online hypermarket, we do not have huge administrative expenses like salaries, electricity, rent etc. Moreover we are making our customers pay through prepaid card, which means that we can collect the payments well in advance. So we have the advantage of buying the goods from the wholesalers in cash. All these factors would help us in reducing our cost of goods. The mode of payment in this website is through prepaid cards. There will be another website prepay.com which would handle the payment division. The registration of users will be free. We will print the prepaid cards of different values ranging from Rs.10 to Rs.1000. The customers can buy the prepaid card from any pan-wala and scratch it and find the 2 registration numbers. The customer has to enter the registration numbers in this website and can increase the balance in his account. We will allow the members to view all our products and its prices on webforyou.com. When he wants to buy he can select the product and add to the shopping list. He would be given the notification of the total amount to be paid. Now the user has to log in prepay.com and generate an online cheque of that amount containing 16 digit numbers. Then that 16 digit number would be entered in webforyou.com and verified from prepay.com. After the verification the customer will be given an online bill which would include the details of the product and a specific bill number which can be used for further inquiry. Then the amount of goods bought would be deducted from the account in prepay.com. The remaining balance would be remaining in his account and can be use for future transactions. Once the channels of distribution are strong, we can extend our areas of operations in other cities also. Webforyou.com has the main business of selling grocery products and general merchandise including home furnishings, utensils, crockery, cutlery, sports goods online. However it also has a complementary business. The mode of payment is only through prepaid cards. This would help us to create a big business. Firstly, the prepaid cards will be available with the pan-walas so anyone can buy. Moreover the transaction done in this way is less risky as compared to transactions done on credit cards. The risk is very low and limited.
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The prepaid cards can also be used on other websites for their payment and we can charge 1% or 2 % on their transaction. Other payments like credit cards, debit cards, paypal etc are very popular but it not so popular with the teenagers. But in case of prepaid cards, it is available everywhere and they can buy through the prepaid cards. They have paper money and not plastic money. Today the teenagers in India spend a lot of money on gaming. They spend a lot on offline gaming. However with the introduction of prepay.com they can even pay for online games. There are a lot of unexplored opportunities which can be explored through the medium of prepay.com.
OPERATIONS Production and service delivery procedures:L.J.I.M.S. 15
Flowchart of the Business processes followed by the Website
repay cardsRecharge Process Shopping Process Payment Process Processing Order Transportation Process
INTERNAL PROCESSES:-
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Recharge Balance:Visit Website Register Id Recharges Balance
After buying the prepay cards from the vendor, the customer visits the website www.prepay.com and registers the Id. If he is an existing user, he may log in his username and password and enter his account. Then he will scratch the prepay cards and enter the two hidden 16 digit numbers. This would increase the balance of the customer by the value of the prepay cards.
Shopping process:Visit Website Find Goods Select Goods Final Amount
After
recharging
the
balance
in
the
account,
the
customer
visits
the
website
www.webforyou.com. He views the goods and various schemes offered by the website and select the goods required by him. He is given the final amount of payment to be made.
Payment Process
Prepay.com
Enter amount
16 digit numbers
Enter the numbers
Verify
After getting the final amount, the customer visits the www.prepay.com and enters the amount to be paid. He gets two 16 digit numbers and these numbers are to be filled in the www.webforyou.com. The website would check the balance with the customer and if everything is satisfactory, it would accept the order.
Processing of Order:L.J.I.M.S. 17
Transfer to HQ
Transfer to city
Place order with supplier
Supplier delivers
Packaging
After receiving the order, the website would transfer the order to the Ahmedabad Headquarters. The headquarters would then forward these orders to the respective cities. The city office will place the order with their distributors two time everyday at 12 pm and 6 pm. The distributors will then deliver the goods at the local warehouse by next day till 12 pm. The 2 nd day will be utilized in packing the various goods for the customers. The local office would keep updating the status of the orders and the headquarters would monitor that all the orders are worked upon.
EXTERNAL PROCESSES
repay Card Process:-Printing
Distributors
Vendors
Customers
This process starts with the printing of Prepay cards. The prepay cards will be printed of different denominations like Rs.10, Rs.50, Rs.100, Rs.500, Rs.1000.The prepay cards will be distributed to the vendors through the various distributors. The vendors would stock the prepay cards of various denominations according to their requirement. The customers can visit our vendors and buy the prepay cards according to their shopping requirement.
Transportation:-
Ready packages
Transporter collect
Deliver
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The packages of different customers will be prepared on the 2 nd day. The goods will be ready to dispatch on the 3rd day. The respective transporter would then collect the goods from the warehouse and deliver the goods in their allocated areas.
Operating Competitive Advantage:Techniques:Webforyou.com is an online hypermarket which will take the orders from the online users and deliver them goods in a span of 72 hours. We will tie up with distributors of various products in different cities. When the user places the order of the goods, the goods will be ordered to the respective distributor of the respective city. Then the goods will be received at the warehouse and will be packed in accordance with the orders placed by the customers. This would enable us to save our cost in maintaining the inventory. We would be able to save our cost as we are buying the goods for cash. This technique of taking the order and fulfilling the order will be one of the competitive advantages.
Economies of Scale:The website would earn profit on large volumes. We would work on low margins but the quantity would be massive. Moreover it would be difficult for us to survive if we do not receive enough orders for any city. The reason is that the fixed cost would be high for any region and so our cost would be covered only if we procure large orders. Economies of scale would be achieved if we sell optimum quantity of goods.
SUPPLIERS:Identification of the suppliers of critical elements of production
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The website will be functioning in different cities. We will search for distributors of different products in each city. We would negotiate the terms and conditions and the price of various products. We would also negotiate the time frame between placing the order and procuring the goods.
Lead time requirements:The website would claim that the goods will be delivered within 72 hours. So maintaining the time is a very important factor. We would have to negotiate with the distributors and force them to give us first priority in delivering the goods. We will receive the orders from the customers and place the orders with the distributors two times a day at 12 PM and 6 PM. The distributors are required to deliver the goods on the next day early morning. The 2 nd day will be spent for packaging and as soon as the goods are packed, they will be ready for dispatch.
Evaluation of the risks of critical element shortages:The website claims that the goods will be delivered in a span of 72 hours. However if the goods could not be procured on time from the distributors, it would be difficult for us to further deliver the goods to the final customer. This would be a problem to us as we have already collected the cash for the goods and are not able to deliver them on time. This would also lead to an image loss for the website.
Management Feasibility
Organization Chart:-
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Proprietor
Marketing Division
Website Division
Warehouse Division
Negotiation with Distributors
Designing the website
Transportation
Searching New products in market
Technical Support
Packaging
Explanation:There will be 3 divisions under the proprietor namely:1. Marketing Division 2. Website Designing Division 3. Warehouse Division
Marketing Division:
It would look at all the marketing functions in the organization. The company will have to negotiate the price and time of delivery of goods with the local distributors. So we will have the hire a marketing team who are good at negotiation. We will also appoint marketers who roam in the market and search for new products. They would also conduct the market surveys when required.
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Website Division:We will hire the web designers who have an experience in this field. The website should be designed in such a way that even a layman can operate it and can make the transaction on our website. Moreover the website division should update the various schemes and promotions on the website.
Warehouse Division:The warehouse division has a tedious job of packing the goods for the customers. The customer would have ordered goods of different companies in different denominations. So the job of the warehouse people is to bring all the goods together and pack them as per the order of the customer. The warehouse staff should also ensure that the goods are dispatched in time and should be in constant touch with the transporters.
Skill Set Matrix:Skill Set Matrix Key Personnel Skills Web Designing Punctuality Web Designers ? Transporter s ? Marketing Purchase Team Dept
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Market knowledge Creativity Finance Negotiation Power IT Skills
? ? ? ?
? ? ?
? ? ?
KEY PERSONNEL REQUIRED:Web Designer:Webforyou.com is an online hypermarket. We need people to design the website and also for its regular maintenance. The designers should be expert in their field and should have the experience in this business. They should build the website in such a way that it has a user friendly interface. The website should be attractive and built in such a way that it loads faster. They also need to have the knowledge of market so that they can add new features to the website and make it more competitive. We are into the business of online retail grocery. The entry barriers are very few and competitors are bound to follow soon after success of the website. So we have to remain competitive to sustain in the market. Moreover we also need creative people who would suggest new ideas and help the website to remain innovative.
Transporters:Webforyou.com will deliver the goods at the place of the customers within 72-96 hours. The orders taken from the customers will have to processed faster and we will have to procure the goods from the suppliers. Moreover the goods will have to be dispatched quickly in order to meet the time standards. So we will need punctual people who could enable the company to deliver the goods in time. Moreover they also should have the knowledge of IT as we will be implementing various software which would help us in order management and its transportation.
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Marketing team:Webforyou.com is an online hypermarket. The concept of an online hypermarket is relatively new for the people of Ahmedabad. So we will have to create an awareness for the website. We need the marketing team to help us in making the website popular and installing the habit of buying grocery online. Moreover they should also take care of various new products introduced in the market. They should also try knowing the tastes and preferences of customers for various products.
Purchase Department:“Finance is the lifeblood of any business”. We will have to take great care of the finance in the organization. We are selling the goods at a lower rate than other hypermarkets. So we will have to work on small margins. We have brought in the concept of prepaid cards for the reason of getting advance cash from the customers and buying the goods for cash. However we will have to take care that the goods are available at a cheaper rate and the suppliers are paid on time. As discussed earlier we will work on small margins. However the quantity would be huge so that would help us in earning more. So the primary aim would be to procure the goods for a price as low as possible. This would be a tedious job. So we need people who have good negotiation power. They would negotiate with the suppliers and procure the goods at a lower price.
Funds Required and their Uses:Current Funding Requirement:The company will develop the website, software and warehouses for its operation. The total fund required in the initial period to start the business is Rs.6030000. The fund would be required in the beginning itself as the fund will be required to develop the software and website. Moreover the warehouses would include computers, air conditions, refrigerators and furniture.
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The website would also require funds for initial marketing. 10% of the total project cost would be kept aside as miscellaneous and over that 5% would be kept aside as contingency. The total fixed assets with the company include computer, furniture, refrigerator, and air conditions worth Rs.2700000. So the bank may give the debt of Rs.2400000 at the rate of 14%. The remaining Rs.3630000 would be equity capital.
Use of Funds:Capital Expenditure:The company would invest Rs.4020000 for capital expenditure like domain name, computers, furniture, website development, software package, refrigerators, air conditions and deposits of rent.
Working Capital:The company has the strategy of buying the goods on cash. So the working capital would be required for the day to day operational expenses only. So the requirement of working capital would be low. However the company will use Rs.802000 as working capital for the day to day operational expenses.
Debt Retirement:The company will borrow the debt of Rs.2700000 from the bank @ 14%. The company plans to repay the debt within the next 5 years.
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doc_967835939.doc