LOCATION PLANNING & ANALYSIS

FOR
CHALDAL ONLINE SHOP

INSTITUTE OF BUSINESS
JAHANGIRNAGAR UNIVERSITY
 A report on

Location Planning & Analysis for Chaldal Online Shop

An analytical study work assigned by the Course Teacher

Name of the Program: WMBA

Course Title: Operations Management
Course Code: BUS 512

Submitted to:
Professor Dr. Md. Motaher Hossain
Course Teacher
Operations Management
Institute of Business Administration (IBA-JU)
Jahangirnagar University

Submitted by:
S. M. Shumsur Rouf Faisal
ID: 201703075
Md. Rafsun Zany
ID: 201901067
Tasmin Wazeda Binty
ID: 201902018
Mohibur Rahman
ID: 201902049

Date of Submission: August 2, 2019

Institute of Business Administration (IBA-JU)

Jahangirnagar University
Savar, Dhaka – 1342, Bangladesh.
 Letter of Transmittal

August 2, 2019

Professor Dr. Md. Motaher Hossain

Course Teacher of Operations Management
Institute of Business Administration (IBA-JU)
Jahangirnagar University

Dear Sir,

We submit herewith an analytical report for Location Planning for Online Grocery Shop
Chaldal.com as educational purpose of your course – Operations Management.

The available data was accumulated, analyzed, discussed and found that the location planning
was perfect and aligned with all the factors used to evaluate a location from all aspects.

We are looking forward for your kind review on it.

Sincerely,

S. M. Shumsur Rouf Faisal

ID: 201703075
Md. Rafsun Zany
ID: 201901067
Tasmin Wazeda Binty
ID: 201902018
Mohibur Rahman
ID: 201902049
IBA-JU
WMBA
Table of Contents

Introduction....................................................................................................................................1
Need for Location Decision...........................................................................................................4
Marketing Strategy...............................................................................................................................4
Cost of Doing Business..........................................................................................................................4
Growth...................................................................................................................................................5
Objectives of Location Decision...................................................................................................5
Profit Potential.......................................................................................................................................5
Select the Best Location........................................................................................................................5
Strategic Importance of Locations...............................................................................................6
Long Term Cost.....................................................................................................................................6
Capacity & Flexibility...........................................................................................................................6
Regional Factors....................................................................................................................................7
Community Considerations..........................................................................................................7
Quality of Life........................................................................................................................................7
Services...................................................................................................................................................7
Attitude...................................................................................................................................................8
Taxes & Environmental Regulations...................................................................................................8
Site Related Factors.......................................................................................................................8
Land........................................................................................................................................................8
Transportations.....................................................................................................................................9
Environment..........................................................................................................................................9
Risks..............................................................................................................................................10
Cultural................................................................................................................................................10
Political.................................................................................................................................................10
Criticism...............................................................................................................................................10
Center of Gravity Analysis for Central Warehouse.................................................................10
Conclusion....................................................................................................................................12
Reference......................................................................................................................................13
Introduction
Location is of utmost importance to businesses that sell goods or services directly to
customers. Choosing a location for a new business is one of the most important decisions
entrepreneurs make during the planning phase of launching ventures. The location of a
business can affect many aspects of how it operates, such as total sales and how costly it is to
run. In this time of modern era, home-based businesses and online businesses are highly
affected by location-dependent services, rules and regulations.

Online shopping websites and Facebook stores are rapidly on the rise. It is so much easier
buying things in the convenience of one's own home knowing that the traffic out there is
horrendous and unfair prices and bargaining completely draining out the joys of shopping.

Figure-1: Home page of Chaldal.com

The status quo of online shopping has drastically changed leading to the emergence of big
online brands such as Chaldal.com -- an online shop based in Dhaka founded by Waseem
Ali and Zia Ashraf, ingrained in the idea that shopping can be a hassle-free experience for
everybody. Established in 2013 and already operating on a large scale, Chaldal was initially
set up to cater to a limited number of areas within the city with only a handful of employees.
It now successfully serves the entire city, offering beyond 4000 different items including
basic grocery items, office stationery, electronics, baby care, beauty and healthcare products
and more.

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What is indeed a remarkable and perhaps the most important facility provided by this online
store is the guarantee of formalin-free food items to mitigate one of the increasing concerns
regarding food safety among the city dwellers. The service remains open during hartals and
promises delivery of hard-to-find items during hyped up demand.

Moving on to how to order items from Chaldal.com, a relatively user-friendly shopping

website. Just select from categories, pick from your options and select mode of payment.
Chaldal.com accepts all payment methods at their disposal to make shopping a relaxing
experience -- cash on delivery, BKash, as well as payment through cards upon delivery are
accepted by this store. Customers can choose among four delivery slots based on their
convenience including next-day delivery for late-night shoppers. Delivery charges are
applicable for bills totaling less than Tk. 400.

All in all, Chaldal.com is the modern household's way of making everyday purchases – it's
convenient delivery services and payment methods are exactly what a homemaker, or for that
matter, any member of the family, needs for daily purchases.

Chaldal, the leader in online grocery, is about to launch Bangladesh’s largest E-commerce
warehouse in Dhaka today, marking a new milestone on its path to growth. This move
consolidates its position in the market. The new warehouse will work as the central
warehouse, connecting other smaller ones enabling the company to improve its productivity,
save cost and improve logistics. Located in Dhaka’s Banasree area, the 15,000 square feet
warehouse, named as the mothership, has the capacity to accommodate over 10,00,000+
products. 100 employees will be able to work at the same time. Chaldal says, it will be able to
serve over 3,00,000 customers across Dhaka city from the warehouse.

Here we accumulated the location information of Chaldal warehouses and analyzed the
effectiveness in respect to current and future services.

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Warehouses and the service areas to cover

Warehouse Location to serve Warehouse Location to serve

Bawnia Badda
Dakshin Khan Baridhara J Block
Warehouse-1
Tongi Basundhara R/A
(Uttara) Warehouse-6
Uttar Khan Khilkhet
(Nikunja)
Uttara Nikunja
Adabor Pink City
Agargaon Vatara
Farmgate Azimpur
Gabtoli Dhaka University
Indira Road Warehouse-7 Dhanmondi
Warehouse-2
Kallyanpur (Dhanmondi) Kalabagan
(Mohammadpur)
Lalmatia Kamrangir Char
Mohammadpur Lalbag
Paikpara Aftabnagar
Panthapath Banasree
Warehouse-8
Shaymoli Merul Badda
(Banasree)
Banani Rampura
Baridhara Tejgaon
DOHS Banani Babubazar
Warehouse-3 DOHS Baridhara Bangshal
(Mohakhali) DOHS Mohakhali Dayaganj
Gulshan Dhalpur
Mohakhali Dholaipar
Niketan Faridabad
Cantonment Gandaria
DOHS Mirpur Jatrabari
Warehouse-4 Kalshi Warehouse-9 Jurain
(Mirpur) Matikata (Jatrabari) Kotwali
Mirpur Maniknagar
Pallabi Matuail
Eskaton Mridhabari
Kakrail Rayerbag
Khilgaon Sadarghat
Warehouse-5 Malibag Shonir Akra
(Malibag) Moghbazar Sutrapur
Motijheel Wari
Paltan
Ramna

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Need for Location Decision
Marketing Strategy

As a grocery items seller through online and the need for grocery is mostly on urgent basis,
Chaldal has set their marketing strategy through a commitment i.e. “1 hour delivery”. To
keep the commitment with all the consumers, the location of warehouses are the most vital
element for their business.

Figure-2: Chaldal Promo Banner for “1 Hour Home Delivery”

Cost of Doing Business

The cost of receiving goods from different vendors and delivering to consumers for each
order is easier to keep at a marginal level if the delivery operations are maintained from
different warehouses. Chaldal designed its warehouse locations to cover up the delivery
services within a delivery time and cost limit.

Figure-3:
Super FAST
Delivery as the
success factor for
e-commerce
business

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Growth

Chaldal has grown significantly over the past five years. A team of 450 people, it delivers
about 3000 orders daily. On last April 28, 2019 Chaldal reached the mile stone of delivering
1.5 million orders from the beginning.

Figure-4: Chaldal Promo for 1.5 million successful delivery as the symbol of growth

Objectives of Location Decision

Profit Potential

As Chaldal is profit oriented organization, they have based their decision on profit potential.
Which locations are densely populated and have the more busy people where the demand for
daily need goods are higher and those places are the highest potentiality for profit for their
business.

Select the Best Location

They have chosen the best location which is best suited for their business. The location is
normally preferred by population density, age, gender, average buyer income etc.

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At very recent, Chaldal has launched the warehouse-9 at Jatrabari to meet up their growing
demand at 18 areas more efficiently than earlier.

Figure-5: Chaldal added Jatrabari as new location

Strategic Importance of Locations

Long Term Cost

Every time Chaldal tries to get a place where labor or location costs are low, most of the
vendors are near so that they can reduce goods receiving transportation costs. They are
increasing the number of warehouses in high traffic areas where delivery can be made within
1 hour as committed.

Capacity & Flexibility

All the locations have enough capacity for goods receiving & sorting before storing at
warehouse and make ready for delivery as per the order including parking facility. A poor
choice of location might result in excessive transportation costs, loss of competitive
advantage, inadequate supplies of raw materials. Besides it could result in lack of customers
and high operating costs.

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 Figure-6:
Chaldal central
warehouse has the
capacity of 1 million
products.

Regional Factors

Chaldal has selected the different prime locations in Dhaka, the capital of Bangladesh, the
most crowded city in the country where 23,234 people lives per square kilometer within a
total of 20,283,552 people. In terms of regional factors, Chaldal has identified and selected
the best region.

Community Considerations
Quality of Life

Chaldal has targeted the communities within the city areas where chances to communicate
consumers higher than the others. The country most educated and technological sound people
are used to live in different areas in Dhaka. As an e-commerce shop, Chaldal has set their
target group who are capable of using e-commerce platform to make orders.

Services

As the population density is higher than other city areas, the cost effective service is ensured
through limiting the number of deliveries per day. The cost of transport and the cost of
adjacent delivery person is usually fixed for each of the delivery for a certain area. The more
population density is indicate the more order to receive and consequently the more
convenient to serve better.

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Attitude

Due to hassle free shopping and home delivery facilities, e-commerce are becoming more
popular day by day and the people in Dhaka city has the favorable attitude towards online
shopping which is the key tool for Chaldal to expand their business in city areas.

Taxes & Environmental Regulations

In Bangladesh tax for e-commerce business are friendly and encourage the entrepreneurs to
do business smoothly. As for the home delivery facilities of e-commerce business, the
movement of people have been reduced for the purpose of buying daily needs. As a result, the
use of motor vehicles are reduced which has the positive impact on the environment and save
the valuable fuel and natural energy.

Site Related Factors

Land

The selected places are well established, separate room for separate categories of products,
order sorting and delivery preparation unit, room for expansion and parking facility, close
proximity of main roads and enough space for pedestrians’ movement.

Figure-7: Selected land for Central Warehouse

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Transportations

The places are best for to and from different sites of the city for customers and transportation
of new of raw materials as well.

Figure-8: Delivery Vehicle to support the faster delivery for Chaldal orders.

Environment

The locations are neat and clean where Chaldal can go through with their policy of quality
customer service because the business environment of city areas is more potential than other.

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Risks
Cultural

Sometimes due to cultural impacts, they cannot compete with foreign online shop. Sometimes
people prefer foreign site which reduce the profit.

Political

Some political unrest happens time to time when the urgent deliveries become delayed as
committed to deliver within the desired time.

Criticism

Higher prices of the Chaldal for some goods compare to local market and delayed delivery
due to unusual traffic are the main challenges for Chaldal.

Center of Gravity Analysis for Central Warehouse

Chaldal has declared the Warehouse at Banasree as their master warehouse which is called as
“Mothership”. The warehouse is used to procure all the goods at one point and distribute to
other warehouses. At the same time it is used to serve the adjacent residential areas.

As this warehouse is the center of all warehouse, we have analyzed its center of gravity
as below-

At first, we have added an X, Y coordinate system into the map of Dhaka including the
location of all warehouses. Then determine the coordinate points for each of the locations.

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 W1: Uttara
W2: Mohammadpur
W3: Mohakhali
W4: Mirpur
W5: Malibag
W6: Nikunjo
W7: Dhanmondi
W8: Banasree
W9: Jatrabari

Central
Warehouse

Figure-9: The coordinate system for Chaldal warehouses in Dhaka City Map

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The location coordination of warehouses is as below.

Area Warehouse X Y
Uttara W1 7 14
Mohammadpur W2 3 7
Mohakhali W3 6 9
Mirpur W4 4 10
Malibag W5 7 8
Nikunjo W6 6.5 12
Dhanmondi W7 4 6
Banasree W8 8 10
Jatrabari W9 10 5.5
Total 55.5 81.5

After applying the formula for the Center of Gravity Method, we found –

Σx 7 +3+6+ 4+7+ 6.5+4 +8+10

x́= = =6.17 ≈6
n 9

Σy 14+ 7+9+10+ 8+12+6+10+5.5

ӯ= = =9.05≈ 9
n 9

Hence, the center of gravity is at (6,9), which is exactly the location of warehouse-3 at
Mohakhali. But fixed cost for infrastructure at Mohakhali is higher than other locations. The
closed one is at point (8,10), Banasree where the fixed cost is relatively lower. Thus Chaldal
established their central warehouse, the “Mothership”.

Conclusion
Location planning of Chaldal is an important part to expand their business. As it is still a
growing market, Chaldal should select more promising locations outside the Dhaka like the
important metropolitan cities – Khulna, Chittagong, Bagura, Cumilla, Sylhet, Rajshahi etc. to
compete more in the e-commerce sector in Bangladesh.

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Reference
Book Reference

 Operations Management by William J Stevenson, 12th edition

Web Reference

 http://worldpopulationreview.com/world-cities/dhaka-population/
 https://www.thedailystar.net/chaldal-com-for-your-daily-grocery-needs-and-more-37501
 https://sdasia.co/2018/10/25/chaldal-rolls-out-bangladeshs-largest-e-commerce-
warehouse/
 https://chaldal.com/
 https://www.facebook.com/pg/chaldalcom/photos/?ref=page_internal

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