MARKETING OF SERVICES (Assignment)

RICHARD BAGE (0191PGM010)

Q-1) Do you think online grocery retailing would work in India?

Please state your reasons.

ANSWER - As the pandemic confines all of us to our homes, there are only a few
industries that are expected to thrive, one of which is grocery delivery, at least as far
as the Indian market is concerned.

The online food and grocery retail currently accounts for just 0.2% of the overall retail
market and according to pre-corona virus estimates, and it was expected to touch
$10.5 Bn, or 1.2% of the overall retail market by 2023. The numbers in grocery retail,
however, may see a spike as predicted by many VC firms and industry leaders.

The important reason being higher trust in home-cooked meals. On a lighter note, an
evident fact that can be supported with the increasing number of online searches for
food recipes. The fear of delivery personnel transmitting the disease is high today and
may stay for a while.

Online grocery retailing is a capital intensive channel because of the need for cold
storage. However, despite this challenge faced by this channel, it is here to stay. There
are three different models currently used by online grocery retailers in the country,
namely - the inventory model, the hyperlocal model and the mixed model. Despite the
pros and cons each of the models entail, retailers are working hard to drive revenue
and ensure this channel witnesses growth in the long run.

Companies who invest in quality cold storage and a strong delivery system including
training and management of delivery staff will benefit in the long term. Additionally,
investing in long term liaisons with farmers directly will reduce operational cost.

To the consumer, it made no difference, as long as the product availability, timely

delivery, and pricing was as per their expectations, however, from an operational
standpoint the models are vastly different. Hence companies who plan to invest in
quality logistics and inventory will emerge as the market leaders.

Q-2) Discuss the strengths and weaknesses of the two main models
employed in online grocery retailing?
ANSWER -
 MODEL STRENGTH WEAKNESS

INVENTORY BASED  Consumers know  Capital intensive

which products are model- cold storage is
available required
 More suitable for  Since the model is
monthly orders which inventory based
translate to higher unavailability of a
spend per transaction certain product may
 Requires least lead to loss of
manpower, as the order customers
placement and delivery
is purely inventory
management based, and
no extra manpower is
required

MIXED MODEL  The retailer can provide  Procurement

with any brand or management is more
product as long as it costly as the retailer
can source it from needs to invest in both,
another store based good inventory
retailer management and
 Inventory management delivery staff who can
costs are less as buy and curate products
inventory is smaller in based on demand
size

Q-3) In your assessment, what is the scope for the hyper local model in
online grocery retailing? In the given scenario, describe the effects of
the interdependence on relationships between the company and the
channel partner for any business model to survive.
ANSWER - The hyper local marketplace as the name suggests is a market that caters
to the needs of a limited geographical area. A walk around your residence would most
definitely make you come across a similar market, however big or small but self-
sufficient in its own right, fulfilling almost all the requirements of the local residents.
A hyper local business is a platform to enable local offline businesses to reach out to
their targeted customers ensuring product delivery within a very short time. The
service ambit of a hyper local business could fall anywhere starting from a few meters
to a few kilometres from the location of the business.

As the name ‘hyper local’ proposes, the desired products should be acquired locally
from the offline stores and delivered to consumers within a short span of time. This
involves picking a dependable store for every region and guaranteeing that the nature
of the items is kept up. These stores earn commissions for delivering the required
items based upon the requests received.

Some of the reasons why collaborations are tough to manage include:

 Weak and inefficient processes as well as flaws in governance to achieve

collaboration goals
 Problems in building relational capital (trust, communication and commitment)
between collaboration partners
 Difficulties in sharing responsibility and accountability
 Frail leadership role in the development and implementation of
 Lack of interdependence between collaboration partners
 Communication breakdown leading to problems related to mistrust and low
commitment between the collaboration partners
 Weak program implementation
 Ethical dilemmas

Q-4) It is important to transform consumer buying behaviour for

groceries from buying from local stores to buying online. Is BigBasket
doing anything in this direction? What can be done further to achieve
this objective?
ANSWER - Yes it is important to transform consumer buying behaviour for groceries
from buying from local stores to buying online. Big basket has a wide range of
category according to customer buying patterns. Best quality available at lower price.
Time slot availability for delivery also facility of online or COD payment. BigBasket
allows you to walk away from the drudgery shopping and welcome and easy relaxed
way of browsing and shopping for groceries. Discover new product and shop for all
your food and grocery needs from the comfort of your home or office. Doorstep
delivery. Food shopping online is now easy as every product on your monthly
shopping list, is now available online.
 BigBasket is looking at achieving Automation in warehouses.
 Scale the footprint to 35 cities with 60 dark stores.
 Raising $150 million. The company has already appointed Citibank (as its
investment bank) for the same.

Q-5) How would technology help BigBasket achieve its long-term

objective? What would be the role of technology in redefining Big
Basket’s business model?
ANSWER - Algorithms and advanced analytics are manoeuvred well in the company
for seamless operational efficiency. At Big Basket, hefty investments are made to
build solutions which allow possibilities like changing the routes for the delivery
fleets. A cart of the customer consists of various categories of products including high
value, low value, or perishable products which are stored at different warehouses in a
city or sometimes different cities altogether. In addition to this, there are investments
on AI and ML, which are used aggressively Hyper-personalisation helps to trace the
buying pattern. It lends the ability to offer management right at the individual level.
The company’s Smart basket feature uses AI and algorithms to understand the
customer’s likeliness towards purchasing certain products. There are pressure sensors
deployed in vending machine which helps in estimating which products are sold and
in what quantity.