Team Name: HayWire

Batch: PGDBM 2019-21

Campus: XLRI Jamshedpur
Primary Research shows that Tier-2 Customers are wary of Online Shopping, especially in the grocery segment
Interview Insights – Consumers Channels, Behavior & Pain Points Interview Insights – Retailers Customer Requirements
Rekha | Working Professional Kanan| Working Professional Hyperlocal Grocery Delivery Interview - Jio-Mart Trader Hygiene Factors
| Nuclear Family | Amravati |Joint Family | Vadodara Startup – Jamshedpur
Fast, On time Fresh & Quality
Kirana, Big-Basket DMart, Big-Basket, Amazon Hyperlocal Model Hyperlocal Model Delivery Products
• House essential and bulk • Groceries, Household • Tier II cities have majority • Onboarded the Jio-Mart
purchase products mid-low-income Platform 2 Months ago
Enablers
• Branded and private label • Cut Vegetables, clothes, population • Initial sales slumped as Discounts & Fast Easy Returns &
product shoes • They prefer known Kirana more shops onboarded Service Replacement
• Returns of bad quality • Schedules delivery and retailers as compared to • Lesser order allocation if
product pickup online services entire assortment is not Inhibitors
• Higher Price than nearby • Fast delivery & easy • Credit facility is a big stored
Higher prices
Kirana returns motivator to shift towards • Find it difficult to stock Un- Tech savvy
wrt Kirana
• Fresh Products, Discount • Offers, Membership deals online purchasing entirely different Purchasers
Offers • Freshness and quality • Quality check is important categories due to working Stores
• Quick delivery in 3-4 hr assurance at time of order pick up capital constraints Key Insights
Maintain the critical balance between
Industry Benchmarking Wastage & Stockout
Focus on Maintaining Price to avoid
Double Marginalization, incentives shift to
Offline
Moderate-Heavy Light – Increasing recently Light Asset Heavy Heavy – Swiggy Stores Light Strengthen Reverse Logistics to improve
Customer Satisfaction, improve loyalty,
2 Hour Slots Fast & Slot Within 24 Hours Time Fast – 2 Hours Fast- Swiggy GO Fast increase repurchase
Wide Wide Wide Assortment Wide Wide Moderate Incentivize Sellers by giving proper
Done away Tie-ups Reliance Retail Retailers To start tie-ups Swiggy Stores Tie-Ups support, Timely Payments & Information
Access – to maintain Long term
Medium to Large Perishables-JIT No Inventory Large Large No relationship
Yes Yes Yes Perishables Yes Yes Yes Asset Light Model; good quality Check
After comparing several models, we arrived at a Hybrid Model combining Inventory & Hyperlocal models
Comparison between various Supply Chain Models
1. Customer 2. Received at FC
places Order and CC
Model Description: Hybrid of
Inventory & Hyperlocal model
• Shelf Life based ABC analysis
(refer to appendix) for inventory
allocation of fulfillment center
• High quality control
• Min. First- and Middle-mile cost
• Delivery time as low as 90 min
• Scalable with min. Capex
Website and Mobile Application
• Live order tracking & updates
• Longitude & latitude-based location •
• Remark section for any special •
request by customer for orders
Our Big Idea
3. Allocation of 4. Quality check &
Purchase Expert packaging at FC Delivery Partners
Category Captains (CC)
• Location: Prominent retail cluster
• Responsible for exclusively stocking 1-2 • Allocation of Purchase Expert
categories
• Categories: Staple, personal, household
• National & private label ensuring width
& depth of assortment & high fill rate
Fulfilment Center (FC)
• Location: Nearby the prominent
retailer cluster & category captains
• Responsible for stocking perishables
Categories: Dairy, meat, fruit & Veg
Ensures quality control, bulk • Algorithm
breaking, packaging & crossdocking
6. Delivery and
5. Allocation of
payment collection
Purchase Expert (PE)
• Purchase Expert works for FC
(PE) basis delivery type, location
and slot timing
• Responsible for getting orders ,
quality control & packaging of
orders at fulfilment centers
Delivery Partner
• Tie-up with 3rd Party logistic
companies like Dunzo, Delhivery
or prominent local players
based automatic
scheduling & palletization
Network Designing Strategy
1. Category Captains:
• Onboard 2-3 prominent retailer in every retail
cluster for exclusively stocking 2-3 categories
• Category Captains cater to specific trading area
and help in assortment planning
• Size of trading area on demographic profile
• Installation of POS machines for data collection for
forecast
2. Fulfilment Centers:
• Establish 1 Fulfilment Center in each retail cluster
for sorting, crossdocking, perishable fulfillment
• Ensures minimum first mile and middle mile
logistics cost
• 2 days inventory holding resulting in minimum
carrying cost
Order Scheduling Strategy
• Each Purchase Expert will process 4 orders in an
hour
• Orders scheduling basis due time and delivery
distance
• Dedicated purchase expert & delivery person for
quick order
• Algorithm like travelling salesman problem will
optimise the purchase path of purchase expert
Please refer to appendix for further detail on the same
We designed 3 financially viable Models of implementation- Quick, Slotted and Subscription Delivery
Model 1: Quick Delivery
Model : 90 mins express delivery
A small premium will be charged against
the quick delivery
Fulfillment:
• Perishables will be picked up from the
fulfillment center.
• Standardized non-perishables will be
picked up on individual order basis
from the local category captains and
will be packaged at the crossdocking
center.
Implementation Models
Model 2: Slotted Delivery
Model : 3 slots:
Morning Slot: 10 am to 1pm;
Afternoon Slot: 2 pm to 6 pm;
Evening Slot: 6 pm to 10 pm
Fulfillment:
• Perishables on slot wise basis will be
picked up from the fulfillment center.
• Standardized non-perishables will be
picked up on slot wise basis from the
local category captains and will be
packaged at the crossdocking center.
Model 3: Subscription Model
Model : Customers can choose from an option
of monthly or fortnightly subscription.
Discounted prices will be offered as this
model reduces variability & guarantees sales.
Fulfillment:
• Perishables will be picked up from the
fulfillment center.
• Standardized non-perishables will be
picked up from the local category captains
and will be packaged at the crossdocking
center.
Phase wise Targeting Strategy
Phase 1 | Time Horizon: 6-8 months
• Start with major Tier-2 city of each
zone / state like Indore, Mysore
• Gather local insights like
consumption behavior, supply
chain challenges
• Devising region wise assortment
and supply chain strategy basis info.
obtained
Phase 2 | Time Horizon: 6-8 months
• Onboarding more CC and FC in
existing cities to cater to demand
• Rolling out plan in other Tier-2s

Market Research & Onboarding Category Captains Onboard Logistics Team & Start Operations Launching model in other Tier 2 Cities
Q1&2 ‘21 Q3&4 ’21 Q1 ‘22
Q2 ‘22 Q3&4 ‘22
Target major Tier 2 Cities from each State/ Zone
Setting up Cross Docks, Warehouses & Marketing Follow Agile to correct model

Financials
Slotted Subscription Net Profit Calculation (per Tier 2 City) Net Profit Calculation PAN India per year
Quick Delivery Total
Delivery Model Gross Profit 271991 Net Profit per Tier 2 City (per month) (Rs) 16991
% of Total Number of Orders (per month) 30% 50% 20% 100% Overheads (per month) (Rs) 30000 Number of Cities targeted for entry in first year 10
Total Number of Orders (per month) 1250 2083 833 4167 Net Profit (per month) (Rs) 169907
Number of Orders (per day) 42 69 139
Salaries (per month) (Rs) 125000
28
Net Profit (per year) (Rs) 2038889
Total Bill Value (Rs) 875000 1958333 1000000 3833333 Resnt of Daak Store (per month) (Rs) 30000
% Margin of Flipkart (per Order) 10% 10% 10% - Refunds and Losses (per month) (Rs) 30000
Total Margin (Rs) 87500 195833 100000 383333
Total Profit from Delivery Charges (Rs) 8125 -3125 -2917 2083 Marketing and Promotion (per month) (Rs) 50000
Salary per delivery person (per shift) (Rs) 250 250 250 - SG&A (per month) (Rs) 20000 Financials
Total Cost towards salary per month (Rs) 63802 35446 14178 113426
Gross Profit 31823 157263 82905 271991 Net Profit (per month) (Rs) 16991
Annexures/ Data after this slide
 Annexure
ABC classification of Category

Class Description Categories Targeted

A Highest Impact on Consumer and Flipkart Dairy & Meat, and Fruit & Vegetable
B Medium Impact on Consumer and Flipkart Staples, Snacks and Beverages
C Low Impact on Consumer and Flipkart Packaged Food, Personal Care and Household Items

Detailed Analysis of Categories

Shelf Life (in Order Frequency ( in a Quality Control Impact on Consumer Experience and
Categories days) Month) Requirement Flipkart
Staples 120 2 Medium Medium
Snacks 90 2 Medium Medium
Beverages 90 2 Medium Medium
Packaged Food 180 2 Low Low
Personal Care 240 1.5 Low Low
Household items 240 1.5 Low Low
Garden and Pet 240 1.5 Low Low
Dairy and Meat 1 4 High High
Friuts and Vegetables 2 4 High High
 Annexure
Phase wise Targeting Strategy Network Design
Category Clustering for Category Captains
Category Cluster Order Frequency Average Revenue
Staples High Low
Snacks, Beverage & Packaged
Medium Medium
Food
Personal Care, Household
Low High
Item, Garden & Pet
The Category Allocation ensures approximately equal Revenue for Category Captains

Strategy for Tier 2 City

Target City: Indore, Madhya Pradesh
Target Retail Cluster Area
Marothia Bazar West Zone Fruit and Vegetable Supplier
Siyaganj East Zone Malwa Mill Mandi
Chawani Mandi North Zone Choitram Mandi
Malwa Mill Mandi South Zone

Phase 1: Tier 2 Cities

Financial Projections (Profit)
targeted
Growth Projections

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

% YOY growth in profit - 150% 100% 60% 40% 30% 15.00% 10% 8% 6%

Net Profit (per year) (Rs) 2038889 5097222 1019444416311111228355562968622234139156375530714036955142791725