Professional Documents
Culture Documents
Sanjay Mohapatra, In May 2014, on a fine summer evening at Bhubaneswar[1], Easy2Grocery co-founders
Vikram Swain, Vikram Swain and Ashish Padhee were engrossed in a deep discussion over a cup of tea
Shriram Misra, on a unique problem faced by their organization relating to its IT infrastructure. “Vikram we
Rohit Padhi, are constantly facing problems in monitoring inventory levels in both the warehouses. There
Subhabrata Nath Sharma,
is a lack of synchronization among the two Point of Sales (POS) applications in the two
Neelakanth Veluru,
warehouses because of which we are not able to take the benefits of economies of scale
Tanaya Saha Dalal and
during procurement and distribution. Further I am facing the problem of stock out and
Subhajit Deb are all
based at the Department excess inventory across stock keeping units (SKUs)”, said Ashish. Vikram realized that this
of Information Systems, problem arose due to two disparate POS systems which caused each warehouse to work
Xavier Institute of as a different entity. He wondered whether there was any probable solution to this problem
Management which could be addressed in a seamless and cost-effective manner.
Bhubaneswar,
Bhubaneswar, India.
Introduction
Easy2Grocery.com was conceptualized as an e-tail business in Bhubaneswar at a time
when e-commerce in India was the new darling of the angel investors. Reports, analysis
and news items on e-commerce companies were found on every business daily and
magazines. But, when the founders started Easy2Grocery, their objectives were not just
limited to having a healthy top line and bottom line, but a sense of fulfilling the dreams of
making a mark for them in the society that made them passionate about the venture. Vikram
left a job in a multinational company to devote fulltime in Easy2Grocery venture. The
founders had sensed the opportunity of what in marketing parlance was best described as
a “blue ocean strategy” where they basically focussed on e-retailing of grocery items which
was not present in Bhubaneswar.
The motive behind Easy2Grocery was simple yet emotive. Free home delivery of groceries
would benefit the people in multiple ways. It would help in generating employment
opportunities especially for those unskilled youth who have been marginalized in the
society and have never been able to get education. Second, the customers would benefit
from the convenience that it provides in delivering the products at home. There were
basically four categories of customers who could benefit by Easy2Grocery, namely, the
housewives, the working executives (both men and women), senior citizens and the
Disclaimer: This case is written differently abled. Usually, shopping was attributed to a pleasant experience and recreation
solely for educational
purposes and is not intended
for some. But, what was overlooked was the pain associated with shopping especially for
to represent successful or those customers who were dependant on others to take them to the market and shop for
unsuccessful managerial
decision-making. The author/s
daily use and monotonous basic necessities such as grocery items. Factors such as traffic,
may have disguised names; rising cost of fuel prices, lack of parking space, long queues at billing counters and most
financial and other
recognizable information to
importantly wastage of time for these people were serious issues. Housewives needed
protect confidentiality. groceries the most for themselves and their family. Senior citizens wanted a helping hand,
DOI 10.1108/EEMCS-09-2014-0230 VOL. 6 NO. 3 2016, pp. 1-24, © Emerald Group Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
as it was difficult for them to commute in traffic, carry baggage and bargain with the local
mom-and-pop stores. The problem faced by the differently abled people was much more
profound to say the least.
There were certain kirana stores[2] who also delivered the groceries in the same locality
within 20 to 30 min, but Easy2Grocery went beyond these kirana shops. For example, while
ordering from a kirana shop over phone, a customer could not see the entire assortment of
products available; the customer had to spend long time over the phone while ordering and
might not get the discount. Any new product, if available, would not be known to the
customer, but could be seen while ordering over internet through Easy2Grocery.com.
Logistic wise, Easy2Grocery provided the convenience of choosing the time for delivery.
Even though in both the models, cash on delivery (COD) was available, the convenience of
choosing a new product and ability to see the product and decide makes e-grocery
channel a comfortable one. One could order at his/her convenience without worrying about
voice network and call drop issues (which are common in tier-II cities in India).
The founders also had another aspect in their mind which made Easy2Grocery unique in its
own way. By pooling orders from one locality and delivering those in one go, Easy2grocery
had attempted to reduce the carbon footprint in the retail business. Consider the simple
case of ten vehicles from one residential locality travelling 2 km for their grocery needs as
compared to one delivery person travelling 5 km on an average to deliver the groceries in
the locality. The carbon footprint was easily reduced by a considerable amount.
Easy2grocery’s foundation was based on the 7 Ps by Porter, but the two Ps – People and
Physical environment – which majority of the organizations ignore during their start-up
phase was what gave Easy2 grocery the competitive advantage and which became the
building blocks for its success:
The idea of an online grocery store came to me when I was pursuing my engineering in
Bhubaneswar. I personally felt that such a provision, if present in Bhubaneswar will help a lot in
easing the life of many working executives, housewives, senior citizens, and differently abled
persons who are always on the go. – Vikram Swain
Industry overview
The grocery industry had seen a dramatic change in India since the emergence of
supermarkets. Earlier, people had to travel to multiple stores for their needs, but now
everything was basically available under one roof. This trend had gained huge popularity
since the early 2000s. A new disrupting trend of e-tailing in grocery was making its way in
India. Grocery business traditionally had been a low margin avenue, which had hampered
its growth in the business world. But with people increasingly using e-commerce websites
for all their needs, an online grocery shop was a natural progress. But it is not like other
e-businesses. Its challenges are unique and the solutions were complex. Supermarkets
made shopping an experience, while e-tailers made shopping easy and less tiring.
E-grocery on the other hand found it difficult to make it an experience, as it is a routine job.
It can become monotonous and even complex. But still more and more new players
entered the market. Seeing the trend, a lot of offline stores beefed up for a share of the
online market too. Online retail was expected to grow at a very healthy pace of CAGR[3]
equal to 50-55 per cent for the next three years. This showed huge potential for the e-tailing
business. Retail sector had seen a huge jump too during the past decade. If anything was
to be learned from the USA, who had the concept of supermarket about a decade earlier
and had gone through these steps in their organizational life cycle, it could be safely said
that the online retail market will grow very fast:
We are satisfied by choosing Bhubaneswar as our base location for start-up. Bhubaneswar’s
start-up ecosystem is encouraging. – Asish Padhee
Strategies
Sales: Increase sales by content marketing and acquire new customers through
referral schemes.
Operational: Open warehouses at strategic locations and manage optimum inventory
to decrease the transportation time.
Website: Increase user-friendly functionalities in the website.
Customer care: Reduce customer grievance redressal time by empowering
employees.
Marketing: Increase online presence and target customers through social media and
emails.
Social challenges
Computer literacy: Computer literacy had been very low in India. The targeted group of
customer, namely, housewives, senior citizens and the differently abled were
particularly not computer literate in tier-II cities such as Bhubaneswar and were
dependent on others for placing an online order.
High return of goods: E-commerce in grocery as a concept was relatively new in India.
There were many first-time buyers who were not accustomed to e-commerce websites.
These customers used to transact due to hard sale and promotions but eventually
demonstrated remorse and made a return when the goods did not meet their expectations.
Lack of credit policy: The mom-and-pop stores and kirana stores dotting the neighborhood
usually gave flexible credit policy to the customers based on trust which was difficult to
Thinking in this direction, the two partners started to find ways to control inventory and
manage customers and found that the cloud-based IT strategy could be a solution here.
Why cloud?
Moving to cloud with its POS application and database, the issue of multiple databases
could be solved, and also scaling up the business became a lot easier, as it was not
required to purchase new hardware and software license every time a new warehouse was
opened. This approach helped its owners to focus on their core competencies and looked
for ways to improve its service experience for the customers rather than breaking head over
technology.
The cloud strategy helped to solve another issue that although was not very evident at the
nascent stage of the business, but later would become critical when the business grew
rapidly, i.e. when the number of hits per second increased on the website. This could be
due to a sudden rise in the number of users following some promotional offers or during any
festive occasion or seasonal needs. During this spike in business volume, the website
response time increased making it highly difficult for the users. Easy2Grocery faced
technical problems, when its number of SKUs displayed on the website went up from 1,800
to 2,500. The response time of the server increased beyond the satisfactory level during the
peak period of the day. This situation could be averted if the system used cloud computing;
then it could be very easily scaled up and down depending on the requirements.
Although cloud provided a lot of benefits in terms of scalability and cost to growing
businesses like Easy2Grocery, the migration to cloud needed to be carefully decided after
taking into account all the pros and cons, as the control over the system and data
decreased on cloud, and the degree of support from the cloud partner was highly
dependent on the service-level agreements.
As discussed above, the company went ahead with the cloud technology to decrease the
costs and to increase the operational efficiency. The company had used cloud
architecture, which has been described in the next section.
Cloud architecture
Easy2Grocery decided to go for “a single cloud” service provider in public cloud. It had the
billing software provided on the cloud by the service provider. It also had all its other
Intangible benefits
1. Ease in inventory management:
The inventory management had become much easier with cloud implementation by
aggregating real-time data on transactions. Through cloud, inventory data of all the
warehouses were aggregated simultaneously and updated with each transaction.
This had not only helped into having real-time data on inventory levels but also
saved capital on losses due to inventory mismanagement.
2. Multiple servers to a single platform where their combined capacity could be used:
Through cloud, the hardware and software for a service had been brought together
which could be further used by multiple users simultaneously. It brought multiple
servers to a single platform where their combined capacity could be used.
Financial benefits
decreased CAPEX cost;
decreased inventory loss cost;
decreased infrastructure maintenance cost;
decreased manpower employed and thus decrease in factor cost; and
overall saving of 17 per cent in comparison to “On-Premises” implementation cost.
By implementing cloud, the above-mentioned financial benefits had been realized. In this
part, there had been a potential saving of around Rs 5,500 on CAPEX cost and around
Rs 48,000 in decreasing the losses due to inventory mismanagement. Though the OPEX
cost has increased by around Rs 25,500, the overall benefit due to decrease in the cost had
been around Rs 27,870 which constitutes for 17 per cent of savings in comparison to
on-premises implementation of the software.
Notes
1. Bhubaneswar is state capital of Odisha in India.
2. Retail stores in India are called kirana stores.
3. Cumulative average growth rate.
4. www.easy2grocery.com/
5. Cities in India.
6. Crore is a unit of measurement for Indian currency. Seveny-five crore equals 750 million. US$ 1
dollar equals 68 Indian Rupees (as on 1 February 2016).
7. Supermarket chain in India.
8. Supermarket chain in India.
9. Saas – Software as a Solution; this is a type of service provided by the cloud computing.
Exhibit 2
Table EII Comparison of cost between ‘on premises’ and ‘cloud computing’
On premises Cloud based
Total Total
Unit Quantity Cost/unit cost/year Unit Quantity Cost/unit cost/year
CAPEX (Initial)
Manpower US$/resource/ 3 8,500.00 25,500.00 US$/resource/ 2 8,500.00 17,000.00
month month
Migration 3,000
cost
TOTAL 25,500.00 20,000.00
CAPEX
OPEX (Annual)
Software Nos. 2 13,000.00 13,000.00 Nos. 1 3,540 42,480
(POS app)
Infrastructure % of total cost 10 3,850.00 % of total cost 0 0 0
maintenance
Cost of 5,000/ 120,000.00 3,000/ 72,000
inventory loss store/ store/
month month
Total opex 16,850.00 42,480
Total/year 162,350.00 134,480.00
Saving on 27,870.00
cloud
ROI In % 20.72
1 25,500.00 16,850.00 120,000.00 162,350.00 20,000 42,480 72,000 134,480 27,870 17.17 20.72
2 16,850.00 120,000.00 299,200.00 42,480 72,000 248,960 50,240 16.79 20.18
3 16,850.00 120,000.00 436,050.00 42,480 72,000 363,440 72,610 16.65 19.98
4 16,850.00 120,000.00 572,900.00 42,480 72,000 477,920 94,980 16.58 19.87
5 16,850.00 120,000.00 709,750.00 42,480 72,000 592,400 117,350 16.53 19.81
Exhibit 4
Exhibit 5
Tangible
Sales/Day 5,000
Intangible
Day 1 1,300
Day 2 1,950
Day 3 2,925
Day 4 4,388
After Day 4 6,581
Corresponding author
Sanjay Mohapatra can be contacted at: sanjay_mohapatra@yahoo.com