HUL Mulls Over E-Grocery Option

Group – 5
Amit Gupta (04)
Ketan Diwate(22)
K.V.D.Surendra (23)
Nitesh Saraswat (32)
Rohit Yadav (40)

3.600 billion dollar 10 percent of the India GDP In top 5 largest Retail market in the world HUL one of the largest player in the FMCG 280 billion rupees revenue .HUL in FMCG • • • • • • Indian Retail Industry -1.2 million outlet across India 35 brands spanning over 20 categories .26 billon population .

Traditional distribution system of HUL Manufacturing Unit Carrying and Forwarding agent Redistributors Wholesalers Rural Retailers Consumers Urban Retailers .

Major Players in Indian ECommerce Industry • eBay India (2004)  149 mn active buyers  First mover advantage  But failed to gain meaningful presence in the industry • Flipkart (2007)  Started as online bookstore  First to implement COD payment method  Expected to introduce e-grocery shopping by the end of 2015 • Amazon India (2013)  Largest e-tailer in India  Operate as a marketplace rather than retailer  Entered e-grocery arena in late march 2015 • Snapdeal (2010)  Entered e-grocery arena in the early 2015 • Shopclues (2011) .

E-Grocery Companies in India • BigBasket  India’s largest online food and grocery store • Aaramshop  Innovative hybrid model  Online stores for each of its physical stores • LocalBanya • ZopNow • Big Bazaar Direct  Franchisee model E-Commerce Channels of FMCG Companies • Dabur’s E-commerce Platform • Coke2Home • Marico .

Challenges of E-grocery • Single digit margins (6%) • Complex process-managing variety of inventories. gathering product and maintaining quality • Perishable products need cold storage which will increase overall costs and risk involved • Different consumer preference in different region (city) • Due to high value-to-weight ratio it is infeasible to courier products from one city to another • Local laws restrict flow of agricultural product across state borders • Security of online transaction • Less than 18% population have access to internet .

Why E-grocery is a success • Due to short self life and low economic value of products it is easy to persuade consumers to try out new way of acquiring product • Much wider range of offered products • Delivery to door step of consumer and that too at his preferred time • Customer can save his shopping list of frequently bought items making the process simple and easy • Low customer acquisition cost • Good customer services resulting in repeat purchases • Video .

Why HUL is looking at ecommerce space? • Increased traffic • Shifting consumer habits • Presence of other players in e-commerce space • www.kitchensofindia.co m by ITC • Increasing internet penetration • Busy lifestyles • Possibility of market share loss to other players .

The Choice for HUL Low Profit Margin (6-8 %) Key Activities Product Marketing Distributio n up to retailer  Low Profit margin products (6-8%)  Most products have a high shelf live  Whether to Target all products or a particular products ? Relatively Non Perishable Products .

Tier 1 cities V/S Tier 2 & 3 ? Existing Infrastructu re Internet Penetration Dispersed vs Concentrat ed Market Availability of Channel Partners Consumer Buying behavior .

Channel Decision ? Marketplace model Horizontal Vertical Hyperlocal Model .

Challeng es Advantag es Beta testing for New Products Very Fast Delivery Customer & Retailer Holdup Onboardin g Cost Product Promotion High Quality Data Source Channel Conflict Infrastr ucture Cost .

Omni channel Strategy .

Thank you… .