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)

HUL in FMCG

Indian Retail Industry -1.26 billon population ,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 , 3.2 million outlet across India
35 brands spanning over 20 categories

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

Indias 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

Daburs 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