Online Supermarket -Part 2

Hey Rama,

Good idea on the online supermarket stuff. I was thinking about the same couple of days back. I'll blabber a little about it.

Opportunity:

1. The last 5 years has seen increasing number of professionals who are busy all week and weekends are too precious to waste time at grocery stores to pick up mundane stuff.
2. 80% of the grocery list is the same every month. Only 20% of the list changes a little.

3. The present gloomy market scenario is the best for anyone foraying into this business. Attitudes have gone back to the 1980's when saving for tomorrow has become the key again.
The mindset has changed to giving importance to value rather than luxury. This is exactly vice-versa to what existed 1 year ago, when luxury of shopping in an expensive supermarket was primary than value for money.

4. Another key advantage would be the low overhead costs. The model should be more in the lines of a warehouse. This can be accomodated in low rental area, coz the location will not be a key. You would just need a supervisor and some helpers to see that things are moving smoothly and of course a very well designed e-commerce portal.

Operational details:
My dad had a supermarket for around 15 years. There are two main categories in the items available:

• Branded stuff: Includes everything prepackaged like Soaps, Oil, Ready to cook food, biscuits, brooms, bulbs, etc. The margin provided by the companies to retailers is very very low around 3-5%.
  
• Unbranded stuff(Kirana): Includes dal, chawal, sugar and all kinds of grains, cereals and pulses. The margin is very high.
  

So Kirana stuff is the lifelinefor any supermarket. This is where your money lies. You need branded stuff also in your portfolio because a customer likes to shop for all his needs under one roof.

So the main glitch is that the prices and quality of kirana stuff change every week unlike branded items like soaps. It is not easy to maintain the same quality at the same price every week. The best quality sugar mayb at Rs.25/kg this week and the same quality maybe Rs.32/kg after 3 weeks.
But a typical customer like you, who observes the bill a little would find it glaringly inconsistent, if prices of stuff are so fickle.


..To be continued (need to talk to my dad about some doubts before I explain further)