HINDUSTAN UNILEVER MULLS OVER E-GROCERY MARKET

OPTION

Presented By: Group 6

UM15012 ARYA SWAYAMSHREEUM15020 GAUTAMI PATIUM15052 SWASTIK PANIGRAHIUM15056 SYED SHAZ AREEBUM15036 PRIYA RANJAN MOHANTYUM15071 ABHISHEK SINGH

HUL It is the largest FMCG company in

India.

Formed from the merger of three prominent companies in 1956.

(Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd.)

It is a household name with over 35 brands in 20 categories of everyday products.

18 of its brands feature in Nielsen Corporations list of 100 most trusted brands.

E-Grocery in India Market size of grocery retail in 2014 was around 160 billion USD.

Grocery had a massive share of country’s total retail sector – 67%.

Organized food and grocery business was growing at a rate of approximately 30 %

per year.

Online retail in grocery was a very small part of it, but was expected to reach

around 17 billion USD in 2018.

With the growth in Internet users, E-Grocery portals were began popping up and

were expected to rise.

E-Grocery Companies in India

Evolving Preferences of Indian Consumers

Causes of change in Buying habits:- Rising Incomes A younger population More working women An expanding retail sector Steady urbanization Rise in number of online transaction

because of deeper internet penetration

Change from supplier oriented to customer oriented system

Indian Economy growth of 8% with economy stimulating reforms leading to greater purchasing power and availability of a wider array of products for the consumers

Increase in mobile internet users

213 million mobile internet users with 53 million rural and remaining urban usersAs a result e-commerce was able to take advantage of India’s tech-savvy consumers

Quality of urbanization

With very little time for socialising and spending time with family, convenient and free home delivery became a key driver behind online shopping

The rapid change in usage of internet for online transactions across the country proved to be a barrier for brick and mortar retailers and as a result e-grocery platforms presented a better alternative

2014 projections:-

Advantages of e-grocery Offered a much wider range of choices and delivery of products at consumer’s preferred

time With the facility of saving items/lists, the routine purchasing process became simple and

easy Providing good service to consumers resulted in repeat purchases which helped

companies to overcome their customer acquisition cost easily

Challenges of e-grocery The process involved managing variety of inventories with diverse storage requirements, cold

storage and maintenance of quality for perishable products. As a result the overall cost of the product and the risks associated with it increased exponentially

Different regions in India had different consumer preferences. As a result, e-grocery failed to offer a tactile experience to the consumers because of complex supply chain issues

The value-to-weight ratio of grocery products is high, so it is financially unviable to courier products from one city to another. As a result, the expansion of business involved setting up a completely new operation for local supply chain

Since warehouses, inventory and logistics also had to be operated on local basis to maintain fresh produce, most food and grocery products worked on single digit margins

Most of the Indian consumers were still concerned about the security of financial information while transacting online. Also, the quality and speed of internet connections were highly variable in India. As a result, a positive shopping experience was not possible for majority of consumers.

Possible Solutions to the Challenges in E-Grocery

Instead of building its own e-grocery field, HUL can partner with giants like Amazon grocery channel, KiranaNow and can have exclusive format only for HUL products so that supply chain cost and risks associated with it can be shared with partners and subsequently minimized.

As customers choose to buy everything from under one roof, HUL can also partner with local providers of fresh produce in each region and provide an e-channel of buying products in a single platform but procurement and fulfillment needs to be taken care by respective providers of the product.  

As smaller baskets are non-profitable, HUL can target weekly or monthly shopping basket which is customized for each individual based on his or her product preferences and consumption facilitating repeat purchase and retaining of customers.

While HUL is trying to attract customers online, there would be potential conflicts between online retailing and traditional retailing. So, HUL needs to maintain a delicate balance regarding trade terms in order not to arise any conflicts with traditional dominant trade partners.

Moreover, the products purchased online need to be fulfilled by procuring from nearby traditional store thus minimizing the loss of traditional sales to other online grocery providers.

Partner with renowned banks like SBI, HDFC, etc. to gain the trust of customers to facilitate online transactions.

Should HUL enter e-groceryMarket Conditions/ consumer behavior

Growing Indian economy with increasing disposable income of the people.

Indian consumers have evolved with technology and lifestyle changes and have become more demanding and value conscious

Deeper internet penetration -> rise in number of online transactions ->increase in number of people shopping online

Will satisfy the needs of time-starved consumers

Online retail is expected to grow faster and reach US$17 billion by 2020

Internal Factors/strengths

Wide distribution network- > to cater to local demands( in case it adopts warehouse model).

Strong brand value of HUL.

Can utilize economies of scope .

Being a big player can afford to have narrow margins to attract consumers who are price sensitive thereby increasing its market share .

Large cash reserves to spend on technology ,infrastructure etc.

Technical and digital capabilities required

Mobile app(apart from web based portal)- to cater to customers who prefer shopping through mobile phones.

Secure online transactions

•Integrated Analytics • Customer and

Marketing• Sales Analytics• Operations Analytics• Enterprise Analytics

•Optimize Web Pages • ‘Buy Now’, ‘Check out’,

‘Pay’ and ‘Subscribe’ call for actions buttons visible to customers

• Better Web Content

• Digital Marketing • E-mail Marketing• Social Media platforms

Facebook, Youtube, Twitter

• Mobile Marketing• Cross-channel Marketing

• Logistics• Selecting proper mode

of transport• Warehousing Strategy• Impact of GST • Third Party and Fourth

Party Logistics

◉ Provide customer support- Use of a robust CRM to improve customer experience and loyalty through customization of offers and discounts.

MONITORING : For monitoring online discussions about itself, its brands, and its products, efficient teams ,tools and processes are required

Efficient management of inventory

Alerts and notifications for better replenishment of items

THANK YOU