the rising stars
analysing localbanya.com | maruthappan s | iim ture development project organization. In the past, it has invested in many startups especially in hospitality domain. Currently they have invested an undisclosed amount in Local Banya. SWOT Analysis of Local Banya: With the SWOT analysis, internal and external factors responsible for the growth of Local Banya have been discussed.
“Analyzing LocalBanya.com”The Rising Star -Maruthappan S, II M Ran chi
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ocal Banya, the first online grocery store of Mumbai, has attained considerable achievements in its past 25 months of operations. It has carved out a niche for itself in this $ 282 Billion market with a wide range of products in 22 categories. Highlights: •Local Banya is an online grocery store started in May 2012 •Founded by Rashi Choudary, Karan Meherotra and Amit Naik •First online grocery store to serve the people of Mumbai •Currently they are serving customers of Mumbai, Navi Mumbai and Thane •Instead of inventory model, it follows ‘lean management’ which is a combination of inventory and cash-and-carry model •Apart from grocery items, it offers wide range of products like dairy products, beverages, organic foods, baby care, health care, personal care, desserts, household supplies etc. About the founders:
Ms. Rishi Choudary: The COO of Local Banya. She did her post-graduation in management from SPJIMS, Singapore. Before joining Local Banya, she worked with Raymonds as the Merchandise and Inventory Manager and with E&Y as a strategist. Mr. Karan Meherotra: The CEO of Local Banya; He hasworked in the FMCG sector for few years before moving to Local Banya. Now, he takes care of the logistics and operations. Mr. Amit Naik: After his short stint with an e-commerce firm, he ventured in to Local Banya. He is an IIM Lucknow graduate. Technical strategy of online grocery is maintained by him Why an analysis about Local Banya should be done? Local Banya is one of the fastest growing online grocery stores in the country. It is evident by their following achievements in their past 25 month of operations: 1.Recently achieved 600 deliverables per day. This is the second highest
number of deliverables in the e-grocery field in the sub-continent followed by BigBasket.com 2.In Economic Times, Local Banya is presented as one of the 7 tech startups with women at helm 3.Raised series A funding worth $ 20 Million from BCCL Spring Board and Karmvir Avant Group. They are in the process of raising series B funding worth $ 5 Million 4.In the report published by SutraHR. com in January 2013, Local Banya featured as one of the top 100 startups in India Previous investments by the venture capitalists who invested in Local Banya: BCCL has invested and successfully exited from firms like IIFL, UNIBIC, TravelGuru, Naaptol and Apollo Hospitals and so on. Currently, most of the players, who raised funding from BCCL, are now major players in their respective sectors. Karmvir Avant Group is an infrastruc-
It’s fine to celebrate success but it is more important to heed the lessons of failure.” - Bill Gates
STRENGTHS 1.Wide range of products 2.High Operating efficiency at a low operating cost 3.Cost & Pricing advantage over other e-grocers 4.Innovative social media marketing 5.Strong venture capital funding
WEAKNESS 1.Less differentiation services compared to their competitors 2.Services limited to a particular locality only
OPPORTUNITY 1.Rapid growth of e-commerce in India 2.Huge potential to tap in e-grocery market
THREATS 1.Stiff competition
STRENGTHS: 1.Wide range of products: LocalBanya offers large range of products from conventional fruits & vegetables to the baby care, house care & kitchen ware (which comes closer to 8,000 products). Focusing on the products apart from traditional grocery items helps them to gain advantage over their direct competitors like BigBasket, ZopNow, EkStop and GreenCart. 2.High operating efficiency at low operating cost: If a grocer relies fully on his inventory, it could turn out to be a disaster as was in the case of WebVan. WebVan was an online grocery based in USA that went bankrupt in 2001. Being aware of the issue, Local Banya founders decided to tame it with lean management. Besides their very few warehouses (4 or 5), they formed tie ups with many retailers and wholesalers around the city which considerably reduced their operating cost. Thereby they are able to
deliver their customers within 2 hours of order placement. 3.Cost & Pricing advantage over other e-grocers: Even though there is only little price difference between LocalBanya and BigBasket in Mumbai (of INR 3 to 5 in case of vegetables), it may impact the customers who are opting for a bulk order. For example, the price of onion at BigBasket is INR 36/kg and at LocalBanya is INR 33/kg (as on 24th June, 2014). This price difference may attract the customers who are planning to order for an entire month towards Local Banya. It is reported that 29% of Local Banya’s total business happens in bulk purchase of groceries. 4.Innovative social media marketing: It is quiet impossible for a grocer to achieve 600 deliverables per day within short period of operations. LocalBanya made it possible mainly with its huge social media presence in Facebook (54,000 Likes) and Twitter (1,194 Followers) which is the highest among all e-grocers in India. 5.Strong venture capital funding: In the series A funding $ 20 Million was funded by BCCL’s Spring Board (1st Round) and Karmvir Avant Group (2nd Round). They are in the talks of raising Series B funding worth $ 5 Million. The funding would help them to improve operations & logistics, marketing & branding and in hiring new talents. WEAKNESS: 1.Less differentiation services: Unlike its competitors, it is offering more products than services. In this competitive world, LocalBanya need to focus on IT services also particularly when other e-grocers like BigBasket and ZopNow are making use of technology in a better way. For example, ZopNow offers ‘live-tracking system’ with which customers would be able to track their product anytime whereas BigBasket offers customers to order the daily basket through their Android/iOS app. 2.Services limited to a particular locality only: LocalBanya was launched in May, 2012 and currently operates only in Mumbai, Navi Mumbai and Thane. Its competitors like BigBasket who launched around the same period now are operating from Mumbai, Hyderabad &
Bangalore. Expanding their operations to different cities could help them to cover more customer base. OPPORTUNITY: 1.Rapid growth of e-commerce in India: Currently the e-commerce constitutes only 0.8% of $ 600 Billion market. This market segment is expected to grow to 2.5% of total Indian retail market by 2016. That would result a 212.5% growth in the e-commerce market. This situation is expected to boost the growth rate of LocalBanya. 2.Huge potential to tap in e-grocery market: In current Indian scenario, including LocalBanya there are very few big players like ZopNow, EkStop, BigBasket and GreenCart. In e-commerce sector, there were only 2 players (FlipKart and SnapDeal) till 2010. Now there are more than hundred players in e-commerce sector. Similarly the number of players in e-grocery is also expected to grow in huge number in the coming years. This would give the existing players an edge over the new entrants in the grocery market which would be in terms of customer’s loyalty and brand awareness. THREATS: 1.Stiff competition: Since online grocery is growing at a rapid pace, many brick and mortar retailers are also interested in setting up their shops online. Apart from them, e-grocers who are arriving recently are focusing more on an individual vertical instead of setting up another grocery shop. For example, SeaToHome offers only fish instead of focusing on the whole lot. The firm which operates in a more focused manner like SeaToHome could give stiff competition to existing e-grocers.
Path Ahead: Local Banya has many plans about increasing the range of products and expanding to other Metro & Tier-1 cities in the upcoming years. Local Banya, which started with 12-15 employees delivering 10-12 orders per day, currently has more than 100 employees delivering 600 orders per day. Based on the previous year’s performance track record of Local Banya, its future looks bright.
Success is walking from failure to failure with no loss of enthusiasm.” - Winston Churchill
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