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Virtual Store   By:
                               Ajay Srinivasan
                               Sneha ShashiKumar
Business Model Presentation    Souvik Sen
                               Susanne Pihl
Introduction
Value Proposition

Customer Segment

Value Chain and Scope of Activities
Strategic Control

Conclusion
Tesco                             People of South Korea




3rd Largest Retailer in The World       Population of 50 Million, ~80% in
                                        Urban Area
Present in 14 Countries, Revenue of     Technology Driven
$94,185 Billion in 2011
Very Busy People

   2nd Most Hardworking People

   Long Work Hours               Very Less NO. of Leaves


Shopping A Dreaded Task

  Long Queue                           Easy To Access To Store


 Only on Weekends                      Other Easy Means
E-Mart is a Big Rival

    NO. 1 Retailer in South Korea

    Large NO. of Stores
                                    Position of Tesco

                                       Cannot Open New Stores
?   To Be NO.1 in South Korea
                                      Strict Gov. Regulations
?   Increase Sales Without
    Increasing NO. Of Stores          Opposition of Mom-Pop Stores
Smart Phone User                                    Subway

  15 Million Smart Phone Users                          Free Internet on the Subway

  ~40 Million Smart Phone Users by
  2014                                                  Widely used by South Korean


                                                        Lots of Place for ADs

                          Demographic Location
                          of Population
                                 80% People Stay in Urban Area

                             Technology Friendly People
2D Images of Products                  Metro Entrances and Platform

Tablets and Smart Phone To Scan        Items Delivered to Customers

Bridge the Gap between Online & Physical Shopping
Bring The Store To The People

   Shop On-The-Go

   Waiting Time At Station Equal
   Shopping Time
Convenient Delivery                       Secure Online Payment

   Order Before 1pm,
   Delivered On Same Day                    No Cash Payment Hassle

   Accommodate Delivery Changes             Tie With O2, App work on
                                            Android, iOS, Symbian

   Set Delivery Date 3 Weeks in Advance
People in Korea work 2193 hours a
year, the highest rate in the OECD
where the average is 1 749 hours.



                           5:30 am up




       11-12 pm
                                                6:30 Leave
        Arrive
                                                  home
         home       39-year-old Lee.
                  A civil servant at the
                  ministry of agriculture


               9 pm or
                                        8:30 Arrive
             later Leave
                                          at work
                work
•   Work long hours
•   Very little peronal time
•   Shop at night or in weekend  So crowded
•   Prefer fresh food
•   Often Singles or no children
•   Tech savy
•   Buying power

          Conveinient location, shop on the go.

          Make waiting time to shopping time

           Hassle free payment

           New unique experience

           Convenient delivery
          Wellknown company, branded
          products, fresh items
Korean society is aging rapidly, and government policies are struggling to keep up with
 the pace of change. However, many ordinary Koreans are not prepared to give up on
their long tradition of respect and care for the elderly. (Jarrod Hall/The Epoch Times.)
Those Aged 65 and Above
                                              By 1990: 5 %

                                              By 2012: 11,8 %

                                             By 2050: 37,6 %
                               That is 5.6 million people above 65 in 2012




60 % of population has
smartphone. Age group expand
•   Shop few items often
•   Often limited mobility
•   Flexible shopping and delivery hours
•   Often have a caretaker/family for shopping
•   Cooking an issue. Help needed
•   Sceptical to new technology
•   Price important


         Convenience. Caretakers can shop on
         their way to/from work

         Convenience: Retiree shop from
         home, no travel, store come to them
         Convenience: Skip Q and commute to
         store, delivery at doorstep

         Fresh items, known brands,

         Delivery fee can be an issue
Virtual store and Catering service

    Skip cooking


    Caretaker shop and provide meals on the go


    Or retiree order from home
Tradition for women to stops
working when married

50 % of women between
15-64 are home runners
2010: 54.6 % of households
have children.
Only 33,9 % Korean families use
childcare
•   Shop often; - fresh food and rising prises
•   Shop bulk items (Diapers etc.)
•   Cook at home
•   Go by subway to parks/play areas
•   Flexible times during day for delivery
•   Healthy food and childrens items important
•   Shopping difficult with children

         Skip nightmare shopping with kids in
         store. Hassle free
         Convenience: Shop comes to her.


         Delivery: Do not have to carry items.

         Delivery fee can be an issue
Shop comes into costumers home

Buy when seen

Expose costumer to Virtual shop
Shop when need appear

Ad to shopping chart instantly

Convenient real time shopping;-Store
comes to costumer every where
Convenience:
Save time                      - Shop anytime
                               - Shop where
Wating time to active time
                                  you are
                               - Delivery at
New cool shopping experience
                                  doorstep
                                Brand
                                - Branded
                                   company
                                - Branded
Hassle free shopping               products

                                Selection
New cool shopping experience
                                - Broad
Store comes to her home         - Fresh
Homeplus virtual shopping                 7 eleven                      E-mart


Higher price (delivery)       Expensive                     Low price
- Convenient location      - Conveinient location on        - Location inconvenience
                              the way
- Convenient opening hours - Convenient opening hours       - Limited opening hours
- Convenient delivery      - No delivery, carry home        - Normally carry home
- Hassle free payment      - Time consuming payment         - Time consuming payment
- Fresh items              - Ready meals/ not fresh         - Fresh items
- Broad selection          - Limited (targeted) selection   - Broad selection
- Branded products         - Branded products               - Branded products
- Waste time to active time   Foreign and Fancy             Pain the ……..
- Real time shopping
New unique experience         Fast culture                  National treasury
High




 Low




       E-mart   7 Eleven   HomePlus Virtual store
Ordering               Delivery




           Packaging
More than 500 products

           Scanning of any code

Ordering
Super Market

            Warehouse




Packaging
Time slots-Interval of 2 hours.

Ordering before 1 pm, goods delivered
on the same day.
Delivery during weekends preferred.

                                        Delivery
‘Virtual fridge’ inside Gatwick -Stock
up while waiting for your plane.
Pick a delivery slot date/time
( up to 3 weeks ahead)
Customer        Scan & Place
                   Order
                                          Tesco
                                        Home plus        Delivery
                                                         Charges
                  ADs In
                                   Online
                 Subway           Payment           Delivery


Interactive
                                                    Packaging
  Display

                               Commission On
                                 Posting Ads


                                  Suppliers

              Tesco Gatwick
Grocery shopping while waiting for their friends at
                        the station foyer.
Cold Storage

  Virtual Shops at Bugis and Boon Lay
  Subways

  Train Platform Don’t have Larger Advertising
  Space


Analyst Feel it’s a Failed Attempt

   A lack of strategy


   Besides strategy, everything else fails
Sustaining                 Appropriability              Competitive
       profitability                  Regime                     Advantage

                               •   Complementary         •   E Mart business vs
•   Create market wave             assets                    Tesco Business
•   Value proposition to       •   Control of industry   •   First mover advantage
    create market                  architecture          •   Customer focus
    presence
•   Tech ego of people

                           Superior Value Proposition
Tesco identified the fact that       15 million smart phone users
Korean’s were adept in using smart   were there in Korea
phones to the fullest.




Tesco’s strategy was to target       Tesco believed that reaching the
the technological ego of the         critical mass to the population shall
young office going Koreans           enable its market presence.
Tesco identified the fact that       15 million smart phone users
Korean’s were adept in using smart   were there in Korea
phones to the fullest.




Tesco’s strategy was to target       Tesco believed that reaching the
the technological ego of the         critical mass to the population shall
young office going Koreans           enable its market presence.
Capturing the
           voice of customer
           was the most
           important strategy
           !!



Tesco’s strategy of having entered Korea with Samsung was to identify the
mentality of Korean people
Korean’s were tired waiting at long queues for getting their items billed.

First Mover advantage – Virtual Store
Market control using Red Ocean Strategy            Tesco competed in Korean market
                                                   1   which was ruled by their competitor
                                                                  E-Mart


                 RED OCEAN STRATEGY                2     Tesco’s target was to beat E-Mart
                                                          and become No.1 in Korea
      Compete in existing market space
1

      Beat the competition                              The people of Korea were tired of
2                                                  3    long queues in billing counters

3     Exploit Existing Demand
                                                       Tesco provided items and lower cost

4     Make the value-cost-trade-off                4       and hence concentrated on
                                                            providing better value

      Align the system of firm’s activities to a
5     strategic choice of differentiation OR low         Tesco strategic intent was to
      cost                                         5        differentiate itself from its
                                                                  competitor
Poor Customer                                 Logistic issues
  planning



Poor planning
                                        Higher delivery cost
Failure to provide due customer         Big investment on delivery vans
service

Failure to predict the readiness of     Spending too much capital before
the consumer market                     producing any profit

Customer acquisition costs - Branding   Expanding too quickly before trying
                                        to establish in a specific market
Order                                              Stores to people
  Packaging Value Proposition
  Delivery                                           Shop on the go
  Handling Display*
                                                     Waiting Time to
Scope of Activities                                  Shopping time
                                                      Customer Segment

                                 Strategic Control




                                                     People of South Korea
  Products Sold                                      Tech Driven
  Delivery Charges                                   Young Working people
  Commission*                                        House Wife
                 Value Capture
15 million smart phone users were there in Korea
Strong Technological capabilities
Future of Shopping
  First Mover Advantage




Superior Value Proposition




Leveraging the E-Commerce

                              Smart Shopping
Virtual Store Model for Busy South Koreans

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Virtual Store Model for Busy South Koreans

  • 1. Virtual Store By: Ajay Srinivasan Sneha ShashiKumar Business Model Presentation Souvik Sen Susanne Pihl
  • 2. Introduction Value Proposition Customer Segment Value Chain and Scope of Activities Strategic Control Conclusion
  • 3. Tesco People of South Korea 3rd Largest Retailer in The World Population of 50 Million, ~80% in Urban Area Present in 14 Countries, Revenue of Technology Driven $94,185 Billion in 2011
  • 4. Very Busy People 2nd Most Hardworking People Long Work Hours Very Less NO. of Leaves Shopping A Dreaded Task Long Queue Easy To Access To Store Only on Weekends Other Easy Means
  • 5. E-Mart is a Big Rival NO. 1 Retailer in South Korea Large NO. of Stores Position of Tesco Cannot Open New Stores ? To Be NO.1 in South Korea Strict Gov. Regulations ? Increase Sales Without Increasing NO. Of Stores Opposition of Mom-Pop Stores
  • 6. Smart Phone User Subway 15 Million Smart Phone Users Free Internet on the Subway ~40 Million Smart Phone Users by 2014 Widely used by South Korean Lots of Place for ADs Demographic Location of Population 80% People Stay in Urban Area Technology Friendly People
  • 7. 2D Images of Products Metro Entrances and Platform Tablets and Smart Phone To Scan Items Delivered to Customers Bridge the Gap between Online & Physical Shopping
  • 8. Bring The Store To The People Shop On-The-Go Waiting Time At Station Equal Shopping Time
  • 9. Convenient Delivery Secure Online Payment Order Before 1pm, Delivered On Same Day No Cash Payment Hassle Accommodate Delivery Changes Tie With O2, App work on Android, iOS, Symbian Set Delivery Date 3 Weeks in Advance
  • 10. People in Korea work 2193 hours a year, the highest rate in the OECD where the average is 1 749 hours. 5:30 am up 11-12 pm 6:30 Leave Arrive home home 39-year-old Lee. A civil servant at the ministry of agriculture 9 pm or 8:30 Arrive later Leave at work work
  • 11. Work long hours • Very little peronal time • Shop at night or in weekend  So crowded • Prefer fresh food • Often Singles or no children • Tech savy • Buying power Conveinient location, shop on the go. Make waiting time to shopping time Hassle free payment New unique experience Convenient delivery Wellknown company, branded products, fresh items
  • 12. Korean society is aging rapidly, and government policies are struggling to keep up with the pace of change. However, many ordinary Koreans are not prepared to give up on their long tradition of respect and care for the elderly. (Jarrod Hall/The Epoch Times.)
  • 13. Those Aged 65 and Above By 1990: 5 % By 2012: 11,8 % By 2050: 37,6 % That is 5.6 million people above 65 in 2012 60 % of population has smartphone. Age group expand
  • 14. Shop few items often • Often limited mobility • Flexible shopping and delivery hours • Often have a caretaker/family for shopping • Cooking an issue. Help needed • Sceptical to new technology • Price important Convenience. Caretakers can shop on their way to/from work Convenience: Retiree shop from home, no travel, store come to them Convenience: Skip Q and commute to store, delivery at doorstep Fresh items, known brands, Delivery fee can be an issue
  • 15. Virtual store and Catering service Skip cooking Caretaker shop and provide meals on the go Or retiree order from home
  • 16. Tradition for women to stops working when married 50 % of women between 15-64 are home runners 2010: 54.6 % of households have children. Only 33,9 % Korean families use childcare
  • 17. Shop often; - fresh food and rising prises • Shop bulk items (Diapers etc.) • Cook at home • Go by subway to parks/play areas • Flexible times during day for delivery • Healthy food and childrens items important • Shopping difficult with children Skip nightmare shopping with kids in store. Hassle free Convenience: Shop comes to her. Delivery: Do not have to carry items. Delivery fee can be an issue
  • 18.
  • 19. Shop comes into costumers home Buy when seen Expose costumer to Virtual shop
  • 20. Shop when need appear Ad to shopping chart instantly Convenient real time shopping;-Store comes to costumer every where
  • 21. Convenience: Save time - Shop anytime - Shop where Wating time to active time you are - Delivery at New cool shopping experience doorstep Brand - Branded company - Branded Hassle free shopping products Selection New cool shopping experience - Broad Store comes to her home - Fresh
  • 22. Homeplus virtual shopping 7 eleven E-mart Higher price (delivery) Expensive Low price - Convenient location - Conveinient location on - Location inconvenience the way - Convenient opening hours - Convenient opening hours - Limited opening hours - Convenient delivery - No delivery, carry home - Normally carry home - Hassle free payment - Time consuming payment - Time consuming payment - Fresh items - Ready meals/ not fresh - Fresh items - Broad selection - Limited (targeted) selection - Broad selection - Branded products - Branded products - Branded products - Waste time to active time Foreign and Fancy Pain the …….. - Real time shopping New unique experience Fast culture National treasury
  • 23. High Low E-mart 7 Eleven HomePlus Virtual store
  • 24. Ordering Delivery Packaging
  • 25. More than 500 products Scanning of any code Ordering
  • 26. Super Market Warehouse Packaging
  • 27. Time slots-Interval of 2 hours. Ordering before 1 pm, goods delivered on the same day. Delivery during weekends preferred. Delivery
  • 28. ‘Virtual fridge’ inside Gatwick -Stock up while waiting for your plane. Pick a delivery slot date/time ( up to 3 weeks ahead)
  • 29. Customer Scan & Place Order Tesco Home plus Delivery Charges ADs In Online Subway Payment Delivery Interactive Packaging Display Commission On Posting Ads Suppliers Tesco Gatwick
  • 30. Grocery shopping while waiting for their friends at the station foyer. Cold Storage Virtual Shops at Bugis and Boon Lay Subways Train Platform Don’t have Larger Advertising Space Analyst Feel it’s a Failed Attempt A lack of strategy Besides strategy, everything else fails
  • 31. Sustaining Appropriability Competitive profitability Regime Advantage • Complementary • E Mart business vs • Create market wave assets Tesco Business • Value proposition to • Control of industry • First mover advantage create market architecture • Customer focus presence • Tech ego of people Superior Value Proposition
  • 32. Tesco identified the fact that 15 million smart phone users Korean’s were adept in using smart were there in Korea phones to the fullest. Tesco’s strategy was to target Tesco believed that reaching the the technological ego of the critical mass to the population shall young office going Koreans enable its market presence.
  • 33. Tesco identified the fact that 15 million smart phone users Korean’s were adept in using smart were there in Korea phones to the fullest. Tesco’s strategy was to target Tesco believed that reaching the the technological ego of the critical mass to the population shall young office going Koreans enable its market presence.
  • 34. Capturing the voice of customer was the most important strategy !! Tesco’s strategy of having entered Korea with Samsung was to identify the mentality of Korean people Korean’s were tired waiting at long queues for getting their items billed. First Mover advantage – Virtual Store
  • 35. Market control using Red Ocean Strategy Tesco competed in Korean market 1 which was ruled by their competitor E-Mart RED OCEAN STRATEGY 2 Tesco’s target was to beat E-Mart and become No.1 in Korea Compete in existing market space 1 Beat the competition The people of Korea were tired of 2 3 long queues in billing counters 3 Exploit Existing Demand Tesco provided items and lower cost 4 Make the value-cost-trade-off 4 and hence concentrated on providing better value Align the system of firm’s activities to a 5 strategic choice of differentiation OR low Tesco strategic intent was to cost 5 differentiate itself from its competitor
  • 36. Poor Customer Logistic issues planning Poor planning Higher delivery cost Failure to provide due customer Big investment on delivery vans service Failure to predict the readiness of Spending too much capital before the consumer market producing any profit Customer acquisition costs - Branding Expanding too quickly before trying to establish in a specific market
  • 37. Order Stores to people Packaging Value Proposition Delivery Shop on the go Handling Display* Waiting Time to Scope of Activities Shopping time Customer Segment Strategic Control People of South Korea Products Sold Tech Driven Delivery Charges Young Working people Commission* House Wife Value Capture
  • 38. 15 million smart phone users were there in Korea Strong Technological capabilities
  • 39. Future of Shopping First Mover Advantage Superior Value Proposition Leveraging the E-Commerce Smart Shopping