In the mid-1980s, a company with the name of Getit Infoservices started as a yellow-page business directory service provider, whose main focus was on enlisting local & small business pan India and providing that information to potential customers. It kept on growing as in 2010, it had spread across 50+ cities pan India. Around 2010-12, it acquired AskMe & started its plans of Online expansion. After acquiring AskMe, In June of 2014, it launched its Online website by the name of Askmebazaar. AskMe’s USP was simple – to take advantage of the local listings of small sellers in smaller towns, that Getit collected in past decades. By investing in Mebelkart, a furniture marketplace, acquiring BestAtLowest, an online grocery marketplace, AskMePay, payment divisions, & AskMeGroceries, groceries divisions. Due to mismanagement and lack of corporate governance, the company wasn’t even successful in paying its employees also. Finding itself cornered, Askmebazaar.com decided not to take orders at all as of August 2016. And the company soon became defunct, leaving thousands of its employees jobless & sellers Unpaid. Full Detail in Blog.
Do you remember those silly Ranbir Kapoor and Farhan Akhtar ads in 2016? Yes, those AskMe Bazaar ones’.
Well, as you’ve already guessed it, we are going to analyze the shit out of AskMe’s success & failures: what was it doing & what it should’ve done right.
For Appetizers (Yeah, I know I’m a foodie.):
AskMe was started as a classified portal in 2010. With Getit info services acquiring it soon, its online marketplace model started around 2012, with AskMeBazaar. And by 2014 AskMeBazaar.com started it’s operations in India, competing with the likes of Flipkart & Snapdeal. So let’s start the Askme Bazaar Case Study
In this case study, we’re going to discuss:
What exactly was AskMe? – Askme Bazaar Case Study
In the mid-1980s, a company with the name of Getit Infoservices started as a yellow-page business directory service provider, whose main focus was on enlisting local & small business pan India and providing that information to potential customers. It kept on growing as in 2010, it had spread across 50+ cities pan India.
Around 2010-12, it acquired AskMe & started its plans of Online expansion.
After acquiring AskMe, In June of 2014, it launched its Online website by the name of Askmebazaar. Although AskMe Bazaar debuted later in the Indian E-commerce market, it had the advantage of vast listings of local & small business in small cities that Getit already possessed, which were not already listed on Flipkart, Snapdeal, & other online Marketplaces.
Also they were having their android app.
WHAT AskMe DID? – Askme Case Study
AskMe’s USP was simple – to take advantage of the local listings of small sellers in smaller towns, that Getit collected in past decades – by taking those small sellers online, and started providing Next Day Delivery (NDD) offer, after experimenting with it for 18 months.
Being Metro cities their maximum revenue streams, such as Delhi, Mumbai, and Bengaluru.
They also managed to tap into other tier-2 cities for the likes of Kanpur, Kota, and Banaras.
With the launch of AskMeBazaar’s horizontal business model, AskMe decided to tap the Vertical business also.
By investing in Mebelkart, a furniture marketplace, acquiring BestAtLowest, an online grocery marketplace, AskMePay, payment divisions, & AskMeGroceries, groceries divisions.
But in retrospect, All these acquisitions & expanding too fast, too early will become its very reason for its Downfall.
One of the surprise factors of AskMe was – being an eCommerce company – it’s top management included only people from Marketing & Sales, which deprived them of the Technical trends & leadership insights.
According to one of its key management personnel, they used to record & track orders through MS-Excel.
Downfall of AskMe
With stars like Ranbir Kapoor & Farhan Akhtar as their Brand Ambassadors and in their ads, the thing they were neglecting was: exactly what they were selling, As being a new name in the Indian market, The company was not successful in articulating the very work done by the company, which confused their Audiences.
Well, the audiences weren’t the only one who was confused. As the Management was thriving to match their incompetency to manage all the divisions of the business.
And the Proverb of the millennia doomed over them:
Jack of all trades, master of none…
When Steve jobs arrived at Apple inc. as their interim CEO in 1997, to save the company from bankruptcy. He instantly cut down the products apple was producing, with only it’s desktop and laptop division remaining. And in this way, he saved the Apple from being doomed in oblivion for eternity. (BTW developing iPod also helped Apple.)
So where were we? Yeah. Ask the group’s thin and early growth ambition tore the streak of their ongoing success. As due to their continuous Acquisitions & Investing, the company was burning Cash above the level of danger. This Prompted their biggest sole investor, Astro Holdings, to pull their hands out from their streak of constant investments. This led to a Capital deficit, as the company was already operating in high losses.
These strings of events brought the dark clouds over the heads of the Top-Level Executives. In an Interview taken by Business Times, AskMe’s CMO tackled the question a journalist asked him of: What were his thoughts on being Askme in loss and losing its sales for last 7 months. And instead answered that they were expecting a huge round of funding being granted by none other than the Chinese conglomerate– Alibaba group. (Though that never happened, BTW Jack Ma best wishes on retirement.)
Scaffoldings of Bills
“I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”
― Friedrich Nietzsche
As the cash burn rate of Askme kept on increasing with their – losses rising & sales declining. Askme found itself unable to pay to many of its online listed sellers, who had already sold the products but didn’t receive their payments.
Along with their loss of trust & faith, sellers decided to ignore the order requests from the site itself, with many being not listing at the online portal at all.
Due to mismanagement and lack of corporate governance, the company wasn’t even successful in paying its employees also.
An ex-employee at AskMe told YourStory that salaries were delayed in the last few months, and in August, many employees did not get a salary at all.
August 9th, 2016: AskMe told its employees to contact directly Astro Holdings for their salaries, and emailed each of their unpaid employees the contacts of Astro Holdings’s management. ( Not a decent corporate etiquette.)
Finding itself cornered, Askmebazaar.com decided not to take orders at all as of August 2016. And the company soon became defunct, leaving thousands of its employees jobless & sellers Unpaid.
Aftermath
The Concluding lessons that could be learnt from the fall of AskMe, the Mega-startup, are that:
Define your Niche
Defining your scope of operations is as important as the very essence of the impact of your product/services on your customers.
It confused Management to their bones as what exactly were they supposed to do.
Expanding too early & too thin can become an inevitable sin.
With being in the market for only 2 years, AskMe Bazaar sailed on wooden boats which had holes in bottom; to surf on the giant waves.
To even generalize their logistics solutions, they had to wait for 18 months, which observed in the light of cut-throat competition coming from the likes of Flipkart & Snapdeal, was suicide.
Incompetent staff is a business liability.
To manage the vast divisions of AskMe, the competency required by the circumstances outreached current managements’ competency, the same management which struggling with confusion & chaos due to its indefinite goals & markets.
The concentration of control led to business complications.
As more than 95%+ stocks were owned by the Astro holdings of Malaysian billionaire – T. Ananda Krishnan, the decisions being made were extremely unilateral, which disabled management to make its own decisions
Profit is an important aspect of the business.
The doom of AskMe Bazaar wasn’t something unpredictable, as the company was running in giant losses with declining sales. The chart says it all: So this Askme Bazaar Case Study. You can share your opinion on Askme Bazaar Case Study in the comment section.
FAQs
When was Askme Bazaar founded and where was its headquarter?
Askme Bazaar was founded in 2012 and its headquarter was in Delhi, India.
Who was the CEO and MD of Askme Bazaar?
The CEO of Askme Bazaar was Kiran Murthi and MD was Sanjiv Gupta.
In which sector Askme Bazaar was operating?
Askme Bazaar was mainly operating on Retail Distribution through E-Commerce, E-Wallet payments
How much did Astro invest in Getit?
Astro invested the total amount of $300 million into Getit over a period of six years
ZOOMCAR was founded and lead by an American Duo – David Back & Greg Moran. Greg had an idea about India as where he started his career in a bank had a branch in India as well. This is how ZoomCar was initially launched in 2013. They needed at least 50 cars in their name, registered, owned, and insured and also they needed to have five offices across the state in which they are getting a license. They have managed to grow on to become the largest self-drive rental company in India, with a market share of 60%.ZoomCar follows a model wherein the company owns almost 75% of the cars through loans from the banks. In against for the business and for all the operational support cost that ZoomCar will provide, they take a 30% commission of the revenue earned from the car, and they also provide a monthly minimum guarantee payment of 3% of the vehicle ex-showroom price. Full Detail in Blog.
Do you having ZoomCar facility in your city ??
You know Zoom Car allows 3000+ rides daily!!
They own more than 6500+ number of Zoom cars.
By now, you must be thinking, what is so special in this ZOOM CAR. I have shared the most detailed case study on ZoomCar with the ZoomCar business model.
WHATS IN IT FOR YOU?
STARTING OF ZOOM CAR – INITIAL DAYS
Let’s start with the idea of ZOOM CAR developed in the minds of the founders.
The Story of zoom car starts with the founder. ZOOMCAR was founded and lead by an American Duo – David Back & Greg Moran.
Greg had an idea about India as where he started his career in a bank had a branch in India as well. He felt that India was a largely unexplored market and it must explore soon.
So Greg decided to visit India to explore it more than just on papers.
At first, he had an idea of starting a company for the renewable energy space but soon after his arrival, he realised that there was a strong business potential for the car rentals in India. At the time, no player in India was offering a similar service of self-driven car renting.
ZoomCar would automatically receive the edge and because of the uniqueness in its fundamentals.
Greg believed his idea had the potential to click in India!
Once the idea and the business model was finalised, the next major challenge was to register this type of business in India. They needed at least 50 cars in their name, registered, owned, and insured and also they needed to have five offices across the state in which they are getting a license. To overcome this challenge, they jumped to the conclusion that they would tied-up with local operating owners who already had a license and ended up subleasing cars from them.
This is how ZoomCar was initially launched in 2013.
They used their license for almost ten to twelve months, after that, using the money they earned in the past ten months, they procured 50 cars of their own and also got the license.
Since then, there was no looking back. They faced one problem after the another but the company always managed to survive the process and has managed to grow on to become a largest self-drive rental company in India, with a market share of 60%.
ZOOM CAR BUSINESS MODEL
ZOOM CAR is India’s first online self-drive car rental company. The business model that it follows is of peer-to-peer car renting business.
The company allows individuals to hire cars on rent.
Yes!! You can hire a car for a few hours to days to even months. ZoomCar follows a model wherein the company owns almost 75% of the cars through loans from the banks. While the remaining cars are on lease from large companies like Avis Budget Group.
Other than that, recently the brand has also started a new initiative called ZAP (ZoomCar Associate Program).
Here, individuals can invest in either a Maruti Ritz LDI or a Maruti Swift LDI (for now) and get into a 30-month Lease Agreement with ZoomCar to lease the car to them. In against for the business and for all the operational support cost that ZoomCar will provide, they take a 30% commission of the revenue earned from the car, and they also provide a monthly minimum guarantee payment of 3% of the vehicle ex-showroom price to ensure a baseline level of repayment, as well. At the end of the lease tenor, ZoomCar will return the car to you.
Little confused?
Let me explain you in some very simple steps –
#1 Select a Car #2 Apply for an offer #3 Pay specific amount and book #4 Delivery of the car #5 List your Car and Share when not in use
Still, confused? Go through the ZoomCar Official webpage dedicated for ZAP programme.
HOW TO BOOK A ZOOM CAR
You can book a zoom car by following 5 simple steps –
Step 1 – is to search for a car you want to book and then click on book car on their website or their mobile app.
Step 2 – Now, you need to upload your driving license through the website or the app and you need to pay a small security
Step 3 – Your request will be processed and 20 min before the pickup time you will receive the card details via SMS. Step 4 – Then, at last, you need to fill the start checklist on the Zoom Car app. Then just grab the keys from the glove-box and drive. Step 5 – You need to return the car to the same location from where you picked and fill the end checklist to finish your trip.
MANAGEMENT AND THE CORE TEAM
Greg Moran He is the Co-Founder and CEO(Chief Executive Officer) at ZOOMCAR.
Before co-founding Zoomcar, Greg studied at USC’s Marshall School of Business. He was the Founder and President of the USC Energy Club, Southern California’s largest club.
Greg is also a graduate of the University of Pennsylvania, where he holds a degree in International Relations.
Apart from professional life, he is personally interested in playing the piano and hitting the golf links.
Vinayak Hegde
He is the Chief Technology Officer. He is responsible for the technology at ZOOMCAR. He has a rich experience of working at an early stage with hyper-growth companies such as Speedera and Inmobi. Vinayak is also a well-known speaker at various national and international technology conferences. He is also the co-founder of Headstart Network which is a decade old not for profit network that mentors various early-stage start-ups. Apart from professional life, he is personally interested in photography, travelling and reading books.
Sudhindra Reddy
He is the Chief Operating Officer at ZOOMCAR. Before joining ZOOMCAR, he worked with P&G for more than 8 years. He also has 3 years of experience with DRDO in project management. Apart from professional life, he is personally interested in playing golf.
Manish Kumar
He is the General Counsel & VP Corporate Affairs at ZOOMCAR. Before joining ZOOMCAR, Manish has worked for some of the biggest organisations in India such as Snapdeal.com, ZTE Telecom, DLF Limited, Delhi Stock Exchange Association Limited and Yadu Corporation.
Varun Jha
He is the Chief Marketing Officer at ZOOMCAR. Varun is responsible for the marketing and demand side of the business at Zoomcar. He is having more than 12 years of experience in the field of marketing and growth strategies. His expertise lies in growth marketing and scaling up internet businesses. loves to read during his travel and leisure time also he likes to go on unplanned road trips. He has travelled to 12 different countries so far.
Hemanth Aluru
He is the Senior Vice President & Commercial Head at ZOOMCAR. Before ZoomCar, Hemanth was previously working in the Principal Investment Area (PIA) of Goldman Sachs in New York. He worked on equity, loan investments and mezzanine in companies across multiple industries. Apart from professional life, Hemanth personally loves to travel and pursue various outdoor activities including scuba diving, cycling, skiing and hiking.
FACTS AND FIGURES
Categories – Automotive, E-Commerce, Rental, Reservations, Transportation Headquarters Regions – Asia-Pacific (APAC) Founded Date – 2012 Founders – David Back, Greg Moran Funding Type – Venture – Series Unknown Number of Employees – 101-250 Legal Name is Zoomcar India Private Ltd.
Zoom Car has raised a total of $115.2M in funding over 11 rounds. The company raised its seed funding in October 2013 for a total amount of 1.6 million dollars from Barbara Judge, Nurzhas Makishev, Basset Investment Group, Empire Angels, FundersClub, Lloyd Thomas, Microsoft Accelerator. Latest funding which ZoomCar raised was from Trifecta Capital for an amount $11,350,000 on 10th July 2019.
ZOOMCAR PARTNERSHIPS
ZoomCar partnerships have been a great strategy for them. ZoomCar has created several partnerships to improve their services and to grow gradually. Few of such partnership includes automobile manufacturers such as Ford & Mahindra. Their partnership with Mahindra and ford have allowed them to become the first car rental company in India to offer an electric vehicle i.e. the Mahindra REVA E2O and the Ford EcoSport.
They have also tied up with Tata Motors to add 50 brand new Tata Nanos to their fleet of cars. Other than that, ZoomCar has also penned down several other partnerships with locally established real estate developers, universities, hotels, and corporate IT parks to secure parking for its vehicles and offer pick-up points to its members, as well. In November 2013, ZoomCar also initiated for a noble cause partnering with Uber and the Ashoka Foundation. Together they launched a campaign in Bangalore and named it RideSmartBLR to discourage drink and drive for its economical, health and environmental benefits, and encourage car-rental.
SWOT ANALYSIS
Strengths
The company has a first-mover advantage.
The company remains very well updated with the latest market trends and consumers changing behaviour.
Weakness
Customer satisfaction – At this initial stage, ZoomCar is failing to provide satisfaction to its customers.
Opportunity
Scalability – There is a vast opportunity for Zoom Car to scale its business across all the state in India as well outside the country.
Threats
Competition – The greatest threat for the company is the competition which it has to face in the form of new emerging car rental start-ups.
Governmental regulations ( leasing and age cars)
FAQs
What is Zoomcar subscription?
It is basically paying monthly EMI’s for the car for both the personal use and for other uses.
How Zoomcar rental works?
It’s provided self-driving, they will provide you with a car and you have to pay some amount of money. Depending on the car model and subscriptions they charge you.
How Zoomcar charges?
Depending on the value of the car and the time period you rent for. Also, if you book a car as per kms then after the kms is over you have to pay per km of charge depending on the type of car.
What is Business Model of Zoomcar?
ZOOM CAR is India’s first online self-drive car rental company. The business model that it follows is of peer-to-peer car renting business. The company allows individuals to hire cars on rent.
Trivago successfully understood the typical Mentality i.e. Comparing prices on as many shops or websites before purchasing anything and then choose the one with the lowest price and good quality. The idea of Trivago was first conceptualized in the year 2005 in the city of Düsseldorf, Germany.There were three university friends – Rolf Schrömgens, Peter Vinnemeier and Stephan Stubner who was the founding members. Further, in 2006 one of the founders Stephan Stubner chooses to opt-out to become a professor, so Malte Siewert became the part of the top management team. There are 3 major Revenue streams Trivago like Revenue from Listings, Services, Affiliate partners. In 2007Trivago goes international. It went live in Spain, Italy and France. Trivago is having its head office in the region of the European Union. Trivago launched its IPO in the US on NASDAQ.Stock Symbol used for the stock market is NASDAQ: TRVG From their IPO they raised in a total of $ 287 M IPO Date –on Dec 16, 2016. Till now, Trivago has received a total of 3 funding rounds raising in a total of $55M. Full Detail in Blog.
Trivago successfully understood the typical Mentality i.e. Comparing prices on as many shops or websites before purchasing anything and then choose the one with the lowest price and good quality.
Trivago’s Business model evolves around the same.
Today we will be talking about Trivago Business Model – the gaint comparison website which allows the customers to compare hotels and rooms on various websites and hotels itself before booking.
WHATS IN IT FOR ME !!
Where did the name TRIVAGO come from?
There are many different theories explained by different people about the meaning and story behind the name Trivago.
I thought every big company has an interesting story behind the framing of the brand name.
I also tried to scrutinize it and to figure out why is it called ‘TRIVAGO’. First, I thought it stands for TRIp VAcation GO. But this was just an assumption.
One of my very good friends works at trivago, he told me the real story behind – a creation of the name which was narrated by the CEO Rolf Schrömgens himself.
It was like, the founders had written their suggestions that had something to do with travel and trip on a wall. Then, they picked different syllables from different words suggested and arranged them in several ways possible.
Finally, the picked up a combination of different syllables and surprisingly it was not TRIVAGO, instead it was spelt as TRAVIGO.
So, after that, they went on buying the Domain name. And eventually, it turned out that www.travigo.com was already taken and had to pay around 100 $ to buy it, which they didn’t have.
So, finally, they decided to change the name slightly to TRIVAGO and purchased the domain www.trivago.com
HOW TRIVAGO STARTED?
The idea of Trivago was first conceptualized in the year 2005 in the city of Düsseldorf, Germany.
There were three university friends – Rolf Schrömgens, Peter Vinnemeier and Stephan Stubner who was the founding members. Their initial foundation was laid from the garage similar to many other start-ups.
Further, in 2006 one of the founders Stephan Stubner chooses to opt-out to become a professor, so Malte Siewert became the part of the top management team.
Today, their Top management board consists of – CEO – Rolf Schrömgens CFO – Axel Hefer COO – Johannes Thomas
They started with an initial investment of just €1.4m.
Initiated by 3 friends in a garage of Germany. Soon after the commencement, trivago gained momentum and started to grow in different markets.
TRIVAGO BUSINESS MODEL
is that it gets virtually all of its revenue from the cost-per-click model. When consumers click on a link, Trivago gets paid.
There are 3 major Revenue streams Trivago has –
Revenue from ListingsRevenue generated from the listings includes the fees paid by the hotel booking websites for displaying their services and hotel rooms listed on trivago platforms
Revenue from ServicesRevenue generated from services includes the fees paid by the hotel brands for managing their listing on trivago which includes their presence and visibility.
Revenue from Affiliate partners affiliate earning or we can call it referral earning contributes up to 59 per cent of the total revenue is generated. Users come to Trivago platform for hotel searches, then they click on one of the hotel offers/deals displayed in the search results. Then he is redirected to the affiliate partner’s website. This Affiliate partner can be either be a hotel booking website or an individual hotel, pays Trivago a certain sum of money for each such referral.
Each affiliate partner/advertiser can determine the amount that it wants to pay for each referral redirect by bidding for advertisements on the website
In Business terminology, this model is known as the Pay-Per-Click or PPC revenue model.
EXPANSION AND GROWTH – RISE OF TRIVAGO
2005 The idea of trivago was born in the year 2005.
2006 Trivago was founded and also goes live in Germany in 2006
Also, in the same year, Chicago got its first round of funding.
The price Comparision was also born in the same year.
2007
Trivago goes international. It went live in Spain, Italy and France.
2008
Finally, they started realising profits. In the year 2008, trivago reaches profitability.
2009 They decided to take the help of TV advertisements to develop its business. Their first TV commercial campaign was launched in Germany and Spain.
2010
The platform trivago.com was launched in 2010.
2011
They launched some new European platforms.
2012
They stepped up in the US for the first time.
2013
Trivago goes live in Asia Expedia acquires 62% stake in trivago through secondary purchase.
2014
Employee count goes more than 500.
2016
Now, more than 1000 employees were working under them.
They launched its NASDAQ IPO.
2017
Upgraded to more than 1200 employees
2018
They got 3.0 million+ hotels and alternative accommodations in more than 190 countries.
SWOT ANALYSIS
SWOT analysis will help you to identify Trivago’s Strengths and Weaknesses, as well as its external Opportunities and Threats.
STRENGTHS
Trivago’s advertising campaigns are very solid.
Trivago is backed by a very solid parent company.
It has 50 international platforms.
WEAKNESS
Limited product offerings, Trivago only covers hotels.
limited market share & less brand loyalty
OPPORTUNITY
New services
New global markets to capture
THREATS
Combo packages of flight plus hotel offered by various portals
Intense competition.
FINANCIAL FACTS AND FIGURES
Now, let me tell you about some official facts and figures of the company.
Trivago was acquired by Expedia for $632M on Dec 21, 2012.
IPO
Trivago launched its IPO in the US on NASDAQ
Stock Symbol used for the stock market is NASDAQ: TRVG From their IPO they raised in a total of $ 287 M IPO Date –on Dec 16, 2016
FUNDING TO TRIVAGO
Till now, Trivago has received a total of 3 funding rounds raising in a total of $55M
1st round of funding was on Jan 1, 2007 2nd round of funding was on Jan 14, 2008 3rd round of funding was on Dec 1, 2010
ACQUISITIONS
Trivago have in total of 3 acquisitions
It acquired –
Base7booking.com On March 1, 2016, Trivago acquired base7booking.com It was not only a hotel management system but also it is a new way to manage hotels efficiently
triple On Sep 26, 2017, the triple was also acquired by Trivago Triple provides travel recommendations(personalized).
TripHappy The latest acquisition of Trivago is of Triphappy on May 9, 2018 TripHappy is a travel startup that leverages AI to highlight locations and neighbourhood information.
Mobile app and its downloads
The main and the most popular app trivago has is –
Chicago: Compare Hotels & Save The app is having almost 2,859,945 monthly downloads
Website and its monthly traffic
Trivago is ranked 1,997 among websites globally. And having almost 29,258,861 monthly visitors. Trivago has registered 2 trademarks with the two most popular class – Advertising and Business.
Trivago is the lead investor in only 1 company – base7booking.com
MANAGEMENT AND THE CORE TEAM
CEO (Chief Executive Officer ) – Rolf Schrömgens
COO (Chief Operating Officer ) – Johannes Thomas
CFO (Chief Financial Officer) – Axel Hefer
CPO (Chief People Officer) – Anna Drüing
CMO (Chief Marketing Officer) – Andrej Lehnert
WORK CULTURE AND CORE VALUE OF TRIVAGO
The work culture of trivago states that they hire the most curious and passionate people around and follow their leads, rather than telling them what to do and how to do.
Their unique work culture is built on human learning and emotional intelligence. This is what sets them apart.
The core of this culture is their values that define their work. Let’s talk about their core Values –
– Trust
– Authenticity
– Power of proof
– Fantastic Learning
MARKETING STRATEGY OF TRIVAGO
Trivago Marketing
TV COMMERCIALS
Biggest hotel price comparison website Trivago has found a unique way to garner attention using a very clever marketing campaign.
I believe, there is hardly anyone who has not seen the simple and somehow irritating advertisements featuring the Trivago guy or girl on their Television. More than half of Trivago’s sales owe to these advertisements featuring Trivago guy/girl in various countries including India, France and the U.S
Making it one of the biggest of its kind in the world.
BRAND AWARENESS
In 2017, Trivago decided to advertise on billboard and poster format.
Trivago doesn’t advertise themselves on Facebook. Rather, they are extremely active on Youtube and TV.
You can go through our blog on Digital Marketing and strategies for more details.
INDIAN TRIVAGO GUY – ABHINAV KUMAR
“Kya Kabhi aapne online hotel search kiya hai?”
This statement will immediately bring a face to your mind. He is popular by the name Indian Trivago guy.
But do you know the real name of the Indian Trivago guy?
Abhinav Kumar is the man how has attained the identity of the Indian Trivago guy.
Every time you turn on the TV you have seen a Trivago advertisement with Abhinav Kumar.
He is not just a random guy Trivago picked up from the streets nor he is from any acting background.
He is an actual employee for the company and not just any employee. Abhinav Kumar is the head of the department for Trivago India.
He worked for TRIVAGO
Now, you have been wondering why and how this guy went viral?
His simple and every-day appearance and a comical way to deliver the dialogue went viral.
From TV to social media, Abhinav’s face and his trolls were all over the internet. It went across so much so that it became hard to ignore.
He was not at all offended over all the trolls and media coverage. He often shares the memes and trolls featuring him on his social media accounts.
Oyo Rooms is the largest branded network of hotels. Currently, OYO rooms are operating with more than 450,000 listings in almost 5,000 cities across India, Malaysia, UAE, Nepal, China, and Indonesia. The man behind the great startup which is popular as OYO Rooms of Oyo rooms is Ritesh Agrawal. He was born in Bisham in Cuttack, Orissa in the year 1993 on 16th November. Oravel Stays Pvt.Ltd was Ritesh Agarwal’s first startup. Some Problem Faced by OYO were High Cash Burn, Standardization, Competition, Malpractices. It acquired Novascotia Boutique Homes on Sep 28, 2017, AblePlus Solutions Pvt. Ltd. On July 10, 2018, Weddingz on Aug 13, 2018, Innov8 Co-working on March 15, 2019, Qianyu Islands on March 26, 2019, Leisure Group on May 1, 2019OYO has got 12 funding rounds until now.In which it has raised for about $ 1.7B. Full Detail in Blog.
DO YOU KNOW?
Out of total rooms booked via OYO rooms, 28 per cent of people book Oyo rooms after they get into a new city.
36 per cent of people are business travellers.
Another 36 per cent is made up of couples.
Oyo Rooms is the largest branded network of hotels.
Currently, OYO rooms are operating with more than 450,000 listings in almost 5,000 cities across India, Malaysia, UAE, Nepal, China, and Indonesia.
WHATS IN IT FOR YOU?
FOUNDER – OYO ROOMS
The man behind the great startup which is popular as OYO Rooms of Oyo rooms is Ritesh Agrawal.
Ritesh Agarwal was born and brought up an in a middle-class Marwari family. He was born in Bisham in Cuttack, Orissa in the year 1993 on 16th November.
Ritesh started his entrepreneurial journey at the age of 17. He dropped out of his college, in the year 2012, in the same year he launched Oravel Stays Pvt.Ltd.
Oravel Stays Pvt.Ltd was Ritesh Agarwal’s first startup. He designed this company for customers to enjoy the platform for enabling listing and booking of budget accommodation.
Being a passionate traveller, he soon realized that the budget accommodation sector lacked many things.
Therefore, in 2013 he transformed Oravel to OYO Rooms with the key vision of offering affordable and standardized accommodations.
Undoubtedly, he achieved so much in such a short span of time. He is a great inspiration for the people who believe success is earned only after one has years and years of experience. Hence, his achievements are worth knowing.
Achievements of Ritesh Agarwal Ritesh Aggarwal, at the age of 24 was India’s biggest entrepreneur. He has won many national as well as international awards.
I have mentioned a few awards that he has won :
TiE-Lumis Entrepreneurial Excellence award in 2014
Business World young entrepreneur award
Forbes “30 under 30” in the consumer tech sector
Top 50 entrepreneurs in 2013 by TATA First Dot powered by NEN awards
OYO BUSINESS MODEL (OLD)
Earlier, OYO used aggregator business model same as of Uber and Ola
Oyo’s earlier strategy was to book some of the rooms of the hotel’s inventory.
Then, they used to apply uniform standards and develop user’s friendly environment in the hotels to maintain it as per the quality standards exclusively for Oyo customers.
OYO gets a heavy discount from the hotel owners as they book rooms in advance for the whole year.
Then they allow customers to book the rooms from an online platform under the name of OYO rooms.
The benefit to hotel owners was that they got bulk bookings in advance.
The benefit to customers was that they got high discounts.
Let me explain to you by an example:-
Suppose,
If the cost of 1 room/night = Rs. 3000 Oyo rooms get a discount on the bulk reservation, let’s say 50% Cost to OYO rooms = 3000*50/100= Rs. 1500
Oyo resells it at Rs. 1800 to customer
Profit to customer= Rs. 1200
Profit to OYO is Rs. 200/room.
PROBLEM FACED BY OYO
There were many challenges faced by OYO rooms based on their hotel aggregator business model.
Let us discuss some of the major challenges faced –
High Cash burn rate
Hotel Aggregator business model involves a very high cash burn rate. Advance booking of the hotel rooms for the whole year needs a lot of cash burn.
Also, since the company is in their expansion mode they are offering heavy discounts in order to acquire the customers.
Standardization
One of the major issues was of standardization which was faced by OYO.
Since the company was dealing with non-branded hotels, the level of professionalism was low.
It soon became a challenge for OYO to delight their customers at every point of contact.
Competition
OYO is the market leader and it is true that leaders define the path.
Oyo has opened paths for many other competitors.
Malpractices
The partners who are the hotel owners used to book their own hotel rooms when they used to see lower prices on the Oyo’s platform and this became malpractice benefiting the hotel owners.
To stop this, and to expand the business, Oyo Rooms has started leasing of hotels and places where it has full control over the day-to-day operations of these hotels.
PRESENT DAY BUSINESS MODEL (NEW)
The company started off its operations by building its business model around the aggregator business model but things have changed since 2018.
The New business model of Oyo Rooms is Fully stack and Franchise Business.
It’s just the company doesn’t lease the hotel rooms anymore, but now it asks the hotel partners to operate them as a franchise.
The founders of OYO decided to shift its business model to a pure franchise business model.
They have partnered with hotels and made them work with them under their name.
The founder and CEO Ritesh Agarwal says – “Oyo now gets over 90% of revenue from hotels under franchise model”.
FINANCIAL FACTS AND FIGURES
458,000 ROOMS GLOBALLY AND REALISED VALUE RUN RATE OF $1.8B WITH A Y-O-Y GROWTH OF 4.3X AS AT DECEMBER 2018
You might have thought about the strategies implemented by OYO that, made it so successful.
Let’s discuss the strategical approach of the brand OYO ROOMS.
To maintain its ranking and perform above all its competitors, OYO focuses mainly upon mass retention and acquisition.
It is using Digital Marketing section very aggressively for customer acquisition and lead generation.
Oyo knows the power of Social media. Hence, it is very strategically using all the platforms available for social media coverage.
They target mass potential customer based on their behaviour, interest and many other factors which are readily available via Digital Marketing.
Social media presence of OYO includes more than 2.7 lakh fans on Facebook, more than 8000 followers on twitter.
The company claims to have over 1.5 million app downloads with a very good number of active users.
The brand actively participates into several social media campaigns such as –
#Aurkyachahiye videos on youtube.
IPL final verbal combat by OYO
Fathers Day celebration campaigns
They also featured Bollywood celebs Manoj Bajpai and Raveena Tandon in a campaign named Jai Hind which was a massive success.
SWOT ANALYSIS
STRENGTH
First Mover Advantage
Standardization
Young and highly spirited leader
WEAKNESS
Customer Dissatisfaction
Low Return on Investment
OPPORTUNITY
Focus on budget accommodation
Lucrative Opportunities in International Markets
THREATS
Competition
Growing Protectionism
SERVICES PROVIDED BY OYO
OYO with a new business model also came up with new verticals.
The services included in the Oyo Rooms business model are –
OYO FLAGSHIP
Now, Oyo Rooms has started leasing or franchising of hotels and places where they have full control over all the operations and day to day activities of these places.
Events & Other Long Stays
OYO has also started serving rooms and banquets for family functions like (weddings, parties, etc) as well as for the corporate which involves hotel rooms for their guests to stay for long.
Commercial Places
OYO is also stepping into the renting of commercial places. Now the customers can also book office spaces via OYO.
Oyo Wizard
The Brand also has started some subscription plans for customers where the subscribers can get exclusive deals and discounts.
Oyo Townhouse
To stand out of the competition and retains its value proposition in terms of standardized hospitality and quality,
The Brand has recently launched the Oyo Townhouse.
Each OYO Townhouse is designed to complement its neighbourhood. OYO has undertaken complete operations of these Townhouse units along with interior and exterior re-engineering.
The concept of Oyo Townhouse is based on the needs of the millennial traveller.
The company is claiming that this townhouse network is its fastest-moving network and will include more than 400 Townhouse properties by the end of 2019.
FAQs
Does OYO allow unmarried couples in the hotel?
Yes, OYO allows unmarried couples into the hotel based on some ID proofs.
2. Which OYO room is safe for couples?
Every room in the OYO is legal and is safe for the couples as they need an ID proof to get in the hotel and they can live without any issue.
3. When OYO was started?
It was started on May 21, 2013, by Ritesh Agarwal and the business has been running from 2013 by connecting more and more hotels.
4. Who started OYO?
OYO (ON YOUR OWN) was started by Ritesh Agarwal on May 21, 2013 and the headquarter is located at Gurugram.
5. What is full form of OYO?
The full form of OYO is ON YOUR OWN which defines that you can choose your own room and live.
6. How OYO earns money or OYO model?
It’s just the company doesn’t lease the hotel rooms anymore, but now it asks the hotel partners to operate them as a franchise.
How oyo works?
The New business model of Oyo Rooms is Fully stack and Franchise Business.
UPDATES
SoftBank Group Corp. is dispatching two executives to help Oyo Hotels, one of the largest startups in its portfolio, right its virus-stricken business in Japan, according to people familiar with the matter.
NoBroker ties-up with OYO LIFE, to scale up its co-living service.
Delhi HC directs Oyo to furnish an affidavit of unencumbered assets for Anam Datsec
OYO Indonesia in hot water after refund and payment complaints go viral.
Agarwal will work with Dr Apoorv Sharma, founder of VCats to promote entrepreneurship across the country’s tier 1, 2 and 3 cities and help India become ‘Atma nirbhar’ (self-reliant).
Indian hotel group OYO in talks with UAE, Saudi partners to review agreements.
OYO, FICCI develops online certification course for the hospitality industry.
IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943. Everybody knows that Ikea offers the products at a very lower price than any retail shop. Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries. the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India. the company is a non-profit. IKEA employs about 135,000 people. Because of tax rules for non-profits, IKEA pays about 33 times fewer taxes than their for-profit competitors. The Ikea trademark and the concept is owned by another private company named Inter Ikea Systems. It acquired TaskRabbit on Sep 28, 2017. IKEA has many mobile apps. But the most popular app is IKEA STORE. The app is having almost 9,60,333 monthly downloads. IKEA is the lead investor in 4 companies. Full Detail in Blog.
Everybody knows that Ikea offers the products at a very lower price than any retail shop.
In this blog, we’ll talk about Ikea Case Study(Business Model) as the Swedish furniture company opened its first retail store in India.
Like Walmart acquired Flipkart and entered the Indian Market. Ikea can destroy the Whole Furniture Market in India.
Ikea has invested 800 crores in India, It has more than 9500 Products and has more than 350 stores in 35 countries.
According to CNN, the new store is spread across 400,000 square feet in the southern city of Hyderabad & plans to invest 105 billion rupees in India.
But have you ever wondered? How does Ikea work?
What is the meaning of IKEA?
How IKEA works?
How IKEA business model earns ?
You must have many questions regarding IKEA, like What is the meaning of IKEA?
How IKEA works?
What is IKEA?
How IKEA earns?
This will be the most detailed case study on IKEA.
I will be answering all of your questions.
Let’s START WITH
WHAT IS IKEA?
IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.
IKEA is a globally renowned furniture retailer that sells ready-to-assemble furniture, kitchenware and home accessories.
The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.
After five years into the business, IKEA brought in the furniture. Since then furniture has been the mainstream for the business.
IKEA furniture is now a well-known multinational brand.
IKEA MEANING
You must be wondering that what is the story behind the unique name the brand has.
The name IKEA isn’t just a fun.. it stands for – Ingvar Kamprad Elmtaryd Agunnaryd.
Short-form is cooler to pronounce right? But it actually has a deeper meaning.
The first two letters of IKEA i.e. I and K are the initials of the name of the founder Ingvar Kamprad.
While ‘E’ comes from the name of the farm he grew up on – Elmtaryd.
And the last letter ‘A’ comes from the Swedish village, Agunnaryd,
where the farm was located.
HOW IKEA EARNS? – IKEA BUSINESS MODEL
They follow Price-leadership model. Low prices are the main concern stone of the IKEA vision, business idea and concept.
In the world of IKEA furnishings, the products are named after Swedish towns like Aneboda, Akurum and Anordna.
But the costumers worry less about the names and care more about how much they cost.
Ikea furniture is a beacon for bargain hunters. Its whole business model evolves around selling their product at the lowest price possible.
IKEA business model revolves around their vision which is – offering a very wide range of well-designed, functional home furnishing products at so low prices that as many people as possible will be able to afford them.
Anybody can make a high-quality product for a high price, or a poor-quality product for a low price.
IKEA follows a different approach, they have developed methods that are both cost-efficient and innovative. Before designing the product… they decide the price tag.
Their designers begin with designing of the product after keeping the price in mind. The IKEA Group has 31 distribution centres in 16 different countries, supplying goods to IKEA stores. It has about 45 trading service offices in 31 countries.
They have very close relationships with their 1,350 suppliers in 50 countries.
IKEA’S SMART SECRET
Is IKEA – a Non- profit organization. ?
WHAATTTTT?
You must be having a lot of questions by now, like if IKEA is a non
profit organization then –
How do they manage their running cost?
Where all the money goes away?
Where does all this money earned is utilised?
You will get all your answer right away as you continue reading.
I would say a big YES,
IKEA has a little known secret: the company is a non-profit
They grew with a vision that states ‘to create a better everyday life for as many people as possible. And on a mission to offer a wide range of home furnishing products at a price so low that as many people will be able to afford them.’
Besides the vision and mission, the main motive of showing itself a non profit organization could seem as business-driven.
IKEA employs about 135,000 people. Because of tax rules for non- profits, IKEA pays about 33 times fewer taxes than their for-profit competitors.
There is one more big hole in this whole IKEA non-profit organization.
Money is not trapped inside Ikea’s foundation.
The Ikea trademark and the concept is owned by another private a company named Inter Ikea Systems.
So, to operate Ikea stores and use the brand name, the non-profit Ikea have to make payments each year to the private company – Inter Ikea Systems.
This clearly means money is paid directly from IKEA profits to the owners of this private company to license the trademark.
The beneficiaries or we can say owners of this private company are not publicly recorded, but it’s not hard to speculate that the Kamprad family is on the receiving end of this loophole.
HISTORY – STARTING AND GROWTH OF IKEA
Let’s talk about the exciting history timeline of IKEA.
From the of how it is started to the story of how it evolved exponentially.
1926
It all started in 1926 when founder Ingvar Kamprad is born in Småland
in southern Sweden.
The 1940s-1950s
In the year 1948 – Furniture was introduced into the IKEA range.
Local manufacturers produced the furniture for IKEA in the forests close
to Ingvar Kamprad's home.
In the year 1956 – IKEA came up with the idea of designing furniture for
flat packs. It started focusing on self-assembling furniture models.
The 1980s
In the year 1980s – IKEA expands dramatically into new markets such
as the USA, Italy, France and the UK.
In the year 1984,
Ikea family was introduced a new club for the customers was launched.
Today, Ikea family is in 16 countries (over 167 stores) and has about 15
IKEA has many mobile apps. But the most popular app is IKEA STORE.
The app is having almost 9,60,333 monthly downloads.
Website and its monthly traffic IKEA is ranked 166 among websites globally.
And having almost 146,040,680 monthly visitors.
Investments
IKEA is the lead investor in 4 companies. Those are –
XL HYBRIDS – IKEA announced its investment in this company on
October 12, 2017
MAT SMART – IKEA announced its investment in Massmart on Jan
23rd, 2018
TRAEMAND – IKEA announced its investment in Traemand on Dec
19, 2018
LIVSPACE – IKEA announced its investment in Livspace on Dec 19,
2018
MANAGEMENT AND THE CORE TEAM
CEO – Jesper Brodin
CFO – Alistair Davidson
FOUNDER – Ingvar Kamprad
HEAD OF CORPORATE FINANCE & TAX – Krister Mattsson
HEAD OF DIGITAL – Christian Moehring
HEAD OF E-COMMERCE, SOUTHEAST ASIA – Koen Besteman
HEAD OF UK MARKETING PROCUREMENT – Maria Malpartida
HEAD OF INNOVATION – Jens Heitland
8 IKEA Marketing Strategy
Many people confuse marketing with promotion. People believe that marketing is something you do to sell your product. But, this is not completely true. Marketing begins even before the production stage, as designing a product based on the demand and needs of the customers is also a part of marketing. This is what IKEA Believes in. Everything in IKEA is from a customer’s point of view. Let’s dive deep into learning different strategies of IKEA.
1. Amazing Customer Experience
Have you tried shopping from IKEA? If not, then I would strongly recommend you to try IKEA next time you need a piece of furniture.SHopping at an IKEA store is a different experience than shopping from any other furniture store. Whenever adults go out shopping with their kids, both the kids and parents face issues.
IKEA has got an amazing solution for this where none of them would feel any type of burden and in fact, both of them would like to spend more time at the IKEA store. Yes, I am talking about the free childcare facility provided by the IKEA stores. You can just leave your child safely with them and enjoy hustle free shopping and the child will also spend some quality time playing and making new friends.
Another amazing thing is that instead of standing and having a long discussion about which product to buy and calculating your cost, you can have a seat ad enjoy your paneer butter masala meal while discussing the furniture.
These little things not only add a value to the customers shopping experience but also give them a reason to visit again and even suggest others to visit the store.
2. Brand Identity
In such a competitive environment, is it very important to stand out or be unique and creative to survive? You have to build your brand in such a way that customers prefer you over other companies.IKEA is very strongly working with this. Its goal is to become the leader of every home.
IKEA focuses more on the product and the customers which a lot of companies fail to do. If you create what your customers want then you can build a good brand identity. Your every action should be a signal of your brand.IKEA uses this technique in its advertising. If you have been following IKEA for a while then you will not have to think a lot you can recognise directly that this is an IKEA ad.
3. Content Marketing
With the growing digital environment, the content has become an important element of the digital industry. Content is used by most of the companies to promote their product digitally. From a picture art to a long written blog anything can be used as content in digital marketing.
One of the best strategies you can use in this digital era is to interact with your customers directly.IKEA uses all types of contents to reach out to their customers. From images, videos to textual content IKEA has it all. To reach your customers digitally, it is very important to identify your potential audience, basically defining who your customers are. Then the most important step is defining how your potential customers can find you?IS is through your social media handles or is it through your website or a combination of all these. And then you need to target them both organically and by paid promotion techniques.
4. Social Media
Social media is something which cannot be avoided. Everyone nowadays uses social media, thanks to the internet revolution and jio revolution in India. Your presence on every social media platform is must, it doesn’t matter if you are an old company or a new one. Social media allows you to be in constant touch with your customers. You can use various strategies across your social media platforms that can help you create trust and a good brand image in front of your customers and also develop new customers.
There are a few strategies which you can follow.
If you follow a consistent posting schedule, then you can have a good content interaction as regular posts can make your customers think about you.
You can also use promotional strategies provided by social media companies to reach a new audience and attract them by telling them about your new products and offers.
Another important feature of social media that you can use is to understand your audience. Understanding your audience is important because they are the ultimate consumers and having clarity about the consumers makes it possible for a brand to plan its products and marketing accordingly.
5. Innovation
IKEA is very famous for new designs and products. It keeps on constantly adding a new design or a new to product to its collection. This allows customers to visit the store even if they do not want to buy anything so that they can check the latest trends and products. If you check their social media handles, you will find a lot of different types of content that displays new and innovative products. This is a very good strategy as your customers stay updated with your products. Even if they do not add the products to their cark at the moment, they still add it to their wishlist. Which indirectly gets converted into sales. Thus, innovation in products and making innovation reach your customers is very important.
6. Creative Marketing Campaigns
IKEA is very creative when it comes to marketing. Their posts are so engaging that you want to click on it and see them that what is there. The example given below demonstrates how one will swipe right to see what they have for you. Isn’t it creative? If you observe, they have made good use of the present condition in a creative way. Similarly, a humorous and creative content strategy can help you get more engagements.
7. Amazing Use of Technology
Living in the 21st century, you can make amazing use of technology to provide a great experience to your customers. Augmented reality and virtual reality are some great examples of technology can you can use especially in such industries.IKEA makes use of both these augmented realities and the virtual reality
What is Augmented Reality?
This is the most amazing use of technology that IKEA could have done. With this, you can use your mobile phone to see how a piece of particular furniture would look at your home. You can also use this to decide at which corner of the house that particular furniture would look good. This is like a trial technology where you can try the products virtually at the comfort of your home without actually buying it. It is similar to something used by Lenskart.
What is Virtual Reality?
Yet another amazing use of technology. Where most of the people are busy using virtual reality for gaming purposes, IKEA has its smart use. Through virtual reality technology, IKEA allows its customers to feel the look of the furniture. For example, say you want to buy a modular kitchen, you can try the kitchen before actually buying it in a virtual reality headset. The most amazing part is that you can try cooking and get real experience.
8. Payments Methods
Consumers have become a lot more advanced than before. Customers need comfort. Since the evolution of the digital era, there are a lot of different methods of payment. Every consumer has different payment options. It becomes important to have all the options available so that the customers get a hustle free shopping experience. As already, IKEA is a price dominant company, best price with all modes of payments is like a cherry on the cake.
Unknown Facts About IKEA
Ikea is the third-largest wood consumer on the planet. Being the leading furniture company it should not be shocking.
IKEA is claimed to print more copies of its annual catalogue each year than the bible.
IKEA has very good food sales. Being known for its furniture has a very good taste when it comes to their restaurant. This can be a great contribution to their revenue as they have an approximate sale of 2 billion annually.
As in 2014, they have 716 million visitors to their store. This is a very huge number.
The first IKEA restaurant was launched in 1956 to feed its customers that would feel hungry after spending the whole day shopping.
SWOT Analysis of IKEA
STRENGTH
* Its vision – ‘to create a better everyday life for many people’
* Economies of scale
* Lowest Price
* Countless designs
WEAKNESS
* Bad press
* Low quality
* Difficulty to control standards across locations.
OPPORTUNITY
* Solutions for a sustainable life at home
* Developing social responsibility
THREATS
* The recession slows down consumer spending
* More competitors entering the low price household and furnishings
markets
IKEA is one of the biggest furniture companies in the world founded by a carpenter named Ingvar Kamprad who was 17-year-old, in Sweden in 1943.
IKEA is a globally renowned furniture retailer that sells ready-to-assemble furniture, kitchenware and home accessories.
The company started with selling pens, wallets, jewellery with the concept of meeting consumers demands at the most affordable prices.
After five years into the business, IKEA brought in the furniture. Since then furniture has been the mainstream for the business.
IKEA furniture is now a well-known multinational brand.
IKEA KEY VALUES
They are very strict about their values.
They firmly believe that every individual has something valuable to
offer.
Let’s look at some of there core values –
1. Cost – Consciousness
Their first priority is to make their product affordable to as many
people as possible. They challenge themselves constantly to make
the product more affordable without compromising on quality.
2. Renew and Improve
They always challenge themselves to try something new and to find a
a better way out.
3. Caring for People and Planet
They believe in caring for people as well as for the environment.
They act as a force for a positive change.
IKEA IN INDIA
In 2006, Ikea first displayed an interest in the Indian market but back then
the Indian laws allowed only 51 per cent foreign ownership.
With the government of India relaxing the norms for foreign direct
investment (FDI) in single-brand retail, IKEA announced in October
their intention to open stores in India.
IKEA opened its first store in India on Aug 9, 2018.
It took IKEA 12 long years to enter the Indian market.
The first store in India was opened in Hyderabad.
Hyderabad, the southern Indian city gave it a roaring welcome.
So far, more than 3 million customers have visited IKEA Hyderabad
store and about 8 million have visited IKEA’s India website
In the year 2016, Ikea purchased land in Mumbai and said that it planned
to open stores in Bengaluru and Delhi too.
After Hyderabad, in 2019 IKEA has launched its first online store in
Mumbai is offering more than 7,500 products.
It will provide delivery to most of the locations in Mumbai and will have
a delivery time of four to seven days, subject to availability and distance.
In India, IKEA currently has more than 55+ suppliers.
Also, have more than 45,000 direct employees and 400,000 people in the
extended supply chain.
Now, the company plans to have more than 25 stores in India by 2025.
FAQ’s
What is IKEA Business Model?
They follow Price-leadership model. Low prices are the main concern stone of the IKEA vision, business idea and concept.
Shocked by the News that Founder of CCD has committed Suicide. Cafe coffee day(CCD) was the first-ever coffee chain opened in India.VG Siddhartha was the man behind making coffee popular in a nation of tea-lovers. Also, CCD owned Asia’s single largest coffee estate and India’s best coffee brand. The first CCD outlet was set up on July 11, 1996, at Brigade Road, Bangalore, Karnataka. V.G. Siddhartha opened the first CCD outlet with an initial investment of ₹ 1.5 crores. the major challenge faced by the cafe coffee chain was to make a revolutionary change in the Indian culture where the majority of the population prefer drinking tea rather than coffee. To stand up against the competition, CCD has built its retail strategy and named it 3As strategies like Affordability, Accessibility, and acceptability. CCD founder V.G. Siddhartha who feared of achieving a target of 500 tonnes, ends up selling 6,500-7,000 tonnes of branded coffee, exports about 28,000 tonnes of coffee and sells another 2,000 tonnes locally each year and has a curing capacity of 75,000 tonnes (largest in the country). Additionally, his cafes attract at least 40,000 to 50,000 visitors per week and presently operating 1,740 CCD stores in around 250 cities. Full detail in the blog.
I was shocked by the News that Founder of CCD has committed Suicide.
What was the reason behind it?
According to resources, He was under pressure from a private equity partner and other lenders.
This ultimate blog is dedicated to India’s best coffee brand “CCD” and it’s owner Mr VG Siddhartha.
I have curated all the information about CCD(Cafe Coffee Day).
Cafe coffee day(CCD) was the first-ever coffee chain opened in India.VG Siddhartha was the man behind making coffee popular in a nation of tea-lovers.
Also, CCD owned Asia’s single largest coffee estate and India’s best coffee brand.
It was the one with the tag line ‘A lot can happen over coffee’, Café Coffee Day was the one who touched the hearts of millions of Indian youth, assuring them that all they need is a cup of coffee and a peaceful place to talk it all out!
And so it happened.
India was strictly a tea-loving country. Let me tell you everything from pin to plane about the brand who successfully made coffee popular in a country full of tea lovers.
We will be talking about –
HOW CAFE COFFEE DAY(CCD) STARTED
I am sure you have visited CCD now and then but do you know the history of the cafe coffee brand who brought the coffee culture to India.
During my college years when I started visiting the cafe coffee day, I had no idea about the success story of India’s largest Cafe Coffee chain.
V G Siddhartha from Chikmagalur district of Karnataka was the man behind changing the beverages culture of India with a variety of drinks and side dishes hard to resist.
Coffee Day Global which is the parent of the Cafe Coffee Day chain was incorporated in 1993.
The first CCD outlet was set up on July 11, 1996, at Brigade Road, Bangalore, Karnataka. V.G. Siddhartha opened the first CCD outlet with an initial investment of ₹ 1.5 crores.
Siddhartha happened come across a German business owner, who was interested in buying coffee beans from him for his “leading coffee brand in Germany – Tchibo”.
During that brief discussion with the German businessman, he told his story of how his band had started in a small 10 ft. shop in Hamburg. This inspiring tale of the Tchibo gave Siddhartha an outlook of a different world altogether & opened his eyes and it also gave him a wonderful idea.
Challenges Faced By CCD
Having done with the initial foundation, the major challenge faced by the cafe coffee chain was to make a revolutionary change in the Indian culture where the majority of the population prefer drinking tea rather than coffee.
After the initial struggle, the homegrown cafe chain came a long way, credited with the start of coffee shop culture in India but then it finds itself facing tough competition not just from the international chains such as Costa Coffee, Starbucks or Barista but also from various domestic players and concept cafés.
How CCD Overcome Challenges
To stand up against the competition, CCD has built its retail strategy and named it 3As strategy :
Affordability What worked best for the Indian cafe coffee chain was its combination of aspiration and affordability.
Even as it gave coffee an attractive makeover, CCD’s prices stayed well below its rivals.
Ensuring that it remained the favourite hangout choice for school and college students or young adults on meagre paychecks from their first jobs.
Accessibility It wasn’t just restricted to the metro cities. If there’s one singular claim that Coffee Day can makeover all of its rivals, it is that it took coffee to cities and towns across the country, and offered the same experience everywhere.
They always believe in serving an experience along with the coffee.
They have ensured that the cafes are at an arm’s reach. Acceptability Today, coffee is not just seen as a beverage but a social glue that brings people together to relax and unwind.
“Let’s catch up at CCD,” is probably one line most Indians have said or heard at one point or the other over the last two decades.
Marketing and advertising strategies of CCD
As we have discussed above, CCD’s strategic approach was based on the 3 A’s i.e. Affordability, Accessibility, and Acceptability. 3A’s are the significant factors contributing to the growth of the brand.
Secondly, Digital Marketing has become an integral part of Café Coffee Day’s marketing plan. CCD’s fan base is overwhelmed with over 5 million fans on its social media pages and consistently engaging customers on Facebook, Instagram, Twitter, Youtube, etc.
The youth was the key target and early adopters of trends, they also evolved their strategy and became more digital-centric as they engaged with the new age world.
CCD marketing also constantly ensures the continuous active engagements of the consumers, like they conducted the ‘Latte Art Festival’ – where customers were served coffee topped with creative latte art designs.
As CCD goes digital, it is also looking at innovation in user experiences by adopting new technologies to enhance customer service.
STRENGTHS * Products of extremely good quality and taste * Highest no. Of stores * High brand equity among the youth * Vertical integration
WEAKNESSES * High pricing * Wrong-site selection * Lacks strength to maintain the brand
OPPORTUNITIES * Coffee cafe industry is one of the fastest-growing industry in Asia * Enter and attract international markets * Rising income of people
THREATS * Growing competition from global and local coffee chains * Growing attrition rate
BUSINESS EXPANSION AND GROWTH
CCD founder V.G. Siddhartha who feared of achieving a target of 500 tonnes, ends up selling 6,500-7,000 tonnes of branded coffee, exports about 28,000 tonnes of coffee and sells another 2,000 tonnes locally each year and has a curing capacity of 75,000 tonnes (largest in the country). Additionally, his cafes attract at least 40,000 to 50,000 visitors per week.
The company, opened its first store in 1996 in Bengaluru, is presently operating 1,740 CCD stores in around 250 cities.
As of 2015; CCD makes revenues worth $450 Million approx., employees 5000+ people, and has 1530 outlets across India, Austria, Czech Republic, Dubai & Karachi.
Other Businesses of CCD
COFFEE DAY EXPORTS
Coffee Day Exports is all about growing, trading, retailing and exporting world-class coffee. It has a heritage of over 130 years.
One of the largest exporters of green coffee in India, since 1999. We also export to the Middle East, Europe and Japan.
Coffee Day Exports has invested in research and development and applied the learning successfully to improve the promotion of various coffee blends and augment its exports.
1. Café Coffee Day won the “Times Food Award” under the category of “Best Coffee Bar” in 2007
2. Café Coffee Day won the Burrper’s Choice Award by users of burrp.com in 2008.
3. Coffee Day Global won an award for “Retailer of the Year” by Asia Retail Congress 2009
4. Café Coffee Day won the Indian Hospitality Excellence Award in 2010”
5. Café Coffee Day was ranked as 26th Most Trusted Service Brand in India and by Brand Equity (Economic Times) in 2012
6. Café Coffee Day won the Best Coffee Bar Award in 2012
7. Café Coffee Day was awarded “The NCPEDP – Shell Helen Keller Award 2013” by National Centre for Promotion of Employment for Disabled People.
8. Coffee Day Global got awarded for “Best Customer Service in Café Restaurant” by Star Retailer Awards 2013
9. Café Coffee Day won the Brand Excellence Award in the retail sector in 2013
10. Coffee Day Global was awarded the bronze prize by the Coffee Board of India for being the third-best exporter of green coffee in 2012
11. Coffee Day Global was awarded as “Retailer of the Year” for the retail excellence by ABP News in 2014
12. Café Coffee Day was ranked as 22nd Most Trusted Service Brand in India, as 27th Most Exciting Brand in India under the category of “Food Services” in Indian 2014
13. The Promoter, Mr V G Siddhartha was awarded ‘ET Retail Hall of Fame’ for his contribution to the growth in the retail sector in 2014
TOP MANAGEMENT OF CCD:
R Ram Mohan CFO, Coffee Day & Chairman, SICAL
Jayraj C Hubli Director, CFO & CIO Coffee Day Global
A Venu Madhav Director, Coffee Day Global & CEO – Café Coffee Day
Sadananda Poojary Company Secretary & Legal Head, Coffee Day
Balachandar Natarajan Group Head, Human Resources, Coffee Day
Shankar Narayan President, Vending Division, Coffee Day Global
Shankar Venkataraman Director, Tanglin
Venkatesh M Director, Coffee Day Hotels & Resorts
Nitin Bagamane Chairman, Tanglin
Shashi Bhushan CEO, Way2Wealth
Ketan Sheth Director of Research, Way2Wealth
Rajeev Gupta President, Exports Division, Coffee Day Global
Sanjiv Mediratta Group Advisor, Food & Beverages, Coffee Day
C J Jayanth President, Fresh & Ground Division, Coffee Day Global
Dr Pradeep Kenjige Vice President, R & D Division, Coffee Day Global
Late M D Mallya Ex-Independent Director
MAN BEHIND CAFE COFFEE CHAINS
V.G. SIDDHARTHA – Was the man whose mind was behind the successful coffee chains in India. He was a man less famous by his name but his hard work speaks it all.
He could have easily survived with the 350 acres of the estate his family-owned, but instead, he was too ambitious and decided to start something that appealed to him, something created by him, something on his own.
His full name was Veerappa Gangaiah Siddhartha Hegde, started his career as a trainee trading in Indian stock market at JM Financial under the tutelage of Mahendra Kampani in 1983, after completing his masters’ degree in Mangalore University.
He bought Sivan Securities in 1984 and turned it into a highly successful investment banking and stockbroking company. It was renamed Way2Wealth Securities in 2000.
In 1992, Siddhartha started his coffee business – Amalgamated Bean Company Trading, an integrated coffee business which ranges from procuring, processing and roasting coffee beans to retailing of coffee products. The company’s revenue stands at Rs 2,016 crore for FY18.
After the success of the coffee venture, Siddhartha launched India’s first coffee café — Café Coffee Day — on Brigade Road, Bengaluru in 1996. Internationally, CCD outlets are present in Vienna, Czech Republic, Nepal, and Egypt.
He also served on the board of directors of Mindtree, GTV, Liquid Krystal, Way2wealth Brokers, Coffee Day Natural Resources, and Way2wealth Securities.
Cafe Coffee day Owner Death:
On Tuesday 30th July 2019, Cafe chain Coffee Day Enterprises has confirmed that its Managing Director VG Siddhartha has been missing since Monday 29th July and that the company with the help of concerned authorities are tracing him.
On, 29th July 2019 Siddhartha had told his driver that he was going for a walk near the bridge and asked him to wait at a distance. Meanwhile, a fisherman had claimed that he saw someone jumping off the bridge. When he did not return even after two hours, the driver approached the police and lodged a missing complaint. And from their a seed of vg siddhartha death is hoped.
Shares of Coffee Day Enterprises dropped 20 per cent and hit the lower circuit limit as well as 52-week low of Rs 154.05 as a piece on BSE after news surfaced that its founder has gone missing.
On Wednesday, 31st July 2019 his body was found at the Hodge Bazaar beach by local fishermen who informed the police. The body had washed ashore near Ullal and was fished out by local fishermen.
VG Siddhartha left a letter allegedly wrote to Coffee Day Enterprises board, he says that he “failed to create the profitable business model despite my best efforts.”
He goes on to say: “I would never cheat or mislead anybody intentionally, I have failed as an entrepreneur.”
News reports say the man who made coffee popular in a nation of tea-lovers referred to three main issues in his letter to the board: “pressure from private equity partners forcing him to buy back shares”, “harassment from the previous DG income tax ”, and “tremendous pressure from other lenders”.
All the issues centre on the liquidity and debt that Siddhartha and Coffee Day Enterprises were facing, and which ultimately culminated in the entrepreneur selling his stake in Mindtree earlier this year.
The downfall of Cafe Coffee Day
I personally like the business model of CCD, but it has a lot of drawbacks.
Let’s discuss major reasons for the DOWNFALL of CCD
BSR associates were their main auditor who used to audit their outlets. The auditor wrote a letter to the shareholders of CCD that they have not audited 40 subsidiaries of Cafe coffee day.
This was the reason the shareholders backed off and denied to provide further funds.
Meanwhile, the Income Tax (IT) department raided on Cafe Coffee Day (CCD) retail chains and found about Rs 362 crore concealed income.
VG Siddhartha in his letter mentioned that Income tax department was attaching their shares on two separate occasions to block their Mindtree deal and then taking the position of their Coffee Day shares, although the revised returns have been filed by them.
Because they were in such a heavy debt, they started taking short term loans in the form of debentures with high-interest rates to pay off their long term debt. This resulted in a more heavy debt burden.
COCA-COLA BUYING CCD?
(NEWS) The US beverage giant COCA-COLA is eyeing a significant foothold in the cafe business space in India.
Soft drinks maker Coca-Cola has initiated pre- talks with Cafe Coffee Day (CCD) before the death of the founder V.G. Sidhartha to acquire a substantial stake in India’s largest coffee chain. If the deal is initiated, it would be Coca Cola’s second major investment.
Now, the promoters of the company plan to restart the pending talks with COCA-COLA for selling off their significant stake in Cafe Coffee Day(CCD). A spokesperson for Coca-Cola has refused to comment on this news.
And calls it what he termed “speculative news”.
Latest Updates:
As you know, Cafe coffee day chain is all over debt and also being pressurized by the lenders.
Coffee Day Enterprises is the parent company of Sical Logistics, has decided to sell the entire stake in the company to ensure the debt removal of the company.
The report says Coffee Day Enterprises has also hired ICICI Securities as an adviser for the potential transaction.
As soon this news spread over the internet, the share price of sical logistics and also share price of coffee day enterprise jumped to the highest and locked upon the upper circuit of the day.
Cafe Coffee Day is funded by 2 investors. Brand Capital and Sequoia Capital India are the most recent investors.
I hope I have shared everything in this article. If I missed out anything, do share your views in the comment section below.
FAQ’s
What is CCD Business Model?
The company, opened its first store in 1996 in Bengaluru, is presently operating 1,740 CCD stores in around 250 cities. As of 2015; CCD makes revenues worth $450 Million approx., employees 5000+ people, and has 1530 outlets across India, Austria, Czech Republic, Dubai & Karachi.
Case Study on CCD
we have provided a video on this you can check it out . https://www.youtube.com/watch?v=RDPXrcYAYVg
What is CCD Case?
On Tuesday 30th July 2019, Cafe chain Coffee Day Enterprises has confirmed that its Managing Director VG Siddhartha has been missing since Monday 29th July and that the company with the help of concerned authorities are tracing him. On, 29th July 2019 Siddhartha had told his driver that he was going for a walk near the bridge and asked him to wait at a distance. Meanwhile, a fisherman had claimed that he saw someone jumping off the bridge. When he did not return even after two hours, the driver approached the police and lodged a missing complaint.
Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas. It was founded by Sam Walton and Started in 1962. Walmart has 11,368 stores and clubs in 27 countries, operating under 55 different names. In 1978, they introduced their IPO in the market and now they have acquired more than 14 companies and still counting. Walmart core Business Model is Cost Leadership. It has 3 Verticles Walmart U.S., Walmart International, and Sam’s Club Segment(Online). They have high sales volume through which they have high earnings. The net revenue of Walmart grew from $500.3 billion in 2018 to $514.4 billion in 2019. Walmart has started a premium subscription service called Jetblack. This was developed last year by Marc Lore, who joined Walmart when WMT acquired Jet.com in 2016. Walmart has acquired Flipkart for $16 billion which is considered as the world’s largest e-commerce deal. Full detail in Blog.
BIG NEWS!! Walmart has acquired Flipkart for $16 billion which is considered as the world’s largest e-commerce deal.
But What does Walmart(WMT) does?
According to Wikipedia, Walmart Inc. is an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores, headquartered in Bentonville, Arkansas
Did you know that Walmart has 11,368 stores and clubs in 27 countries, operating under 55 different names? ( as of April 2017)
After reading this detailed Walmart case study, you’ll get to know everything from the Business Model of Walmart to its Marketing Strategy.
What’s in it for me?
1. Walmart Business Model
Started in 1962, Headquartered in the U.S., Walmart began its business as a retail store with its USP of providing products at a cheaper rate than what is available in the market to the Consumers.
It was founded by Sam Walton. In 1978, they introduced their IPO in the market and now they have acquired more than 14 companies and still counting.
Walmart started its new vertical of providing services such as groceries, food items, Healthcare services and Medical Services as well.
They work on a business model which eliminates the Middle Man from all the Distribution Channels in business, also provides benefits to the ultimate consumers by providing them products and services with the lowest prices.
Walmart has the main motive to enter every segment in the market and dominate them by offering the lowest prices to the consumers.
Everyday low cost (EDLC) is Walmart’s motto to manage overheads.
Walmart has three core verticals:
a) Walmart U.S.,
Walmart U.S. segment operated in the United States. It provides customers with products and services that are not present in the physical stores at low prices and services online through its e-commerce website and Mobile Applications.
The Ecommerce website includes a special feature that allows the third party to sell products on Walmart.com.
It does business across various Store formats such as supercenters, discount stores, neighbourhood markets and Walmart.com.
b) Walmart International
Walmart International segment includes three categories which are retail, wholesale and other.
These categories have various formats such as supercenters, hypermarkets, Warehouse club, home improvement, speciality electronics, apparel stores and drug stores as well as digital retail.
c) Sam’s Club Segment
With its online portal “samsclub.com”, Sam Club provides various benefits to its customers in the form of a variety of Merchandises, which are not found in its club and services online at samclub.com, and by its Mobile Application.
It also provides services such as Club Pickup.
2. How Walmart Earns?
Walmart follows the principle of buying the whole lot in a single go. In this manner, the company gets a quantity discount from the Manufacturer and sells in small quantities to the ultimate consumers at a low price.
They have high sales volume through which they have high earnings.
By following the principle of Everyday low prices, they penetrate the market with their Business Strategy.
Customers always focus on three aspects: Convenience, Product Quality and Low Prices.
These aspects are kept in mind by the company when they sell a particular product to the potential consumer.
The Bargaining power of Walmart makes it an unbeatable player in the market.
Revenue Generation of Walmart
Walmart generates its revenue from selling its products and services directly to the consumers and Business. It has two Sources of Revenue Generation:
A) Product Revenue:
Walmart deals in Grocery, Health and Fitness, Hardlines, Apparel, Entertainment and Home Products.
Grocery Consists of a bakery, deli, dairy, frozen foods, floral, produce and consumables such as health and beauty aids, baby products, household chemicals, paper goods and pet supplies.
Health and wellness include Pharmacy, Optical services, clinical services.
Entertainment contains electronics, toys, cameras and supplies, photo processing services, cellular phones, cellular service plan, movies, music, video games and books.
Hardlines consist of Stationary, Automative, hardware and paint, sporting goods, fabrics and crafts and seasonal merchandise.
Apparel Includes apparel for women, girls, men, boys and infants as well as shoes, jewellery and accessories.
Home Includes Home Furnishings, houseware and small appliances, bedding, home décor, outdoor living and horticulture.
B) Service Revenues:
Walmart generates revenue from services as well:
Financial Services and related products:
It includes services like money order, prepaid cards, wire transfers, money transfers and Bill payments.
VUDU Movie Streaming Service: This includes subscription revenues for renting, buying, and watching movies, and TV shows on demand.
Clinical Services: Clinical Services of Walmart includes Primary Care, Illness and Injuries, Management of Ongoing Conditions, Physical and Wellness Checks, Lab tests and Immunizations.
Health Insurance Services: They accept the following Insurance Plans:
3. Marketing Strategy
Marketing is the core aspect of any business whether its scale is small or large. It is important to make an effective marketing strategy for long term growth and development.
Walmart follows the principle of Market Penetration which involves capturing the whole market by offering lower prices or competitive prices to the consumers.
Cost Leadership is a concept that helps the company to make a huge impact on the market.
As consumers are Price sensitive, they want the product at a low price with maximum satisfaction.
The consumer is treated as the king of the market and that is what captured by the Walmart to maintain its customer relationship.
According to Walmart, four factors drive a customer’s choice of retailer. These are Price, access, assortment & experience.
4. Success Story of Walmart
Walmart has a large customer base and scale of operations. It has been possible due to its core objective which is providing good and services to consumers at a low price.
Four important factors drive the success story of Walmart.
Large Sales Volume: Walmart core agenda is to make goods and services available to the consumers at a low price. This drives their sales many folds and hence increase their sales volume.
Walmart understands the needs and wants of consumers and help them make their buying decisions quickly by offering a monopoly price for a particular product or service.
The net revenue of Walmart grew from $500.3 billion in 2018 to $514.4 billion in 2019.
Supply Chain Management System: Walmart’s distribution system is the largest in the world. It focuses on three aspects Lower Cost for Inventory Storage, reduced transportation costs and products spend less time in transit.
Introduction to BARCODE: To manage huge inventory efficiently and effectively, Walmart introduced the concept of “BARCODE” which is a process of collecting and representing the data in a Computer-readable format.
This helped Walmart to manage its huge and diversified inventory into a systemized format and create a system of STOCK IN and STOCK OUT.
Barcode Scanner scans the barcode labelled on the product and save that detail in the computer so that in future if that particular product is out for sale, then it can be easily identified using that special code.
Low Operational Costs: Walmart always prefer to use standard and less number of parts.
It manages to keep its operational cost low because it always manufactures the goods in those countries where the labour cost is cheap.
This helps him to gain a competitive advantage in his domain. It controls production costs, advertising costs.
5. 12 Amazing Facts About Walmart
Walmart averages a profit of $1.8 Million Every Hour( Data May vary).
37 Million People Shop at Walmart every day; that’s more than the population of Canada. ( Data may vary)
Walmart’s $288 U.S retail sales exceed those of Kroger, Target, Costco combined.
The Average Walmart Supercenter sells 140,000 items. (data may vary).
Walmart’s top-selling item in 2014 was the Banana.
90% of Americans live within 15 minutes of a Walmart.
If Walmart were a country, it would be the 28th largest economy in the world.
Walmart has 2.2 Million employees, that’s more than the population of Houston.
Now, in this Walmart Case Study, let’s have a look at some of the interesting initiatives of Walmart.
Walmart has started a premium subscription service called Jetblack.
Jetblack offers customers a personal shopper-like experience and costs its subscribers around $600 per year.
This was developed last year by Marc Lore, who joined Walmart when WMT acquired Jet.com in 2016.
Walmart(WMT) is also focusing on its online-advertising business(Digital Marketing). It is hoping that it can replicate Amazon’s success in advertising.
While Walmart(WMT) has been trying to catch up with AMZN in this area for a few quarters, it is now making some bold moves.
Walmart App: Store Assistant
In 2016, Walmart set a new goal to reduce emissions in our supply chain by 1 gigaton (1 billion metric tons) by 2030.
To achieve this goal, Walmart is launching Project Gigaton – an opportunity for suppliers to join Walmart in reducing greenhouse gas (GHG) emissions in the global value chain.
Deepti Chauhan is one of the thousands of farmers across the world overcoming the challenges of a traditional market.
With resources that educate and empower her business, she can take care of her family in a better way.
What if learning a job was as easy as downloading an app?
Walmart New Gaming App, designed to teach key management skills from the backroom to the sales floor. Coming soon to Walmart Academies nationwide.
Optimizing tasks like scanning shelves for inventory means Walmart associates can spend more time with customers on the sales floor.
Bossa Nova Robotics increases efficiency and support associates in 50 stores.
In 2005, Walmart partnered with the National Fish and Wildlife Foundation to create Acres for America, with a commitment to conserve one acre of wildlife habitat for every acre of land Walmart developed.
The original commitment of $35 million over 10 years was recommitted in 2015.
How is Walmart using innovation and GPS technology to assist customers in finding their favourite items?
Implementing Visual Light Communication to assist associates and customers alike.
The list is long……..
7. SWOT Analysis
STRENGTHS
Thin Business Model
Easily Copied Business Model
Competitive Disadvantage against high-end speciality sellers
WEAKNESSES
Global Organizational Size
Global Supply Chain
High Efficiency of Supply Chain
OPPORTUNITIES
Expansion in Developing Countries.
Improvement in Quality Standards.
Improvement in human resource practices to develop competitiveness in the labour market
THREATS
Healthy Lifestyle Trend.
Aggressive Competition
Online retailers of Various Sizes
8. Walmart-Flipkart Acquisition
In 2018, US retail giant Walmart Inc. picked up 77% stake in India’s largest online retailer Flipkart for $16 billion marking world’s biggest purchase of an e-commerce company.
Flipkart is an e-commerce company headquartered in Bengaluru primarily into the sale of consumer electronics, fashion and lifestyle products is leading Indian Ecommerce Brand.
On a call with analysts on May 9, Walmart CEO Doug McMillon and COO Judith McKenna stated three main reasons for acquisition:
Flipkart’s leadership in some lucrative segments, its payment platform and the company’s Talent Pool
9. Financial Statistics
Number of Employees: 10001+
Established in year: 1962
Number of Acquisitions: 21
Number of Investments: 6
Number of Lead Investments: 5
Founder: Sam Walton
Founded Date: Jan 2, 1962
Operating Status: Active
Legal Name: Walmart Inc
IPO Status: Public
Stock Symbol: NYSE: WMT
Company Type: For Profit
Web Traffic by SimilarWeb: Ranked 102 globally with 343,839,241 monthly web visitors
Patents and Trademarks: The intellectual property of Walmart includes 58 registered patents primarily in the ‘Computing; Calculating’ category.
Additionally, Walmart has registered 93 trademarks with the most popular class being ‘Advertising; business’.
Number of Exits: 1
IPO Date: Jan 13, 1978
Competitors by Owler: Target, Costco and Amazon.
IT spend: This year Walmart is projected to spend $8.5 B
on IT.
Number of Current Team Members: 142
Number of Board Members/Advisors: 20
Number of Sub-Orgs: 14
Number of Events: 12
Number of Articles: 24321
Company Tech Stack by Siftery: Walmart uses 220 technology products and services including Google Analytics, Word Press, and Vimeo.
Mobile App Metrics:
Downloads Last 30 Days: 3,450,283
Monthly Download Growth: 3.65%
App Name
App Store
Monthly Downloads
Walmart-Save Time and Money
Google Play, Itunes Connect
2,347,381
Walmart Grocery
Google Pay
534,767
Walmart Grocery Shopping
Itunes Connect
404,265
My Walmart Schedule
Itunes Connect
80,185
My Walmart Schedule
Itunes Connect
43,398
Spark City
Google Pay
20,487
Spark City
Itunes Connect
9,489
Walmart Perk Pick up
Itunes Connect
4,416
WMT Events
Itunes Connect
2,361
Website Tech Stack by Builtwith:
Walmart is actively using 148 technologies for its website. These include Viewport Meta, IPhone / Mobile Compatible, and SSL by Default.
If you are a traveller then you must have listened to the name of Airbnb. Started Brain Cheskey and Joe Gebbia in 2008. Airbnb has revolutionized the way people travel by focusing on building a community and not just a mere distribution platform. Airbnb is a marketplace where travellers get to stay at the property listed on the site by the local hosts. Airbnb is a community built on sharing. It was started by two friends when they faced difficulty in paying the massive rent and had a spare living kind of a room. Airbnb is based on an aggregator business model. Airbnb take-offs flat 10% commission from hosts for every booking done through the platform. Usually, the payment processing fees are 2% that here is 3. So, an additional 1% is also levied that the host pays. Airbnb charges an amount up to 20% of the booking total that is set as a service fee by Airbnb for travellers for every confirmed booking. This fee is non-refundable. Airbnb business model also includes business ready homes that fulfil certain requirements for home type, amenities, check-in, reviews, responsiveness, and host commitment. Airbnb also provides services like for which it charges a flat 20% commission from the person who provides it.
Are you a traveller or have a spare room?
Then you must have heard of Airbnb and how you can rent a room at an affordable price.
Have you ever wondered how Airbnb Business Model works?
Why is Airbnb so successful? How much revenue does Airbnb make?
Started byBrian Chesky and Joe Gebbia in 2008, Airbnb has taken the hospitality industry by storm.
Airbnb has revolutionized the way people travel by focusing on building a community and not just a mere distribution platform. After reading this article you’ll get to know everything about Airbnb’s business model.
What’s in it for me?
What is Airbnb?
Airbnb is a marketplace where travellers get to stay at the property listed on the site by the local hosts. A person who has a spare room can list his property on the website and the person who is travelling to that particular location can book it and get to have a unique experience offered by the host.
Airbnb is a community built on sharing. It was started by two friends when they faced difficulty in paying the massive rent and had a spare living kind of a room. They got a mattress and started marketing it offline as a space for rent. Later they started offering breakfast with that as well.
They got 800 cereal boxes which they sold for around 40$ each during the presidential campaign. They earned so much money and reinvested back into the business.
Airbnb is now operational in more than 190 countries and has a presence in 34000 plus cities.
It has turned into a huge business now with 150 million-plus users and 1.9 million-plus listings that the user can book at any given time.
Airbnb business model
Airbnb is based on an aggregator business model. Aggregator Business Model is a network model where the company collects the data about a specific good/service providers, make the providers their partners, and sell their services under its brand.
Since the aggregator is a brand, it has to provide services which have uniform quality and price. This is done by signing up a contract with the partners. You can understand it as an asset-light model where you earn a commission for the services you provide without owning any inventory.
If we talk about the conventional model where you had to purchase a hotel to get started with bookings, they have turned the game around and connected the demand and supply. This is one of the reasons for its rapid growth.
People having vacant space at their home and willing to earn some extra money can list their rooms on the website and earn some extra bucks. Also, the key differentiator is they sell experience and not just space.
Many travellers wanna feel like home once they go out to travel and explore different countries. The travellers get a local like feel and also feels light on the pocket as compared to hotels.
Airbnb also has personal profiles and rating/reviewing systems that help the travellers make an informed decision about the hosts and what is on offer. Hosts too can decide and have a choice about whom they have to rent out their space. These help to build trust and reputation in the community.
Besides the travellers and hosts, the Airbnb business model also includes a huge network of freelance photographers in all major cities of the world. They visit a property and get high-definition photographs of the property.
These high-definition photographs improve the click-rate and help in getting more responses. Airbnb pays these photographers directly.
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Airbnb Distribution Strategy
Airbnb has changed the way users searching for accommodations online. It is the largest experience host in the world. The most important thing about the distribution strategy of Airbnb is that it keeps the cost as low as possible by avoiding to outsource their work.
Airbnb helps to create the brand value of its hosts so that the guests can find them easily if they want to visit again. The company took many strategic decisions to spread its distribution network all over the world. Let’s look upon the events to know how Airbnb used the distribution strategy to become the largest accommodation provider.
The company started Bed and Breakfast services for the travellers in the US in 2008 through its website airbedandbreakfast.com which became airbnb.com in the next year.
The headquarter of Airbnb was in San Francisco, California. To list more properties and expand the chain of hosts, the company opened its first international office in London in 2011.
In May 2011, Airbnb established its first European office in Hamburg, Germany by acquiring its equivalent rival Accoleo. This was the indication that the company is up for global expansion and creating a distribution network.
In October 2011, the company opened its second international office in London and till 2012, Airbnb had eight international offices including Paris, Milan, Barcelona, Moscow, Sao Paulo, and Copenhagen.
In the same year, the founder and CEO of Airbnb, Brian Chesky announced that he will focus to expand his distribution network in Australia and opened an office in Sydney as he saw an opportunity of rapid growth there.
With this distribution strategy, the company completed 10 million bookings on its platform and in 2013, it successfully listed 250,000 properties.
In 2014, the company partnered with home-cleansing services Homejoy and Handybook for the Airbnb hosts to clean their homes at discounted prices. This move brought exponential growth in the listing of new hosts on the platform and the guests also got standardised and well-managed homes.
In 2015, the company announced “Business Travel Ready” badge for business customers. It attracted over 250 businesses including Google, Salesforce, SoundCloud and Vox Media to use the platform.
In February 2018, the company announced its new service Airbnb Plus which offers verified homes with value-added amenities. This allowed people to list their premium properties and provide a comfortable experience to the visitors who look for a luxury rental property.
Airbnb partnered with SiteMinder as a third-party distribution partner. With this partnership, the company officially allowed to list the hotels and other accommodation properties in the portfolio of Siteminder as Airbnb host. Its channel manager displays the real-time report of the booking trends and room rates for a better user experience.
Airbnb offers a lower commission for the boutique hotels to make its distribution channel stronger and getting an edge over its competitors. The other platforms charge around 10-15% as commission whereas Airbnb takes only 3-5% from the hosts.
The company has a large number of software partners to make the host and customer experience better. As of 2019, the company made its website available in 62 languages to make it relevant to a large number of users.
Airbnb made many acquisitions over the journey to expand its network of listed properties in the different cities of various countries and improve the host and guest experience. The company hired many photographers to capture and upload high-quality attractive photos and inspection members to ensure the quality of the properties listing on the platform.
Apart from homes and apartments on rent, now the company also lists boutique hotels, heritage hotels, lodges, resorts, etc. It has crossed over 5.6 million listings worldwide till the end of 2020. Also, the company served over 800 million guests on its platform.
How Airbnb Works?
Airbnb is a platform that connects travellers to the localhost. If you have a spare room in your house, you can list that on Airbnb’s property and earn for every booking.
It is a kind of opportunity for both the travellers and the host as travellers to get live cheaply as compared to hotels and also get a feeling of the homestay. On the other hand, hosts earn money for the property they provide.
The host can provide additional services like breakfast, tour guide, pet-friendly environment, etc for which they can decide the amount they want to rent.
The rating and review system builds trust and if you read the reviews for some properties, travellers make a long term connection with the host.
Airbnb vs Uber vs Oyo Rooms:
Airbnb, Uber and Oyo Rooms all work on the aggregator based model. Oyo Rooms has still shifted significantly and have started to operate the full buildings independently. Also, they have expanded to co-living and co-working spaces.
Uber has simplified travelling from one place to another. Its business model is such that it acts as a middleman between the drivers and the riders guaranteeing a standardized level of service.
However, this is different from the Airbnb business model that thrives on discoverability. The level of service is not consistent. The travellers are free to choose from the listings that are there on Airbnb’s website after going through its reviews.
Uber too has ratings and reviews for both riders and drivers. It doesn’t give the facility to the user to choose a driver they want to ride with. Also, the reviews on Uber, if you would see are not as elaborate as those on Airbnb.
The most Uber can do is suspend a driver or rider if his/her ratings are too low. Uber pays its driver partners through a fixed rate of commission for every ride.
Oyo Rooms business model is based on quality control or standardization where they ensure a certain level of uniformity in their services. The case with Oyo Rooms is that a person books the room with the brand and not the individual hotel.
With Airbnb, the case is opposite, a room is booked through the website with the host providing it. Just like Uber, Oyo ensures a certain level of service. As I told above, Oyo has now started to lease out the full property and run the entire building under its brand name which gives it the access of day to day operations.
Airbnb has no such control over the quality of the homestay. The difference is also, Airbnb earns through commissions mainly.
How Airbnb Earns?
As we talked about Airbnb being run on an aggregator based model, its main income comes from the commission on every booking made. The property owner can list their properties for free.
The booking and monetary transactions are carried out on the Airbnb platform. The company mainly earns from these transactions in the following ways-
From the hosts/owner of the property
Airbnb take-offs flat 10% commission from hosts for every booking done through the platform. Usually, the payment processing fees are 2% that here is 3. So, an additional 1% is also levied that the host pays.
2. From the Travelers/Guests
Airbnb charges an amount up to 20% of the booking total that is set as a service fee by Airbnb for travellers for every confirmed booking. This fee is non-refundable
3.Airbnbmag
Airbnbmag is a magazine product that the company has added. The thinking behind it is to make the travellers feel that they belong to the place they visit. This 15 dollar magazine is a result of the partnership between Airbnb and Hearst. The motive is also to help the traveller discover the place through the locals’ eye.
4. Business Travel
Airbnb business model also includes business ready homes that fulfil certain requirements for home type, amenities, check-in, reviews, responsiveness, and host commitment. This feature is designed especially for travel managers of the companies to provide better transparency and more accurate reporting for their company.
5. Airbnb Services
Airbnb also provides services like for which it charges a flat 20% commission from the person who provides it.
Marketing Strategy of Airbnb
Marketing is an essential part of any business and below we have discussed some strategies adopted by Airbnb to get their product out there to more and more people.
Influencer Marketing
Influencer marketing means promoting your product/service through social media influencers who have the audience. It could be YouTubers, Social Media celebrities, bloggers and even movies stars.
In 2015, Airbnb hosted a ‘floating house’ publicity stunt on the Thames River in London with a variety of related events including a #FloatingHouseParty where attendees were encouraged to live stream, take pictures and splash the night all over social media.
The resultant coverage turned out to be massive. 340 press pieces in the UK alone, which translated into over 70,000-page hits, 10,000 new users, and more than 200 million social impressions! Airbnb also leverages the impact of celebrity stays.
https://www.youtube.com/watch?v=vvQtUH03bHQ
Since then, Airbnb has partnered with several celebrities – picking up the tab for their stay in return for some social media love.
Airbnb understands the importance of high-quality images and that’s why they offer all of their hosts’ free professional photography to maintain consistency across their media. They even spend more money on production than promotion because they understand that better quality content will always get more engagement. Travel lovers use Airbnb because they feel inspired by what they see in the beautiful pictures on the Airbnb website.
3. Community building
Airbnb knows the value of community building and hence focuses on building trust through regular communication, detailed profiles and strong reviews. That makes the engagement phenomenal. Another advantage is booking a room with Airbnb is just a matter of a few clicks if we compare it with the conventional hotels that include a longer process. This is one of the reasons customer keep coming back to the website.
It is also the authenticity of the experience that makes Airbnb such a successful community. Hosts go out of their way to make their home their guests’ home with detailed local knowledge of the best eateries, transport links and hidden gems.
4. Brand partnerships
Airbnb has shown us n number of times that collaborating can provide some serious exposure and generate a lot of buzzes. Successful Airbnb partnerships include KLM Royal Dutch Airlines, UK bookstore chain Waterstones and even the French government.
Think what customers of each brand would love and find something that appeals to both. The brand crossover has to offer something unique, something you can only offer together. For example, with KLM a contest was created where the winners could spend a free night in a luxury ‘Airplane Apartment’.
With the French government, it was a night in the Paris Catacombs at Halloween, which helped raise the profile of a lesser-appreciated French tourist spot.
Airbnb India
Airbnb has huge expectation in the Indian market and said their co-founder said that Millenials will drive its growth in the country. It is active in most of the tourist places like Goa, Delhi, Mumbai, Rishikesh, etc. Recently it has invested in Oyo Rooms also around an amount of $200 million. More than one million Indians have travelled on Airbnb globally.
With over 30,000 listings in the country, Airbnb listings in India have grown by 115% over the past year. There has been almost 2x growth in the number of nights booked on Airbnb in India since 2016. We have witnessed over 100% YoY growth in inbound guests from around the world (2017-2018)
Airbnb statistics
Airbnb has 31 offices across the world.
Around 400 million guests have been hosted since the company’s launch.
Over 150 million users are on the platform.
Airbnb has more than 5 million listings worldwide
53% of travellers use Airbnb because of price
Airbnb has a total of 21 acquisitions to date related to its business. They are constantly improving their product for the good of both hosts and guests.
Airbnb has raised a total funding of around 4.4$ billion till date in 15 funding rounds.
Millennials account for roughly 60% of all guests who have ever booked on Airbnb.
There’s million-dollar insurance coverage for an Airbnb host
Airbnb users can book 1.9 million listings at any given time
Airbnb has a total of 1000-5000 employees.
The website has monthly traffic of around 86,570,491 with a monthly visit growth of around 3.99%.
Cost of renting an average home on Airbnb is cheaper than a single hotel room.
Airbnb has spent $23.5 million and counting on advertisement in the U.S
Airbnb has a total of 21 acquisitions to date related to its business. They are constantly improving their product for the good of both hosts and guests.
Airbnb has raised a total funding of around 4.4$ billion till date in 15 funding rounds.
The company had a profit of around $93 million in the year 2017 and has reported a profit in the year 2018 as well.
With the rapidly growing online business, the market that is gaining momentum now is Food. A cloud kitchen is a virtual restaurant. You cannot physically go there and order food. You have to order online and the food will be delivered to your home. There is no need for dining and no need to take an exclusive place. It saves a lot of investment. According to a recent survey, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet. Faasos was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune. Due to Online players, The rent-to-sales ratio dropped from 15% to 4% over the next 2 years. Today, Faasos has 160+ kitchens that produce delivery meals for four distinct brands. This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake. Their main focus is on UAE, Indonesia, Thailand, and Vietnam. Rebel Foods has raised a total of $124.6 M in funding over 10 rounds. There most recent investors are Sequoia Capital and Go Ventures.
Cloud Kitchen Business Model
In this digital age, everything is becoming digitized and technologically advanced.
The internet has become a faster source of earning revenue.
From clothes and shoes to gadgets and cosmetics, everything is available for sale online.
With the rapidly growing online business, the market that is gaining momentum now is Food.
The online food business has now gradually transformed itself from traditional outlets to cloud kitchens.
But what exactly is a cloud kitchen?
What is cloud kitchen, business model?
If you are a foodie or a food entrepreneur, this blog is a must-read for you!
What’s in it for you?
WHAT IS A CLOUD KITCHEN?
A cloud kitchen is a virtual restaurant.
You cannot physically go there and order food.
You have to order online and the food will be delivered to your home.
There is no need for dining and no need to take an exclusive place.
Cloud Kitchen owners can take place anywhere and deliver food at your doorstep.
This means you can also deliver food even by cooking at your home.
It saves a lot of investment.
There is no need for proper setup or an exclusive furnishing and interiors.
This reduces your operational costs.
All you need is chefs to cook food.
PROS
CONS
Streamlined order process
No personal touch to build a customer relation
Low operational cost
Limited Audience
Easy Expansion
Limited brand presence compared to traditional outlets.
According to a recent survey, 67% of the restaurant owners would want to open a cloud kitchen as their next outlet.
One of the best examples of Cloud Kitchen in India is Rebel Foods.
Rebel Foods owns numerous companies including Faasos, Oven Story, etc.
ABOUT REBEL FOODS (Faasos)
Rebel Foods cloud kitchen was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune.
At that time the concept of cloud kitchen was new and only a few people knew about it.
Jaydeep Barman didn’t set out to create a new food tech category.
He was just tired of burgers and pizza.
He was craving a more Indian take on fast food.
Jaydeep and his friend Kallol Banerjee set up Faasos, an Indian wraps chain.
They had built Faasos as a tech-friendly brand and was an early adopter of online ordering platforms.
This gave them a front-row view on how technology was reshaping the food services industry.
The shift from a traditional fast food format to a cloud kitchen business model changed the economics of the entire venture.
The rent-to-sales ratio dropped from 15% to 4% over the next 2 years
It took away the need to solve the #1 problem of retail – finding great locations!
Today, Faasos has 160+ kitchens that produce delivery meals for four distinct brands.
This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake.
This cloud kitchen business model is clever because it showcases their separate brands as individually established.
BRAND
TYPE OF SERVICE
FAASOS
Wraps and Rolls
Behrouz
Biryani
Oven Story
Pizza
Firangi Bake
Italian Cuisine
Mandarin Oak
Chinese Cuisine
Sweet Truth
Sweets and Confectionary
Nav Saram
South Indian Food
The Good Bowl
Bowls like Rajma-Rice
Slay Everyday
Coffee & related items much like a Café Coffee Day
Lunch Box
Tiffin Service
The same customer can order a wrap for lunch and a biryani dinner, or something different for every member of the family.
The team is always experimenting, fielding a few new concepts at any given time.
TEAM
Rebel Foods has 4 current team members, including Co-Founder & CEO Jaydeep Barman.
Jaydeep Barman – Co-Founder & CEO
Kallol Banerjee – Co-Founder
Sagar Kochhar – Chief Marketing Officer
Soumyadeep Barman – Chief Technology Officer
EXPANSION
Rebel Foods is expanding its presence within the country and in overseas markets.
Their main focus is on UAE, Indonesia, Thailand, and Vietnam.
They also have taken a bigger kitchen and have opened multiple kitchens within it to suit multiple brands.
In one restaurant, various speciality restaurants are functioning.
They are working under one management which reduces its cost.
MARKETING STRATEGY OF FAASOS
Faasos has an amazing marketing strategy.
Faasos launched its mobile app in 2014.
It is one of the first companies that took orders on Twitter.
People had to just tag Faasos and they could order anything.
Barman shares that the strategy fetched good social media presence and new customers to the brand. Faasos is spending around Rs 400 – 500 for acquiring new customers.
Another special feature of Rebel Foods is their amazing packaging.
The type of packaging of all the verticals of Rebel Foods is special and there is a special vision behind it.
FINANCIAL STATISTICS
Rebel Foods has raised a total of $124.6 M in funding over 10 rounds.
There most recent investors are Sequoia Capital and Go Ventures.
GO Ventures
Yes
Series D – Rebel Foods
—
Sequoia Capital India
Yes
Series D – Rebel Foods
—
Lightbox
Yes
Series D – Rebel Foods
—
Evolve India Fund
—
Series D – Rebel Foods
—
Lightbox
—
Debt Financing – Rebel Foods
—
Alteria Capital
Yes
Debt Financing – Rebel Foods
—
Sequoia Capital India
—
Debt Financing – Rebel Foods
—
Sistema Asia Fund
Yes
Series C – Rebel Foods
Kirill Kozhevnikov
Lightbox
—
Series C – Rebel Foods
—
Evolve India Fund
—
Series C – Rebel Foods
—
COMPETITION
Their main competition is Fresh Menu which works in similar services.
Fresh Menu provides offline and online services.
You can go to a restaurant or order food online.
Currently, OYO Rooms is looking to acquire Fresh Menu.
The reason is that they are thinking of launching their cloud kitchen.
With Fresh Menu they are getting a readymade platform to deliver food.
Disadvantages Of Cloud Kitchen
Nothing is perfect in this world, everything has its pros and cons is a very popular quote. This also happens to be true in the case of cloud kitchen. There are a lot of drawbacks that you may face if you are planning to start a cloud kitchen. Various disadvantages of a cloud kitchen that one may come across are discussed below in detail.
Very High Competition
Restaurant or the food industry has always been very competitive. Talking specially about the cloud kitchen, there are no entry barriers in the business. Anyone who has a little amount of investment and some knowledge and skills can enter into this business. The new entrepreneurs who wish to start a cloud kitchen must be ready to face the competition.
Dependence
There are two modes of launching a cloud kitchen business. One is through your platform, it may be either a website or an app or through the other mode that is depending on the food aggregators. The first option may not be a good one because it will require a lot of initial investment and marketing which may not be a good idea in such a competitive industry.
With the other option that is depending on different food aggregator platforms, there comes a lot of restrictions. Unless and until you don’t have any issue with the terms and conditions provided by the food aggregator, you can stick with the second option.
No Direct Customer Relation
In a cloud kitchen business, except for the delivery of food, there is no direct relation with the customer. This may act as a disadvantage because you cannot directly know the taste and preference of your customer. And if you are working with a food aggregator, then you might not even know the basic details of your customer.
Only Online Presence
Whatever sales a cloud kitchen generates is all through the online medium. Since the concept of cloud kitchen does not involve any physical presence, it becomes a little difficult for the customers to develop trust in the brand, and any business whether online or offline needs to gain the trust of its customers.
Dependence On Technology
A cloud kitchen or ghost kitchen business is one hundred percent dependent on technology. Any small hurdle can disturb the business. This is a very big disadvantage as all the sales of a cloud kitchen depends on the technological environment.
Marketing Cost
Many newcomers into the cloud kitchen business start with a very low investment. This is one of the reasons they do not spend a lot or barely any minimum amount on marketing. But the ultimate growth hack in this business to beat the high competition is a good marketing strategy. Marketing comes with a cost.
These are a few disadvantages that you may face in the business. However the list is not finite, you may face various challenges that may come as a disadvantage. Like any other business, if you overcome these challenges there are a lot of scopes associated with the business.
HOW TO START A CLOUD KITCHEN?
I am sure that you have started thinking about how you can start a cloud kitchen.
Following are some things that you will have to keep in mind before starting a business.
#1 Location
First, you need a place, a location where you will set up your internet restaurant.
Suppose you rent a place at a monthly expense of Rs. 10,000.
It is also assumed that the company would not achieve breakeven until five months.
So you need at least Rs. 50,000 to pay the rent.
#2 Kitchen and Equipment’s
Rs. 2,50,000 is required for all the kitchen equipment like utensils, gas stove, etc.
The cost also includes Power costs, Water bills and machinery costs.
#3 Licenses
You would need four licenses to start your business.
This include-:
FSSAI
This is a food security license that is compulsory for every business.
GST
GST is Goods and Services Tax which is levied on online companies as well.
Online businesses need to register themselves under GST as part of the law.
The people will be paying you online.
FIRE SAFETY
A fire safety license is compulsory to acquire for every business.
TRADE LICENSE
This license permits you to trade goods or services in the city.
The cost of taking all the licenses can range from 15,000- 20,000.
#4 Staff
Suppose you are employing 2 staff members as chefs at a salary of Rest. 20,000 each.
After multiplying with 5 you will know how much you need to pay for the next 5 months.
A cloud kitchen needs to have good chefs who cook delicious food.
This is because food is the only thing that will build your reputation and bring the customers back.
#5 Inventory Management Software
The point of sale software will cost you around Rs. 15000.
Convenient software is required for easy calculations and printing bills.
#6 Working Capital
Initially, I assume that you would require Rs. 50,000.
Working capital will keep your business running when the company hasn’t received payments.
#7 Marketing
In my opinion Rs. 1, 00,000 should be invested for marketing as it is the only thing that will help in growing the business.
It includes costs like:
Online Customer Acquisition
Cost – Rs.40,000-Rs.1,55,000
In the beginning, it is important to acquire online customers through advertisements and offers.
Social Media
Cost – Rs.20,000-Rs.40,000
Social Media has become a force where you can promote your brand widely at a lower cost.
Today in the age of Facebook and Instagram it has become important for a brand to have a great social media presence.
Do share your ideas and queries regarding cloud kitchen business model in the comment section.
Also you can go for some cloud kitchen franchise Model available in Market.
FAQ’s
What is Faasos Business model?
Faasos was launched in 2011 by Jaydeep Burman and Kallol Banerjee in Pune. Faasos has 160+ kitchens that produce delivery meals for four distinct brands. This include, Faasos, Behrouz, Oven Story – a pizza brand, and Firangi Bake.
What is the Cloud kitchen Marketing Strategy?
Barman shares that the strategy fetched good social media presence and new customers to the brand. Faasos is spending around Rs 400 – 500 for acquiring new customers.
Patanjali Case study & Detailed Analysis (Business Model)
2 Minute Summary
Today, Everyone Knowns Patanjali as It is the fastest growing FMCG company in India. It was started by Baba Ramdev And Aacharya Balkrishna in January 2006. It’s Manufacturing Unit and headquarters located in Haridwar. Its also has a manufacturing unit in Nepal. Patanjali declared its annual turnover of the year 2016-17 to be estimated 10,2186 crores. It was listed 13th in the list of India’s most trusted brand as of 2018 and ranked first in FMCG category. Patanjali’s consumers mostly came from its great Yoga and Patanjali ayurveda network. Patanjali Yog Samiti has 1Lakh branches and 5 lakh teachers. The company doubled its sales targets each year and set its sights on total domination over the Indian consumers. It operates on Low Pricing and Cost dynamics. There are many Patanjali distribution Strategies like they used ADS(Alternative Patanjali Distribution System) to create new demand. Also, they are playing on Low Prices, Swadeshi Manufacturing, Part of the profits going to charity, Gaining Massive Popularity from Yog Guru Ramdev Baba, Natural & Ayurvedic Products and much more.
As Baba Ramdev is famous for Yoga and Ayurveda.
In this blog, You will get to know the entrepreneurial side of Ramkrishna Yadav.
How a Desi Company replaces Colgate?
How a Yoga Guru created an approx Rs 10,216 crore?
Have you ever think about the Patanjali business model?
How Patanjali is producing so many types of products?
We have got all covered for you.
Started by Baba Ramdev And Aacharya Balkrishnain January 2006, Patanjali is an Indian consumer goods company Manufacturing Unit and headquarters located in Haridwar. Its also has a manufacturing unit in Nepal.
According to CLSA and HSBC, Patanjali is the fastest growing Indian FMCG. Patanjali declared its annual turnover of the year 2016-17 to be estimated 10,2186 crores. It was listed 13th in the list of India’s most trusted brand as of 2018 and ranked first in FMCG category.
What’s in it for me?
Patanjali Business Model
Patanjali’s consumers mostly came from its great Yoga and Patanjali Ayurveda network. Patanjali Yog Samiti has 1Lakh branches and 5 lakh teachers.
There are 10,000 Patanjali Chikitshalya and Arogya Kendras.
The people who come to their yoga camps are ready to market to the company. Added to that all kind of Swadeshi branding of Baba Ramdev.
Its integrated mega-facilities is Haridwar, their firm churned out as much as its customers demand.
Patanjali Into Swadeshi Pitch.
After pramotic swadeshi to consumers Baba Ramdev building a business empire by targeted traders community on the swadeshi plank.
You saw in its ad in social and print media, Patanjali Ayurved is appealing to shopkeepers “to give prominence to Patanjali product on shelves” because it “will help in fulfilling the dream of Mahatma Gandhi to promote Swadeshi”.
“The country needs Swadeshi Products; now we are telling shopkeepers to help in this movement.
Ultimately, Swadeshi product should reach the consumer,” Patanjali spokesperson SK Tijarawala said.
Baba Ramdev followed the same strategy with organised retailers such as the Future Group, Reliance Retail and Shoppers’ Stop-promoted HyperCITY.
While Reliance Retail has created ‘Patanjali Destinations’ at its out.
Speaking at a Conclave, Patanjali CEO, Acharya Balkrishna questioned why the food processing sector in India was not generating enough revenue.
He went on to city figure from Thailand, Which indicated that India’s all food processing is only 6 % to Thailand’s 30%.
Best sales and distribution methods:
Patanjali’s combination of low prices,’ natural and pure’ proposition and ‘swadeshi’ positioning are widely acknowledged to be the reasons behind success, what is not that well known is the critical role played by Patanjali’s path-breaking sales and Patanjali distribution strategy in driving this exceptional growth trajectory.
A perfect Strategy for sales and distribution of patanjali was a key factor behind Patanjali’s meteoric Growth. Patanjali’s low-cost distribution system was remarkably efficient in getting the acceptance of its products against far heftier rivals.
The company doubled its sales and distribution of patanjali targets each year and set its sights on total domination over the Indian consumers. It developed a piece of hunger for new distributors and new channels for trade.
Low Pricing and Cost dynamics
Patanjali products are made available at an exclusive discount as compared to their companies. The company’s raw material comes directly from farmers.
It has lower marketing spends and overhead cost compared to its peer and as such can produce at a much cheaper price.
A large proportion of the India population, especially the middle class, is extremely price-sensitive and looks for quality products at a reasonable price.
Patanjali has understood and developed a strategy to take advantages of the aforesaid mindset capturing market share from share established players.
A Baba as Brand Ambassador
The other big factor in Patanjali’s favour is the image of Baba Ramdev. He is a recognized face all over India and beyond.
Patanjali can create a brand perception of health and wellness among the Indian masses, primarily because of Ramdev’s association with the brand who is considered to be a veteran of yoga and a firm believer of Ayurveda.
In India market where personalities outshine products, it’s imperative to have a brand of your own.
How Patanjali challenged The FMCG Protocol
Now the days Indian market is witnessing a tussle between FMCG brand to be on top of the game, especially in becoming the “desi-est brand”, which Has been occupied by Yoga Guru turned industrialist Baba Ramdev’s Patanjali Ayurved Ltd.
Since the international players started venturing into the market of India, they had only focused on eliminating the traditional and age-old methods and introducing modern techniques.
Patanjali made the “deshi” segment alive when other FMCG brand was still selling the chemically loaded herbal products.
Slowly other companies too started to look into space they had avoided looking in all these years, which is why other FMCG products to have started venturing their products in “desi” space.
Is Baba Ramdev’s Patanjali a non-profitable company?
As you all know Patanjali Ayurved Limited is an FMCG company. It gains profit by selling their Varieties of like herbal products. But another important thing is the profit earned by them goes to charity.
It can be proved by the following points:
1- He is an unpaid Brand Ambassador
2- Managing Director takes 0 salary
3- Gurukulam and Vansprastha Aashram (For Samaj Seva)
Patanjali Marketing Strategy
The 12 years old FMCG sector Company Patanjali has emerged as a prominent FMCG player in the market with a large number of products and deep assortments. Its manufacturing unit is located in Haridwar and outside India i.e.
Nepal under the trademark of Nepal Gramodyog.It is primarily in the business of minerals and herbals.
Like other FMCG Company, it uses the mass of demographic and psychographic segmentation strategies to make its offerings appropriate/relevant to the particular set of customer groups.
It uses undifferentiated targeting strategy, as the main objective Patanjali is to offer healthy Products to all people.
Patanjali Distribution Strategy
Patanjali used ADS(Alternative Patanjali distribution System) to create new demand.
Patanjali centred to general trade once a sizable consumer base was generated.
It also reduces cost by using another Patanjali distribution strategy: Primarily distribution. By setting up its stores, eliminating wholesalers. It eliminated wholesalers in the retail space too.
Low Prices
Swadeshi Manufacturing
Part of the profits going to charity
Gaining Massive Popularity from Yog Guru Ramdev Baba
Natural & Ayurvedic Products
Man Behind Empire of Patanjali Business Model:
Yoga guru Baba Ramdev-led company’s revenue makes it the second-largest pure-play FMCG sector giant aftermarket leader Hindustan Unilever(HUL), which had a turnover of Rs 30,783 crore in the last fiscal.
If Patanjali can double its turnover, even HUL will come within its biting distance. There is a man who knows how it can be done Acharya Balkrishna, the CEO.
A confidant of Baba Ramdev, Balkrishna holds a 94% stake in Patanjali Ayurved, but he doesn’t take home a salary. Yet, he works for 15 hours a day, even on Sundays and other holidays during the year.
He claims he hasn’t taken a single day’s leave.”I work daily from 7 am to 10 pm. While a normal person would work for 8 hours a day, I work for 15 hours through the week. I am doing the job of five people,” he says.
Challenges From Multinationals
To counter attack Patanjali Dominance in Herbal Category, Colgate launched Cibaca Vedshakti herbal toothpaste and many more products like Active salt, Active salt neem, Sensitive Clove etc.
They also brought down the prices of their products and providing promotions in the top end multifunction toothpaste segment. Colgate India is spending aggressively on advertising. As per the Market report, Colgate India spent about 12% of its revenue on marketing compared to 9% globally.
In December 2015, Unilever acquired Indulekha Brand for INR 330 crore to step up its presence in the new and emerging categories. They relaunched Ayush Brand with a wide range of products including toothpaste, soap, handwash, shampoo and face wash in five South Indian States.
How Patanjali is planning its future:
Patanjali kickstarted the new year by foraying into the e-commerce platform and its founder Baba Ramdev has now decided to throw down the gauntlet to the firm’s strongest competitor-Hindustan Unilever Limited (HUL)
A report in The Economic Time says that Patanjali is eyeing to overtake HUL’s existing market presence.
“We have created the capacity of Rs 50,000 crore and w are racing ahead now. Our target is to beat HUL by next year,” Ramdev told the paper.
