A Concept Paper on
The Sabzeewala Model
By: Varun Narula
Introduction:
Most of us who have lived in urban or semi-urban areas have noticed a man on a cart or bicycle ferrying vegetables on the streets in colonies and societies. This person who our society termed as the Bhajiwala or the Sabzeewala (literally meaning ‘the vegetable man’) shows up at the doorstep of his selected clients every morning to make a sale. His prices are usually considerably higher than the wholesale or the mandi prices and yet within a few hours, he has sold off most of his inventory. Ever wondered why? Its because the Sabzeewala gives you the ultimate in customer service – Personalized and Convenient Service. It is because of the convenience of having a person deliver your desired vegetables at your doorstep and at the desired time, that you do not mind paying a slight premium over the lower prices available in the market. You can tell him your requirements, your preferences and you can rest assured that it shall be on his cart the very next day. To sweeten the deal he’ll even throw in a couple of tit-bits free of cost into your polybag. Everything delivered with a smile and respect for the consumer.
Now can this micro-level model of a successful business-customer interface be replicated and scaled up in other retail industries? I believe it sure is possible and with a little investment, a retail firm can generate better volumes and customer base over a period of time.
The Sabzeewala Model:
The Sabzeewala Model is a truly unique way of combining a personalized sales service with an established chain of retail outlets. For illustration purposes, we shall consider the example of Big Bazaar, one of India’s leading retail chains.
In the proposed model, Big Bazaar must introduce a new scheme called ‘Aapka Samaan, Aapke Ghar’ (literally meaning Your Goods, Your Home). Under this scheme Big Bazaar outlets shall offer membership to their customers residing within a said distance from the outlet (assume a radius of 15 km). The member shall have to pay a fixed monthly fee towards membership charges (In this case, Rs 300 as shown in the calculations at the end).
Big Bazaar shall employ about 2 to 3 one ton tempos to cater to this scheme and one personnel dedicated to each tempo. Every tempo shall have a sales beat of about 15-20 member households in an area. A tempo can have upto 2 sales beats or circles which can each be catered to on alternate days in a week.
The Big-Bazaar employee with the tempo shall go to a member household with their pre-placed order and deliver it to the customer. He shall then take any future orders and requirements and the desired day of the delivery (subject to the days allocated to a circle). The tempo shall visit every member between 8 am – 10 am on the designated day depending upon the time preference and location of the customer. Every member shall have a catalogue of the available items at the Big Bazaar store to facilitate the ordering.
A member can also ask for a demo/sample of any good priced above Rs. 1000. The sample shall be carried along with the next order of the member but shall be returned to the store on the same day by the tempo salesman. White goods/bulky goods may be excluded from this demo/sample plan due to space constraints.
Incase of a unavailability of the customer at their residence, the concerned official shall visit the customer again once in the evening (after store-closing hours) as per the customer’s approval. Incase the customer is still not available, the sales tempo shall visit the customer on the next allocated day for the said circle. Incase of a delay on the part of the Big-Bazaar tempo, the goods shall be delivered to the customer the same day at a time preferred by the customer.
No Delivery charges shall be charged to the customer under any circumstances and the goods shall be delivered at the store prices.
Incase a member customer wishes to modify or cancel a pre-placed order, they can do so 6 hours in advance of the designated date/time of delivery by logging onto the ASAG member section on the Big-Bazaar website (24 hours a day) or calling up the designated Big-Bazaar outlet of which they are a member (during store operation hours). This model also ensures that the customers know their tempo salesman personally and can contact him directly for any updates on the order or any changes in the order or schedule.
Cost Analysis:
Cost of three one-ton tempos = Rs 2,50,000 X 3 = Rs 7,50,000 (approx.)
Salary of three tempo drivers/salesmen = Rs 6,000 X 3 = Rs 18,000 per month
Fuel consumption of one tempo = 18 km per liter of Diesel (approx.)
Cost to cover one circle (sales beat) of about 30 km = Rs 75 (Assuming Diesel price @ Rs 45/lit)
Membership charges for ‘Aapka Samaan,Aapke Ghar’ Scheme = Rs 300 or Rs 10 per day
Total membership revenue per sales beat of 15 members = Rs 4,500
Total running charges per sales beat = Rs 3000 + (Rs 75 X 15 days) = Rs 4125
(Note: Maintenance charges and depreciation on the tempos is not considered here)
(Assumption: 15 members per sales beat and 2 sales beat per tempo)
Hey Varun;
ReplyDeleteThe retail industry is following what you have said . Infatc its the rival of big bazar the "More" retail shops promoted by Aditya Birla group who is following these measures. Big bazar are really big in nature and they are located mostly in prime locations, whcih are far from residentail areas and are in malls mostly. They are like on stop shop for every need, offering from essentail commodities to luxary tems like furtinutes (with barnd name furniture bzaar). But the "More" shops are smaal in nature and are located in residential areas. They take order on phone. If you order is of more than 50 rupees, they will do the home delivery, withing an hour. There are no extra charges for home delivery. I observed this strategy in Navi Mumbai area while i was in Mumbai. When Big bazar has only one shop in Vashi (Navi Mumbai) area at the main shopping area; "More" opnened one store in every 2 kilometer and captured at big part of market in that area.
Sumit Saurabh
Sumit, I know about the delivery offered by MORE and this is where this model comes in. MORE can afford to deliver in its 2 km radius which is good for them as they are basically focussed on groceries and FMCG items (yet managing to stay operational only by a miracle).
ReplyDeleteOn the other hand retail giants like Big Bazaar cover a much larger geographic span with each outlet as mentioned in the blog. As of now, these retail chains do not have any such delivery model in place in India. And when I suggested this with Big Bazaar as an example I wasnt restricting it to FMCG products. This model can work for a number of items which a Big Bazaar provides over what a Reliance Fresh or a More would. Imagine buying your shirts or shoes at your doorstep because you can choose a product from the catalog and get a sample delivered to your home. The touch-n-feel mentality is considered here.
This model has its share of drawbacks and operational difficulties but it is feasible in my opinion.