SUPER SHOPPY ON WHEELS

1.0 INTRODUCTION This is a new concept. So far vegetables, fruits, low-priced footwear etc. are sold by some hawkers on door-to-door basis. Concept of home delivery is gradually becoming popular. More and more branded and packaged products are made available and consumers also prefer them as they are clean, price, weight, date of manufacture/packing and other relevant details are clearly printed and they are properly packed. As a matter of fact almost 65-70% of the grocery items are now-a-days available in this fashion. Super Shoppy on Wheels is an extension of home delivery and some items of daily needs can be properly packed in smaller quantities and some packaged items can also be included. Some of the items could be grains, pulses, spices, ready-to-eat items, snack food items, bakery products, gents toiletries, bathing and washing soaps and detergent powders, stationery and so on. These items need to be stored properly in a vehicle and the vehicle moves around certain selected localities on pre-announced days and fixed timings to sell the goods. This door-step availability of daily necessities would attract certain section of people. 2.0 MARKET POTENTIAL This is a new concept and can be tried out by imaginative entrepreneurs. Selection of around 70-80 strategic locations in thickly populated residential areas would play a critical role. A quick assessment of these locations such as: standard of living of people, their needs and preferences, information about retailers, local super markets etc. and a permanent parking place can throw more light on items to be sold. Pre-cleaned and packed vegetables, fruits, eggs and many other items can be included depending upon overall response. Facility of placing prior or advance orders by phone or during the visits can also be extended. Proper display of items available and prices (may be on a prominently displayed blackboard) may

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induce impulse buying. It is necessary to visit each location at regular intervals on preannounced days and time every week or 10 days or fortnight , to create confidence in the minds of consumers about regularity and availability. Yet another important aspect would be pricing. No extra charge should be levied on consumers. The prices must match with the open market or retailers. Items made available may change over a period of time depending upon demand. Imagination and new concepts would be a key factor. 3.0 CAPITAL COST OF THE PROJECT A vehicle like tempo traveller or second-hand mini truck with necessary changes in body (to make it fully covered) can be bought. Racks of appropriate sizes can be fitted in the vehicle for adequate storage and display of products. If need be, the vehicle can be painted with pleasant colours. A possibility of seeking advertisement on the outer portion of body can also be explored. The total cost is expected to be around Rs.5.00 lacs. A provision of Rs.25,000/- is made for a small weighing scale, billing machine, plastic sealing machine and couple of folding chairs and stools. 4.0 ECONOMIC VIABILITY OF THE PROJECT All the items finally selected must be bought from the authorised sole-selling agent, distributor or company depot because then and then only prices can remain competitive. Certain items can also be bought directly from the manufacturer (if quantity permits or the products are locally manufactured). On an average, distribution costs and commission of wholesalers and retailers is 25% to 30%. 4.1 Sales Income

During initial couple of months sales may not pick up or products may have to be changed/reshuffled. But once this activity is known and regularity is established, sales would pick up. Annual sales target of Rs.15.00 lacs and Rs. 18.00 lacs during first 2 years may be feasible. Considering purchases at about 22.5% discount as explained above, total income would be Rs.3,37,500/- and Rs.4,05,000/-. 4.2 Operating Expenses

There will be two persons doing shift work. Each person would act as driver-cumdeliveryman. Their monthly salary could be Rs.2,500/- each. While planning everyday routes, care has to be taken to ensure that nearby localities are clubbed together to save time and fuel cost. A provision of Rs. 4,000 is made towards vehicle maintenance and fuel costs per month. Assuming that a loan of Rs. 3.50 lacs is taken against vehicle to facilitate purchase and necessary modifications and working capital of around Rs.25,000-30,000/-, the annual interest cost would be Rs. 42,000/- @ 12% interest whereas it will come down to Rs.31,000/- during second year if the loan is repaid in 60 monthly instalments.

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Other costs like stationery, telephone, plastic bags etc. is taken @ Rs.2,000/- per month. Thus, the profitability projections would be as under: (Rs. in lacs) No. A B Particulars Income Operating Costs Salary Vehicle Maintenance Interest Administrative Expenses Total C Profit before Deprn. and Income-tax Depreciation @ 20% Profit before tax Income-tax @ 20% Profit after Tax Cash Accruals 0.60 0.48 0.42 0.24 1.74 1.63 1.00 0.63 -0.63 1.63 0.69 0.54 0.31 0.30 1.84 2.21 0.80 1.41 0.31 1.10 1.90 1st Year 3.37 2nd Year 4.05

As per the above stated assumptions, this activity has potential to generate income. With these cash accruals, the loan can be repaid even in 3 years which would reduce the yearly interest costs and the vehicle is owned by the promoter. Profit margins are high and therefore margin of safety is also good resulting in sufficient cushion. 5.0 CONCLUSIONS This is a comparatively new concept. In certain cities, there are some mobile vehicles selling religious books and cassettes or some fast food items. But a mobile grocery shop is a new concept. Trying to implement a new idea is always risky. The risk factor can be minimised by undertaking sample survey of various localities before finalising locations. Interactions with actual users, retailers, salesmen of some companies who are dealing with identical products and even some local manufacturers can help to fine-tune the concept. Sudden but regular visits by the promoter to locations where vehicle is parked for selling items and discussions with customers about their aspirations and feedback would also be helpful. Prima-facie this activity seems to be financially viable. With proper field work, element of risk could be brought down. Entrepreneurs with high risk-bearing capacity and aptitude to try out new concepts may venture into this new line.

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