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Trojan Horse Event

(https://www.iimb-vista.com/trojan-horse/)

Eatwell Company Overview

Eatwell was established on 12th September 2014 by two young Indian graduates with a
mission to provide fresh and quality food products at convenience. It was among the first few
food ecommerce platforms to have mushroomed in the startup capital of India, Bangalore. In
the last 5 years, the company has established a strong presence in Bangalore, Chennai and
Hyderabad. The major categories sold by Eatwell were: Vegetables and Fruit; Dairy; Meat,
Fish and Eggs; Food grains, Oil and Spices; Bakery and Cakes; Beverages; Snacks and
Branded Foods.

Eatwell prides itself in its high-tech supply chain networks where fill orders and warehousing
are managed using leading technology. The order lead times they can achieve with such
practices are at par with industry standards.

One of the biggest reasons for Eatwell’s success in the three cities was the initial groundwork
and research the company did prior to performing any marketing activities. The company
focused on understanding market demand and setting up local supplier relationships. Eatwell
in its initial years did not believe in expanding across India aggressively. Their strategy was
focused on strengthening their business in limited cities. Investing in supply chain technology,
strengthening supplier relationships and catering to changing customer needs were the three
main focus areas of Eatwell.

With its new round of funding, Eatwell is looking to expand its presence in India and is targeting
to set up operations in 5 cities across Western, Central and Southern India by December 2020.

Further, while Eatwell’s new investors are keen to expand to other cities they are also prudent
to cost. The management has not been given free reign and has been directed to ensure lean
operations.
Online Grocery Industry Overview

Online grocery is expected to be the fastest-growing segment in online retail in India and is
expected to almost quadruple over the next three years to Rs 100 billion in revenues,
according to a February 2018 CRISIL report. The competitive landscape comprises three
major types of players: generic e-commerce retailers diversifying into the food space, pure
grocery e-commerce retailers and brick-and-mortar retailers venturing into the e-commerce
space. In the geographies that Eatwell operates in there are three other major players, with
Eatwell typically outperforming two of them in monthly revenues. But with the liberalization of
FDI norms and the raising of funds by other players, rapid expansion can be expected from
competitors and it is imperative for Eatwell to establish operations in the target markets ahead
of competitors.

Operations of Eatwell
Eatwell prides itself in bringing the freshest produce to the table and procures primarily from
local farmer and producer communities in each of the three cities for the following categories:
Vegetables and Fruit; Dairy; Meat, Fish and Eggs; and Bakery and Cakes. Eatwell procures
the majority of its fresh produce from local communities. These communities aggregate local
farm, dairy, poultry produce, and promise a certain quality benchmark for the food items they
supply. Food items are aggregated by the communities and shipped from the local community
centers to the Eatwell warehouse by Eatwell’s in-house logistics operation.

In addition to local communities, certain products in the above categories are also procured
from distribution centers of large organized producers/ corporates e.g. sliced cheese is
procured from distribution centers of Britannia, Amul; spice mixes are procured from the MTR
distribution center, etc.

Categories like beverages e.g. Coca-Cola and branded snacks e.g. Lays which typically have
a longer shelf life are procured from regional distribution centers itself and stored at the Eatwell
warehouses.

Eatwell also offers its own private label for packaged foods like snacks, food grains, spice
mixes, etc. These items are produced on contract basis by local manufacturers and stocked
at the city warehouses. Margins earned with the private label are substantially higher for
Eatwell than branded items.
Eatwell realized early that investing in technology based solutions is the future of ecommerce.
The company invested significant capital to ensure its warehouses conformed to the highest
industry standards. Use of RFID, advanced analytics to stock up supplies based on customer
orders, were some of the key steps taken in that direction.

Each city has one warehouse that caters to customer demand. The warehouses were chosen
in strategic locations for optimum ease of distribution and cost. Due to difference in the shelf
life of food products, Eatwell segregated its warehouses into multiple divisions based on shelf
life and storage requirements for cold, chilled and room temperature food products. This
enabled the facility to manage the supply chain of the given products in a systematic manner.
Competitive advantage

The warehouse establishment costs were high due to the same reason, but the benefits
outweigh the costs involved. Eatwell consider their high-tech warehouses to be a key
competence in their success story. Owing to the high investment cost in warehouses, each
city could only afford to have one such warehouse. Going forward, with increase in demand
increases for additional express orders, a single warehouse might pose a challenge to their
operations.

Customer orders placed on the website are transmitted to the central servers. The servers
segregate the orders received from each city and then further break them down by the food
categories ordered and delivery destination. This information is communicated live to the
warehouse information systems in the form of a concise report on the warehouse dashboards.

The warehouse then separates the orders based on delivery time opted for by the customer:
Express or Normal. Normal delivery orders are promised same day delivery if placed before
12 pm and next morning delivery if placed after 12 pm. Express delivery orders are promised
a maximum delivery time of 4 hours. Express delivery items are processed on priority.

Each order based on category information available e.g. Vegetables, Dairy, etc. is
independently processed by the various category teams and then assimilated for packaging
and onward dispatch to customers. The use of order ID in processing helps the whole process
flow seamlessly.

Eatwell manages dispatch of orders based on area. Their mini trucks are designed to carry all
kinds of food categories together. It saves the company from operating multiple trucks in the
same area. The trucks are area specific and cater to demand in a certain predetermined
radius. Managing their fleet to cater high demand centres and optimizing number of trips per
day is the biggest challenge for the company. Further, sticking to delivery commitments under
the Express option is challenging with just one warehouse.

However, a challenge currently faced by Eatwell currently is with respect to its employee force.
Attrition is high and it is difficult to find employees with the right skill set to conduct its
warehousing and delivery operations.

Further, management capabilities may need to be expanded in case Eatwell scales up


operations.

Expansion Plans

Due to market potential and competitor activities, Eatwell has set a target to enter 5 new cities
by the end of 2020. This has put enormous pressure on the management to look for the best
way to enter new markets and the strategy to adopt going forward. Develop a long term supply
chain strategy for the firm, keeping in view the objective of fast scale up in multiple Indian cities
as well as the investors’ directive of lean operations. The strategy should address the following
aspects:.
● Key competence in their current supply chain network
● Challenges in their expansion plan and how to address them
● Inhouse vs outsourcing decisions

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