Case Study

On

Chaldal.Com: One-Stop Shopping Solution for Busy Bee

Lifestyle

Prepared For

Mr. Sheikh Morshed Jahan

Associate Professor & Chairperson, MDP Program

Prepared By

Md Abul Hasan Faraz (Batch: 56D; Roll: ZR 20)

Institute of Business Administration

University Of Dhaka

March 16, 2018

INTRODUCTION

Now-a-days online grocery shopping has become a good prospect in Bangladesh as

customers frequently use websites for their daily needs, choose and order their desired
groceries by placing order. Chaldal.com is an online shop in Dhaka, Bangladesh. They believe
time is valuable, and that the fellow residents of Dhaka should not have to waste hours in
traffic, brave bad weather and wait in line just to buy necessities like eggs. This is why
Chaldal delivers everything of need right at the doorsteps of the customers at no additional
cost.

Chaldal was founded in January 2013 based on Dhaka city. Still it is in progress and hopes to
get better over time. The founders believe in using technology and education to improve
Bangladesh and they want to continue to invest all their efforts in pushing the boundaries of
technology. Chaldal operates an online shop for necessities in Bangladesh. It now
successfully serves the entire city, offering beyond 4000 different items including basic
grocery items, office stationery, electronics, baby care, beauty and healthcare, pet care and
home appliance products and more.

TECHNOLOGICAL ADVANCEMENT & BANGLADESH

Bangladesh is set for growth with a market of 160 million+ packed into a territory roughly
one-quarter the size of Thailand (5th most dense in the world). Geo-strategically positioned
between India and China, Bangladesh consists of the world’s 8th largest population, where
consumer spending is around USD 130 billion+ growing at 6% annually

As an emerging economy, Bangladesh has embraced technology at a rapid pace. The

penetration of the telecom sector, mobile commerce and advent of internet based
applications designed by businesses and supported by the tech friendly government
validates the growth story that is going to unfold in the e-space of Bangladesh. Bangladesh’s
telecom penetration has been impressive compared to regional peers and is growing with
increasing per capita income. With growing internet connectivity, proliferation of cheaper
varieties of smartphones, rapid rise in social networking (10 million + Facebook users) and e-
commerce firms in Bangladesh, the consumers are getting more and more digitally attuned
which eventually ends up having a profound impact on their consumption pattern.
The number population with digital access is increasing tremendously. Bangladesh has
experienced an average 22.6% growth in internet subscriber base after 3G service swere
launched in 2013. Figure 1 shows the internet subscriber’s growth in Bangladesh from 2013
to 2016.

Figure 1: Number of Internet Subscribers (in millions)

Source: Monthly BTRC reports on internet subscribers in Bangladesh (February 2013-January2016)

CURRENT E-COMMERCE SCENARIO OF BANGLADESH

With in five years between 2007 and 2012 thr e-commerce and online auction area grew by
10.4% and is expected to grow by 15%+ annually through 2020.Thenumber of businesses
operating in the e-commerce sector is expected to grow exponentially to 61K+ over the next five
years (source: IBISWorld). Currently,annualized volume of e-commerce isestimated at USD50
million with seasonality peaks during early religious festivals (Pi strategy Projections)

A recent survey showed the following consumption pattern across the users:

Online
32%
Consumption
32%
Pattern of Different Product Category:
35%
27% 28%
30% 25%
25%
25% 21% 20%
18%
20%
14%
15%
10% 7%
5% 4% 4% 4%
5% 1%
0%

Respondents currently buying online Willing to buy online

Figure 2: Online Consumption Pattern of Different Products

The current consumer demographic of E-commerce in Bangladesh is primarily made up of
youth with male consumers making up the majority (75%). The most prevalent age group is
26-30 years old consisting of 50% of the consumer group. Majority of the consumers are
either young professionals (44%) or university students (33%) with one-third of them has a
monthly income of BDT 30K+. Fashion wear and consumer care products are the top selling
categories in the market.

According to a report by E-commerce Association of Bangladesh (e-cab), there are currently

1000 e-commerce entrepreneurs in Bangladesh and who are running their business through
Website and 8000 f-commerce entrepreneurs. Registered e-cab members are almost 500.

BACKGROUND OF CHALDAL .COM

Chaldal.com was founded in January, 2013 by Mr. Wassem Alim along with his friend Mr. Zia
Ashraf and ex-colleague Tejas Viswanath. Mr. Zia Ashraf was appointed as COO (Chief
Operating Officer). Mr. TejasViswanath, former Sigfig colleague of Mr. Alim, was appointed
as CTO. Initially, the founder's own fund of $ 40,000. Since then, they have found very good
investors. Y Combinator has invested for Chaldal. Y combinatory is an American company,
which invests for start ups. Fortune has called Y Combinator "a spawning ground for
emerging tech giants" and Fast Company has called YC "the world's most powerful start-up
incubator".

TARGET CUSTOMERS OF CHALDAL.COM

Chaldal has used two major segmentation variables:
 Geographic: They are initially trying to expand in the city areas and they have chosen
Dhaka city. Since this is also a large area to cover initially, they targetted Uttara for its
pilotting. However, they are gradully moving towards the whole city
 Demographic: In demographic segmentation, they divided the market based on two
variables – age and income group. Their target is upper income and middle-income
group. Their focuses as potential customers are the internet users who want to save
shopping time with less resistance. Currently most of their customers are from the age
group of 25-35 years and 50-55 years.
COMPETITIVE STRATEGIES OF CHALDAL
Starting in 2013, Chaldal has now a growth rate of more than 300% a year. Though there is a
number of competitors in current market for online grocery shops, Chaldal is in a leading
position. In an interview with futurestartup.com, Waseem Alim, the CEO of Chaldal, has said
about their growth strategy that, “I think of growth in two ways: acquisition and retention.
For now, our focus is on retention. Our retention rate is now around 60-70%, which is a
good number but we are working hard to push that number further”

As a market leader, Chaldal is now mainly focusing on “Protecting Market Share” strategy.
For retaining market, they act as proactive marketer. They give importance to both
responsive and creative anticipation. For Position Defence they are trying to occupy the
most desirable market space in the consumers mind. To do so, they have made training
obligatory for delivery persons. In addition, they built their own system to manage home
delivery trucks and motorcycles with GPS. In addition to checking the position of each, the
system automatically processes the data, delivery routes and receipt of orders.
MARKETING MIX OF CHALDAL
I. Products

Chaldal.com offers groceries, such as fruits and vegetables, breakfast, beverages, meat and
fish products, snacks, dairy products, frozen and canned food products, bread and bakery,
baking needs, and cooking products; office products, beauty and health care products; baby
care products, such as diapering, fooding, and bath and skincare products; sweets; and
electrical products.

II. Price

Chaldal lists the price at retail price listed on the product itself, suggested by the
manufacturer or supplier, or estimated in accordance with standard industry practice. The
list price is a comparative price estimate and may or may not represent the prevailing price
in every area on any particular day. With respect to items sold by Chaldal, they cannot
confirm the price of an item until it is ordered. If the correct price of an item sold by Chaldal
is higher than the stated price, they will, either contact the customer for instructions before
shipping or cancel the order and notify customer of such cancellation.
Chaldalalso uses Product Bundling Pricing as a situation of Product mix pricing. Mainly the
offer mixed bundling, offering goods both individually and in bundle. If customers avail the
bundles, they are charged less than if the items were bought separately.

III. Place

They are serving with 1 Hour Delivery Service to Uttara, Mirpur, Cantonment, Banani,
Banani DOHS, Gulshan, Baridhara, Baridhara DOHS, Badda, Mohakhali, Mohakhali DOHS,
Khilgaon, Paltan, Motijheel, Banasree, Moghbazar, Malibag, Razarbag, Pallabi and
Mohammedpur. Customers can also specify a convenient time and they will send the
products during that time. The delivery time is from 8 am to 10 pm every day

IV. Promotion

For first order, Chaldal offers 3% discount. Once a customer’s 4th order is completed,
he/she gets access to use 4% discount. After completing 6th order and 5% discount gets
unlocked. They also offered free delivery of products initially. They are still offering free
home delivery for bulk purchase. In addition, customer can order customized product in
some instances.

V. Packaging (the 5th P)

Packaging is a very crucial factor for delivery based grocery shop like Chaldal. Chaldal take
special care of it. They provide special refrigeration delivery, if the product is temperature
sensitive. In case of fragile product, they also provide special packaging. However, these
things are obvious considering the nature of the business. In addition, they also provide
booklet, leaflet of their business with each delivery.

CURRENT BUSINESS SCENARIO

Chaldal.com is about to roll-out a new subscription service which will allow its users to pre-
schedule their entire month of orders and get it delivered accordingly without having them
place the order every time online or over the phone. The move is expected to help the
startup with its growing base of recurring customers. With the new subscription feature,
Chaldal aims to make grocery shopping simple and extra convenient for its growing base of
users. The startup has now more than 700 weekly buyers who largely depend on it for their
grocery shopping. The new service will allow effortless, time-efficient, and convenient
shopping for Chaldal users fuelling further growth of the company and offers some useful
value additions like short delivery, free return, and competitive price.

The startup now delivers 650 orders per day with an average basket size of 900 BDT. There
is a BDT 10 delivery fee if the order value is BDT 300 or more. If the order value is less than
BDT 300, they charge BDT 29 as delivery fee.
The sales volume could not be revealed because of the confidentiality issue. However, a
rough percentage is as follows (Considering 2015 as base):

Sales growth (2015 Base)

800%
691%
700%
600%
500%
400% 348.48% Sales
300% Expon. (Sales)
200%
100%
100%
0%
2015 2016 2017

Figure 3: The Sales growth of ChalDal on the basis of 2015 Sales

They are adding around 2500 customers per month. They also have some renowned
corporate clients like Aarong, GSK, Foodpanda and so on.They accept cash on delivery and
also have Online Credit Card and Online Bkash service.Chaldal representatives should always
carry enough change. Among total delivery, 93% transections are done with cash, 5% by
credit card and 2% mobile finance.It employees more than 300 people, maintains its own
logistics and operates from several zones in Dhaka which allows the startup to maintain
one-hour delivery in those areas.They are open for business even when all others are shut,
delivering products during hartals and public holidays.

With the growing number of customers and demand, Chaldal has to deal with some
additional difficulties. They are receiving huge orders everyday; however, it is not keeping
pace with customer’s expectation. Their marketing and promotional activities were
successful in creating demand as we can see from the growing number of orders but supply
side was inadequate to act upon it. There are having issues with scaling up their operations
as in accordance with growing demand. They have started full scale operation in Uttara but
in other densely populated area they are yet to start it. If this scalability issues continues, it
will certainly dampen the reputation of the business.

Chaldal promises to deliver their good within one hour but it is quite a difficult task to
achieve in a crowded and traffic driven city like Dhaka. For different part of the cities, they
have a fixed time slots when they make the deliveries. So if a customer requires an urgent
delivery s/he may not be able to get it in time. For instance, in case of Dhaka University
area, its delivery man comes twice or thrice in a day. As a result, if someone orders
something in 3:00, s/he has to wait till 7:00 PM to receive the product. Even with the given
time slots the number of delays in delivery is increasing every day. Among 1300 Facebook
reviews from its customers, Chladal got almost 300 bad reviews and most of them were due
to late deliveries. Recently, there has been a change in delivery charges (an increase), which
was subjected to sheer criticism.
References:

Ahamed, B., Islam, S., & Qaom, K. (2016). Customers’ Attitude towards E-commerce in
Bangladesh: An Empirical Study on Some Selected B2C E-commerce Sites. Journal
of Business And Technology (Dhaka), 10(1), 37.
http://dx.doi.org/10.3329/jbt.v10i1.26905

An Interview With Waseem Alim, Co-founder and CEO, Chaldal [Part I] - Future Startup. (
2017). Future Startup. Retrieved 13 May 2017, from
http://futurestartup.com/2016/06/07/waseem-alim-of-chaldal-part-one/
Chaldal.com (2017). Retrieved 3 May 2017, from https://chaldal.com
Haq, M. (2017). Lecture on Marketing Management. Lecture, IBA, University of Dhaka.

Haque, M. (2015). Bangladesh: Online Grocery shopping on the rise - SDAsia. SDAsia.
Retrieved 11 May 2017, from https://sdasia.co/2015/04/01/bangladesh-online-
grocery- shopping-on-the-rise/

Kotler, P., Keller, K., Manceau, D., & Jha, M. (2013). Marketing Management (1st ed.).
Paris: Pearson.
LightCastle Partners. (2017). E-COMMERCE The adventure begins in Bangladesh. Dhaka.

Shu, C. (2017). Chaldal Wants To Become The Amazon Fresh Of Bangladesh’s

Capital. TechCrunch. Retrieved 3 May 2017, from
https://techcrunch.com/2015/07/30/chaldal/