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Table of Contents
Executive Summary....................................................................................................................................... 4
Introduction .................................................................................................................................................. 5
Project Description: Save Mart ..................................................................................................................... 5
Corporate Setup & Management ................................................................................................................. 6
Roles and Responsibilities ......................................................................................................................... 6
Market Prospects .......................................................................................................................................... 9
Information technology in Pakistan .......................................................................................................... 9
The prevalence of the Internet increases ................................................................................................. 9
E commerce situation in Pakistan ........................................................................................................... 10
E commerce outlook in Pakistan............................................................................................................. 11
Current Market Trends ........................................................................................................................... 12
E Commerce Services .............................................................................................................................. 12
Online Payment....................................................................................................................................... 12
Mobile E Commerce................................................................................................................................ 13
Major Buying Holidays ............................................................................................................................ 13
Social Media ............................................................................................................................................ 13
Development of the Pakistani E-Commerce market .............................................................................. 13
Market Competition in Pakistan ............................................................................................................. 14
Demand of Online Grocery App .............................................................................................................. 15
Supply Chain............................................................................................................................................ 16
Potential Product Market Analysis ......................................................................................................... 17
Technical Aspects and Project Facilities...................................................................................................... 18
Location & Site ........................................................................................................................................ 19
Selecting Project Premises ...................................................................................................................... 19
Possible Locations ................................................................................................................................... 20
Geopolitical Analysis ............................................................................................................................... 20
Material Requirements ........................................................................................................................... 21
Environmental Aspects ........................................................................................................................... 22
Project Cost & Means of Financing ............................................................................................................. 23
Operating & Financial Results ..................................................................................................................... 24
Conclusion & Recommendations ................................................................................................................ 25
Annexures ................................................................................................................................................... 26

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Location & Site map: ............................................................................................................................... 26
Initial Net Working Capital ...................................................................................................................... 27
Assumptions of the Underlying Project .................................................................................................. 27
Calculations based on Assumptions........................................................................................................ 28
Breakdown of Project Cost ..................................................................................................................... 30
Projected Financial Statements .............................................................................................................. 31
Balance Sheet ...................................................................................................................................... 31
Cash Flow Statement .......................................................................................................................... 32
Income Statement............................................................................................................................... 33
Interest and Repayment Schedule .......................................................................................................... 34
Weighted Average Cost of Capital, Workings ......................................................................................... 34

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Executive Summary
Online grocery shopping is considered as a new way of buying the desired grocery products for
household consumption. The concept of online grocery shopping was first evolved from Malaysia where
local grocers begun to increase their presence through entering online channel for grocery retailing. This
project appraisal report is based on the development of business plan with regard to opening an online
grocery business in Pakistan. The name of new venture is given “Save mart” which is a combination of
both grocery and retail. This plan discussed industry background of online retailing and grocery shopping
in Pakistan. The appraisal report presents both the marketing and technical prospects and evaluations.
Moreover means of financing and operating results are also presented and analyzed before presenting
the conclusions and commenting on the feasibility of this project.

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Introduction
Worldwide, one-quarter of online respondents say they order grocery products online, and more than
half (55%) are willing to do so in the future. Growth of online grocery shopping is driven in part by the
maturation of the digital natives—Millennials and Generation Z.

Pakistan is a country where people still prefer to shop for grocery items using conventional means.
However, the rapidly growing e-commerce and online shopping industry has successfully started to take
aboard the demand of conventional shoppers. In today fast-paced world grocery shopping is still a
hassle that demands a lot of time and energy, to visit various outlets, find the right products, bargain the
right prices, etc. So ‘Save Mart.’ has been orchestrated as a powerful solution, delivering reliable
products at the click of a button. The internet has become the center of convenience for everyone, with
several websites now offering deals on restaurants, foods, fashion products, electronic items, and a
whole range of everyday consumer products.

After the huge success of several e-commerce websites offering clothing, foods, and a range of
electronic items, several websites have been launched that provide customers with the ease of shopping
for groceries from the safety of their homes.

New offerings of the project

• Picture attachments: Ability to attach an image to an item in the list for easy identification.
• Coupon compatibility: Ability to look up and use coupons for items on your list.
• Universal access: Available on all major platforms.
• QR code scanning: Ability to scan a QR code to add or look up an item.
• Standard grocery list consisting of everyday items can be saved on the app and with the click
of a button can be sent to the vendor.
• Credit system will be available.

Project Description: Save Mart

‘Save Mart.’ will offer more than 7,000 different products (SKUs) across categories like; Staples,
fresh food stuff, dairy items, household consumables, baby items, toiletries and much more. It
is Pakistan`s only on-line grocery store, based on dedicated mobile apps for both Android and
iPhone Operating Systems. It promises many innovative shopping experiences, as the
customers are completely relieved of the stresses of grocery shopping on a daily, weekly or
monthly basis. The goods are promptly delivered at your doorstep within 2 hours of placing the
order. Customers will be charged Rs 200 for shopping over Rs 2000.
Initially, the start-up will do business in Karachi and expand to five major cities of the country –
Lahore, twin cities of Islamabad and Rawalpindi and Faisalabad – by December-end.

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Corporate Setup & Management
Roles and Responsibilities
Chief Executive Officer – CEO
• Increases management’s effectiveness by recruiting, selecting, orienting, training,
coaching, counseling, and disciplining managers; communicating values, strategies,
and objectives; assigning accountabilities; planning, monitoring, and appraising job
results; developing incentives; developing a climate for offering information and
opinions; providing educational opportunities.
• Creates, communicates, and implements the organization’s vision, mission, and
overall direction – i.e. leading the development and implementation of the overall
organization’s strategy.
• Responsible for fixing prices and signing business deals
• Responsible for providing direction for the business
• Responsible for signing checks and documents on behalf of the company
• Evaluates the success of the organization
• Reports to the board
Admin and HR Manager
• Responsible for overseeing the smooth running of HR and administrative tasks for
the organization
• Maintains office supplies by checking stocks; placing and expediting orders;
evaluating new products.
• Ensures operation of equipment by completing preventive maintenance
requirements; calling for repairs.
• Updates job knowledge by participating in educational opportunities; reading
professional publications; maintaining personal networks; participating in
professional organizations.
• Enhances department and organization reputation by accepting ownership for
accomplishing new and different requests; exploring opportunities to add value to
job accomplishments.
• Defines job positions for recruitment and managing interviewing process
• Carries out staff induction for new team members
• Responsible for training, evaluation and assessment of employees
• Responsible for arranging travel, meetings and appointments
• Oversees the smooth running of the daily office activities.

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Store Manager:
• Responsible for managing the daily activities in the store
• Ensures that proper records of goods are kept and our racks and warehouse does
not run out of products
• Ensure that the store facility is in tip top shape and goods are properly arranged and
easy to locate
• Interfaces with third – party suppliers (vendors)
• Controls goods distribution and supply inventory
• Supervises the workforce in the grocery sales floor.
Merchandize Manager
• Manages vendor relations, market visits, and the ongoing education and
development of the organizations’ buying teams
• Help to ensure consistent quality of goods and products on our rack
• Responsible for the purchase of goods and products for the organizations
• Responsible for planning sales, monitoring inventory, selecting the merchandise, and
writing and pricing orders to vendors
• Ensures that the organization operates within stipulated budget.
Sales and Marketing Manager
• Manages external research and coordinate all the internal sources of information to
retain the organizations’ best customers and attract new ones
• Models demographic information and analyze the volumes of transactional data
generated by customer purchases
• Identifies, prioritizes, and reaches out to new partners, and business opportunities
et al
• Identifies development opportunities; follows up on development leads and
contacts; participates in the structuring and financing of projects; assures the
completion of development projects.
• Responsible for supervising implementation, advocate for the customer’s needs, and
communicate with clients
• Develops, executes and evaluates new plans for expanding increase sales
• Documents all customer contact and information
• Represents the company in strategic meetings
• Helps to increase sales and growth for the company

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Information Technologist
• Manages the organization website
• Handles ecommerce aspect of the business
• Responsible for installing and maintenance of computer software and hardware for
the organization
• Manages logistics and supply chain software, Web servers, e-commerce software
and POS (point of sale) systems
• Manages the organization’s CCTV
• Handles any other technological and IT related duties.
Accountant / Cashier:
• Responsible for preparing financial reports, budgets, and financial statements for
the organization
• Provides managements with financial analyses, development budgets, and
accounting reports; analyzes financial feasibility for the most complex proposed
projects; conducts market research to forecast trends and business conditions.
• Responsible for financial forecasting and risks analysis.
• Performs cash management, general ledger accounting, and financial reporting
• Responsible for developing and managing financial systems and policies
• Responsible for administering payrolls
• Ensuring compliance with taxation legislation
• Handles all financial transactions for the organization
• Serves as internal auditor for the organization
Client Service Executive
• Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides
the client with a personalized customer service experience of the highest level
• Through interaction with customers on the phone, uses every opportunity to build
client’s interest in the company’s products and services
• Manages administrative duties assigned by the human resources and admin
manager in an effective and timely manner
• Consistently stays abreast of any new information on the organizations’ products,
promotional campaigns etc. to ensure accurate and helpful information is supplied
to customers when they make enquiries.

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Market Prospects
Information technology in Pakistan
Information technology in Pakistan is a growing and rising industry that has a lot of potential. The
IT industry is regarded as a successful sector of Pakistan economically, even in financial crisis. The
government of Pakistan has given numerous incentives to IT investors in the country during the
last decade; this resulted in the development of the IT sector. In the years 2003-2005 the
country's IT exports saw a rise of about fifty percent and amounted a total of about 48.5 million
USD. The World Economic Forum, assessing the development of Information and Communication
Technology in the country ranked Pakistan 111th among 144 countries in the Global Information
Technology report of 2014. In spite of all the challenges, including the energy crisis, political
instability and lack of promotion, the IT industry has shown great character and grit in winning
global recognition. There have been many success stories in the various IT domains, such as
finance, healthcare, telecom and mobile applications.

The prevalence of the Internet increases

Between 2010 and 2018, the Internet penetration rate has more than doubled. However, even
with this high rate of growth, Pakistan's share of Internet users still falls below the average in
Asia. Despite this, Pakistan's large population compensates and a quarter of these Internet users
are already shopping online. Desktop may be the most used device to access the Internet in
Pakistan, but the number of mobile users is growing. Driving this potential for the rise of mobile
shopping, by 2025, half of the population of Pakistan is expected to have mobile devices.

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E commerce situation in Pakistan
In today’s digital world where the West is positioned firmly in the e-commerce market, the Asia-
Pacific region (APAC) no longer lags that far behind. Pakistan stands at the second largest in terms
of e-commerce industry in South Asia with about $75 to $100 million currently, while India leads
with a whopping $33 billion while Bangladesh and Sri Lanka follow at number three and four,
with $44 million and $25 million worth of e-commerce market. Pakistan subsequently forms a
part of APAC and is in international limelight currently for its rapidly growing e-commerce market
– with Alibaba and Rocket. Internet gazing at the potential. However, where other Asian
economies are credited for APAC’s e-commerce growth, international research firms do not
recognize Pakistan as a heavy contributor as such. For Pakistan’s e-commerce, local gurus predict
that it will hit the $1 billion mark by 2020 – or maybe earlier. Though relatively new in the
business, online shopping trend is catching up faster than ever. The size of the e-commerce
market of the country is debatable as documentation is difficult, but the e-commerce market is
estimated to be $75 million in its current scenario, though some experts paint a far better and
brighter picture. This explains that e-commerce is spreading its talons across the country.
Pakistan is still largely a cash-based, informal economy. The majority of transactions are
conducted in cash, except for those that are very large and require a bank draft or pay order.
Several studies suggest that up to 60 percent of the economy is informal, with the majority of
local companies, particularly SMEs, undocumented and outside the tax net.
A number of government departments have started to offer services via the Internet. In the
private sector, four Pakistani airlines now offer e-ticketing and almost all local banks offer online
banking services. This segment of the economy is expected to grow steadily as there are
approximately 44.6 million Internet subscribers in Pakistan and this figure is expected double
during the next five years.
There are also more than 32 million Facebook users in Pakistan and several local companies now
use social media to promote their products and services. Pakistan has one of the highest rates of
mobile penetration in South Asia at nearly 74 percent, and mobile banking is an area with some
promise.

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E commerce outlook in Pakistan
Pakistan has witnessed exponential growth in e-
commerce activities over the past few years.
Lured by lower transaction costs, convenience
and expanding internet penetration, both
enterprises and consumers have started shifting
their transactions online (Figure 7.4). Thus far,
business-to-consumer (B2C) side of the e-
commerce has been the main beneficiary,
though investments are underway to kick start
the business-to-business (B2B) e-commerce on
a large scale as well.
According to SBP data, the sales of local and
international e-commerce merchants reached
Rs 20.7 billion in FY17 and Rs 40.1 billion in FY18
– an encouraging growth of 93.7 percent.
However, the data only covers transactions
made via digital channels (credit/debit cards, interbank funds transfer (IBFT), prepaid cards, and
mobile wallets). This is important to note, as the market estimates put the share of postpaid cash on
delivery (COD) settlements at around 80 to 90 percent of the total volume, and about 60 percent of the
total value of e-commerce in Pakistan (Figure 7.5b). Extrapolating accordingly, the figures for total e-
commerce activity in FY17 and FY18 may have touched Rs 51.8 billion and Rs 99.3 billion respectively
(Figure 7.5a).

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Current Market Trends
The e-commerce sector has focused mainly on consumer products. Online customers in Pakistan
search for and purchase Consumer Electronics and Mobile Phones, Employment Queries, Online
Education and Counseling, Sale/Purchase and Information Gathering about Vehicles, Computers
and Accessories, Financial Services, Laptops and Notebooks, Motor Vehicles by Brand, Test
Preparation and Tutoring, and Apparel and Accessories. In Pakistan, most of the major e-
commerce players are either online marketplaces for goods - such as Shophive, Daraz.pk (for
consumer electronics and apparel, etc.), and FoodPanda (for food delivery) – or online
marketplaces for services via immediate delivery – like the ride-hailing platforms Careem and
Uber. Then there are online information and financial intermediaries – or infomediaries, as they
are often called – like PakWheels (for automobile sale and purchase), Rozee.pk (job hunting and
recruitment), and Zameen.Pk (real estate business). These channels serve to fill information gaps
and mostly earn profits through advertisements, contract making, and commission fees.

E Commerce Services
There are no banned browsers in Pakistan. Google Chrome is the most popular browser with 56
percent of total visitors, followed by Microsoft Internet Explorer with 21 percent. The remaining
23 percent of searches are through Android, Safari, Opera, Opera Mini, UC Browser, Safari and
Maxthon respectively. Google Chrome, Internet Explorer, and Android account for the longest
session durations.

Online Payment
According to reports 95 percent of e-companies get payments for their online orders by cash-on-
delivery. This increases the liquidity requirements for e-commerce companies and also forces
them to have dedicated teams that manage cash receipts for the company, thereby raising
operational costs. The larger players in the e-commerce space have started to utilize digital
payments, and are optimistic that the industry will come together to coax consumers into moving
away from cash-on-delivery to online payments. Digital payments also represent a hurdle for
Pakistan’s e-commerce sector. While a number of products like EasyPaisa, JazzCash, and uPaisa
– which are mobile banks - are available today, none of them has high market penetration. This,
coupled with the fact that only 16 percent of the country’s population has a bank account, vastly
raises the cost of doing business for e-commerce companies.

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Mobile E Commerce
With the introduction of 3G/4G services, internet penetration has risen rapidly. Internet
subscriber growth in Pakistan is averaging over 22 percent per year and total subscribers crossed
the 44.6 million mark in 2018. Cheap smartphones, low cost of 3G/4G services and a consumer-
goods obsessed middle class has meant that Pakistan’s e-commerce sector is “mobile first”: some
e-commerce start-ups claim that over 75 percent of their total business is online.

Major Buying Holidays

E-commerce entrepreneurs enjoy heavy traffic on Pakistani holidays and event season such as
Eid-ul-Fitr (June), Eid-ul-Adha (September), Black Friday, New Year and Wedding Season (October
through April). Major sporting events can also drive purchases of related equipment and apparel.

Social Media
The introduction of mobile broadband coupled with affordable smartphones has driven the social
media use and the popularity of Facebook, Twitter, Skype and Instagram. Facebook leads social
media with more than three billion connections per day and more than 17.2 million user
accounts. Twitter is also fast becoming the preferred social media portal with more than 280
million connections per day. Google, You Tube and Instagram are also popular.

Development of the Pakistani E-Commerce market

Despite being still in the early stages of development, over 2018, the E-Commerce market in Pakistan
increased two-fold. The market is propped up by increasingly better Internet penetration rates and
more mobile device usage.

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Market Competition in Pakistan
Pakistani IT companies are developing software for use in different types of businesses and
services. Locally made software packages are cheaply available for implementation in schools,
hospitals, supermarkets and other businesses. Also, the increasing use of Android smart
phones, tablets and Apple iPads has given a great boost to the mobile applications
development industry. Experts can easily develop these applications at home, with very low
capital investment, as a personal computer and an Internet connection are the only things
required to begin. Recently in Pakistan a number of grocery websites are available to
accommodate the public and provide them an efficient and a fast way to purchase the things
they need at home without the hassle of going out to buy them. Some of the websites available
in Pakistan are;

 Cartpk.com
 Hummart.pk
 Daraz.pk
 Aaramshop.pk
 QnE.com.pk
 GoMart.pk
 RashanLelo.pk
 TazaMart.pk
 RashanMart.pk

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Demand of Online Grocery App
Online grocery shopping is an unexplored but exciting element in Pakistan's expanding e-
commerce landscape while physically exploring huge cash ‘n’ carry stores is a popular way to
shop, the surge in online grocery stores indicates some space in the market for those who wish
to avoid that hassle and order goods at the click of a button. There is considerable opportunity
for disruption in Pakistan’s retail market, a discerning observer might conclude. Estimates in
2013 suggested the size of the market to be US$42 billion, growing at a solid five percent per
year. The average Pakistani also spends up to 42 percent of his income on food and food-
related items, implying a healthy, vibrant market for startups looking to target this space.
Surprisingly, Pakistanis have yet to alter their shopping habits to the point where they feel
comfortable purchasing groceries and perishable items online. There are a slew of ecommerce
startups, touting an array of fashion, lifestyle, and electronic goods.
Considering the demand and supply of grocery in the past trend over the horizon of particularly
5 to 10 years, in the past when online shopping specifically for groceries was not introduced or
inducted in the market, the general public used to commute to general stores, utility stores,
super markets, shops in the vicinity of the compound and local super stores to purchase goods
and products. CDC, Imtiaz Supermarket, Macro, Hyperstar are some of the giant departmental
stores which Pakistanis usually go to for grocery shopping.
Online shopping is not new, but our attitude towards it is. As our lifestyles become busier and
mobile technology becomes more integrated into our daily lives, we are increasingly becoming
on-the-go consumers. It is convenient as it saves us time and fuel, while allowing us to fit in
grocery shopping around our busy schedules. One of the most important factors in the
equation is the rate of internet penetration in Pakistan. Pakistan’s internet enabled population
is limited to around 30 million users today. This, however, is expected to raise up to 56 million
users by 2019.
Currently valued at over $60 million, the country’s e-commerce sector is doubling in size every
year – that is, it is growing at a compound annual growth rate (CAGR) of over 100%. The
industry analysts predict this trend (rate) will continue during the next three to five years and
help the sector surpass the $1 billion milestone in 2020.The number of broadband users in the
country skyrocketed to 23 million at the end of October, 2015, up from less than 4.7 million a
year ago.

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Supply Chain
Save Mart. have delivery schedules so one can have it at the time of his/her choice and
convenience. Otherwise, it takes on average two to three hours to deliver an order from the
time of its booking. We have started acquiring most of the ordered items for our warehouse
like shampoos, soaps, and other fast- moving consumer goods, while we are planning on
purchasing perishable items on the way to delivery while we also have our cooling units to
store such item for maximum 10 hours. We are targeting to have 80% inventory of the products
on offer in the next one-year time.
The suppliers of Save Mart. will be:
Metro Cash and Carry (Wholesale)
The company has a simple and efficient business concept: cash & carry wholesale, which is
defined through its customer base: only professional customers are allowed to purchase at
METRO-Habib Cash & Carry, all of them duly registered and provided with a customer card. It is
not a super- or hypermarket chain for private consumption, but a modern form of wholesale
exclusively tailored to the needs of businesses and companies.
Imtiaz Supermarket
There are some grocery items which might be unavailable at Metro cash and carry so we are
listing Imtiaz Supermarket as our second option. Convenience, amazing product range,
excellent customer service and unmatched affordability are few of the features that make
Imtiaz Super Market the leader in modern shopping in Pakistan with the desire to exceed
customer’s expectations.
Sabzi Mandi (For vegetables and fruits)
We will be buying the vegetables fresh from the market and might store vegetables like chilies
or tomatoes in our cooling unit to save time through eliminating the step of buying them from
the vendor. However, our storage time will not be more than a day (maximum) as they are
perishable items and retaining their freshness is important.
Our plan is to buy at wholesale/low rates so that we can add a little margin to our selling
product which would serve as one of the channel for revenue. Although, our rates will be lower
than the retail prices in the market.

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Potential Product Market Analysis
Pakistan is reportedly one of the fastest growing economies in the world and has now become
one of the hottest destinations for the mobile industry and global retail and e-tail giants.
Pakistan is expected to become one of the most mobile-savvy countries in the world, with a
mind blowing 125 million mobile subscribers in 2015, which will have an immense impact on
the transformation of how companies will do business in Pakistan and how they interact with
their customers. According to a survey conducted by Grappetite, this population segment is
also the most tech-savvy segment of the population with 80% spend a minimum of two hours
online on daily basis.
After carefully observing consumer behavior, it has been established that consumers are more
inclined towards navigating on the app as opposed to the website’s mobile version. The amount
of time spent on the app is twice as high the time spent on the mobile site whereas;
conversions are approximately three times more likely. Similarly, 63% of the users on Daraz.pk
access the contemporary offerings through mobile this number was at 30% just about a year
ago and rose considerably. That has significant implications for websites more than being only
user friendly on desktop, mobile and app sites become the focus of attention and consumers
are shifting more towards smartphone apps. In the second half of 2015 the growth rate in app
download was 258% it is no surprise that apps will be taking over the web. App downloads is
becoming popular especially among the Millennials and 77% of the Pakistan population is
below 30 years of age it is with them where the market lies. Our target market is that 77%
population below 30 who are tech savvy and considers shopping through app as the order of
the day.
Our app will be launched on android phones initially because 9 out of 10 app installs are on
android and these phones are owned by most of the mobile users in Pakistan. Later it will be
spread over iOS as well.
Our app user is a technology and fashion addict that forms part of the Pakistani youth who
redefines the retail market, as we know it. Brick and mortar stores may eventually lose their
relevance and a mall on your palm will come out as the winner with a vast selection of brands
and interesting price points for the majority of Pakistani online shoppers.
*Even if we are able to capture a small percentage of such booming industry initially we will be
able to make it to break even and will then be on our way of reaping profits from this industry.

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Technical Aspects and Project Facilities
Our scale of work will encompass the designing and development of the application, marketing
and advertising it on social media and doing SEO work as well. Clients and customers will
receive support and guidance round the clock in order to counter any error or problem related
to the order and application in general.
The maintenance and back end operations will be conducted by us. A server will also be
required and setup in order to host all the activities carried out by our team and vitally the
customers. The server itself will be guarded by both physically and digitally through firewalls
and other security options.
Our core work will be technical based therefore technical operations will also be involved and a
fast reliable internet source will also be required for effective functioning of the server and
working of the application in order to connect the application with the customers and clientele.
Requirement of software’s to compete and become the best in what we do is important
therefore the purposes of different software requirement are:

 Adobe Photoshop for designing purposes

 AVG Antivirus to protect us from external threats digitally
 Windows 7 and above for Laptops and desktops
 Microsoft office 2013 version which includes Visio which is required to make process
flow for various projects

In collaboration with Grappetite which is a mobile app development outsourcing company, our
idea for development of online shopping app can be put to action with a budget of PKR
5,000,000 as initial investment for the business and application development which will entail
the distinct features required for ease of operation for the customer i.e. user friendly and less
hurdle for the operation and maintenance of the application as well.
Grappetite will execute the building of the mobile application in the course of 30 to 60 working
days i.e. from one to two months. The application will be launched on trial and testing basis in
the initial week to target and identify any discrepancy, malfunctioning and problem in order to
improve the App’s functioning and counters the problems. All the mentioned technological
arrangements are required by the company to execute the job professionally and with the best
possible outcome.

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Location & Site
From a business perspective, the pure-play (no retail storefronts, only web ordering and
delivery, and possibly one or more warehouses) this model has several advantages over the
traditional retail grocery model.

1. First, e-grocers do not have the high costs associated with multiple retail locations,
including rent, parking, and property taxes.
2. Second, by “pooling” our inventory in fewer locations, e-grocers can better manage
their inventory, reducing inventory holding costs and increasing inventory turnover
rates.

Marketing for one location is not cost-effective given the limited reach, and a lack of marketing
creates a self-fulfilling prophecy of customers not using a service they aren’t aware of.
Supermarkets aggregate demand by allowing customers to come to the stores, and therefore
customers do the order picking and delivery. For e-grocers, more deliveries in a given area
lower the costs per delivery. Those who can afford computers and Internet access are more
likely to live in cities, which means less driving and fewer deliveries per hour for any company.

Selecting Project Premises

With having above points in mind we came up with this model as a premise of our business.
Initially the project will be a Hybrid Store-Warehouse.
Orders will be originally picked and packed in-store by a team of personal shoppers and
customers can have it delivered to their home at an agreed time for a delivery charge of Rs250
if the order exceeds by RS 1500.
This service can be made possible by having personal shoppers go to grocery stores and fill
orders made online by picking items right off the shelves. Orders were then delivered by mini-
vans to customers the order fulfillment seems to be a natural evolution. Picking from existing
stores provides fast roll-out with low investments.
Therefore, when the initial customer base has been established, and the required density is
achieved, a plausible alternative is to move to another distribution center which can help us
cater more audience and cover more destinations.

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Possible Locations
Shaheed Millat Warehouse: 2,000 sq. ft. Warehouse which is suitable for any kind of storage,
being close to Imtiaz our main partner in this project, and having quick access to the residential
area this area proves to be a center point of the city. This location would prove to be very
benefiting and therefore makes it our first choice of location.
Head Office (Shah re Faisal): Our HO will be located on Main Shah re Faisal, in a suitable office
building. All orders will be received through our online app to Head Office and after the billing
process; list of items will be forwarded to our Manager at the warehouse who will be looking
after the team of personal shoppers to gather the required grocery list items.
Our mini-vans will then deliver these grocery items to the required customer places within a
time range of 30-60 mins.

Geopolitical Analysis
Geopolitical means the foreign influences we will face due to the geographical location of
Pakistan. We have the advantage of having a Port Qasim and Gwadar Port because of which the
transportation cost will be less for this project.
We will be buying our goods from suppliers like Imtiaz, Metro and Naheed. Many of the
products we will buy will be imported and from other countries. So the crisis in other countries
will affect us as their prices will increase because of which people will shift to local products.
Treaties and trade agreements or regulations with other countries can affect us as that can
reduce import duties and tariffs. One very important treaty is the China-Pakistan Free Trade
Agreement. A Second Phase agreement is currently being negotiated between China and
Pakistan. The second phase will lower tariffs further as well as normalize various trade
procedures.
Another treaty is called the SAFTA Treaty. SAFTA Treaty is between Afghanistan, Bangladesh,
Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. SAFTA has reduced customs duties of all
traded goods to zero since the year 2016.

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Material Requirements

S.NO ITEMS DESCRIPTION QUANTITY UNITS

1 Desktop computer HP 3 Nos
2 Lenovo Laptop G50-70 6 Nos
3 Printers HP 2 Nos
4 Photocopy Machine Xerox 1 Nos
5 Office Chairs 20 Nos
6 Ready-made cubicles 7 Nos
7 Keyboard IBM 3 Nos
8 Mouse IBM 3 Nos
9 Honda Generator 100KW 1 Nos
10 Server 1 Nos
11 Office Tables 10 Nos
12 Air Conditioners Units 4 Nos
13 Internet fiber optic Cables As per actual Meters
14 Ready-made shelves (steel) 50 Nos
15 Pak Cable Electronic wiring As per actual Meters
16 Human Capital
Clerk 1
Mini-Van Drivers 3
Inventory Managers 2
Grocery Riders 3
17 Suzuki Bolan 2 Nos

21
Environmental Aspects
Online shopping is a form of electronic commerce which allows consumers to directly buy
goods or services from a seller over the Internet using a web browser. It has already taken over
the physical supermarket & retail stores. The project ensures to minimize the things that effect
the environment and awareness of the environmental impact of our professional and personal
lives is at an all-time high.
The main issues to tackles were:
Cause: Online orders means digitization of products
Economic effects: → Change in supply chain, stores → warehouses → On-time delivery →
smaller warehouses → Company decentralization → more communications (phones, faxes) →
Transportation of freight: smaller packages, more by air
Environmental effects: → Dematerialization (ex. digitization of books) → Change in land use
(fewer malls, more warehouses) → Transport volume, vehicle emissions → more packaging but
more plain
Health effects: → carpal tunnel syndrome, spine injury, eye strain, etc. → lack of exercise,
obesity
Environmental concern reflects the commitment by an organization to respect and protect the
natural environment in which we live. If we do not protect it then we will have more
environmental hazards as everything is linked together.
Some other relevant issue like:
Transporting goods to the consumer will release carbon monoxide gas, hence to minimize the
effect we use to transport good on monthly bases so that our cost plus the environment will
benefit out of it.
We can conclude that this Online App will not only avoid the waste of resources but will also
help to reduce the carbon emission in the atmosphere and make Earth a better place to live in.

22
Project Cost & Means of Financing

23
Operating & Financial Results

Estimated Ratios 2019 2020 2021 2022 2023 2024

 GP Margin - It can be seen that there is a substantial growth trend in this ratio as the company’s
gross profits and sales are estimated to rise every year.
 Operating Profit Margin – There has been an overall consistent growth trend between operating
profit and sales expect for year 3.
 Net Profit Margin – Since both of the above ratios are doing pretty well, the trickled down effect
to net profit to sales has been estimated to show a positive growth trend over the years with 4%
as the highest increase from year3 to year4. It decreases in year 3 due to the lower GP and OP
margin both for year3.
 Return on Assets – This ratio does not present a good picture at the beginning years of the
project but increases over the years.
 Return on Equity – This ratio is expected to also increase over the period of the project and with
consistency. Retained earnings will likely increase every year and the net income as well as
expected.
 Current Ratio – This ratio’s expected calculations say that the company’s current assets are
highly enough to cover its current liabilities. The trend shows that the company has a good
current ratio but it starts to decline over the years as current liabilities begin to rise each year.
 Debt to Equity Ratio – the trend of this ratio is estimated to decrease every year. This is because
since our DFI loans are being paid off every year, so the total amount decreasing consistently
per annum, plus the total current liabilities increasing every year, would eventually give an
effect of the total debt to decrease substantially every year. This is a good sign for the company.
 Interest Coverage Ratio – Here the trend can be seen as increasing per annum. This is because
the DFI loan payments are decreasing every year, whist the operating profit is increasing. The
trend shows that this is good for the company, and the higher it gets the better it is.

24
Conclusion & Recommendations
Save Mart. offers the latest methods of online shopping which are the way forward in the 21 st
century and this digital world. We provide a hassle free and cheaper more innovative alternate
to traditional forms of shopping. However, There are a number of critical things to keep in mind
that need to be taken care of in order to successfully implement our project and so that it
doesn’t fail and suffer huge losses in a few years:
1. We should follow the critical path analysis and make sure that each and every one of
our activity isn’t delayed more than its maximum days because then our whole project
will be affected by it. The critical path is simply all the tasks that determine the end date
in your project schedule. If one of those tasks is late by one day, then our project end
date will be extended by one more day. Following the path will also help reduce risk of
our project.

2. We should keep all our expenses limited and not overspend in the first year because our
outflows will be heavy with zero inflow. With keeping our expenses tight it will ensure
that we can reach our breakeven point quickly and our cost does not rise because then
our prices will also go up and we may lose our market share to our competitors in this
industry.

Lastly we should form a strong marketing team and strategy to ensure that customers accept
and try this relatively new idea of shopping which is strengthening its roots in the market. We
need to build our customer base right from the start because they can make or break our
business. By this way our company can establish a name for it and get a competitive edge. As
we are in the digital business itself so we should also focus on the state of the art latest forms
of facilitating our customers through our app because if we can market ourselves then so can
we market others. Our own app should be an example for all others to attract other businesses
that are planning to enter this industry.

25
Annexures
Location & Site map:

26
Initial Net Working Capital

Assumptions of the Underlying Project

1. The proposed project is expected to commence its operation from January 1st, 2019.
2. The proposed project would not be exporting any goods, its sale are based on local market only
3. Sales Revenue is expected to increase by 5% every year
4. Admin and General expenses are expected to increase by 2.5% annually
5. Selling expenses are assumed to increase at 1% of sales
6. Finance charges: All loan borrowing: 15%
7. Repayment of DFI loans: 10 annual installments commencing from 1/3/2019
8. Corporate Tax: 35%
9. Advance deposits and Prepayments assumed to increase by 25% annually
10. Transportation cost increasing at 10% annually.
11. Software upgrading is done after every 3 years at the cost of Rs 150,000 and expected to
increase at 33%

27
Calculations based on Assumptions

28
29
Breakdown of Project Cost

30
 Projected Financial Statements
Balance Sheet
End of
Construction Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
ASSETS
Current Assets
Cash and Bank Balance
225,000 161,496 (108,332) 68,261 418,874 655,194 833,360

Short Term Investments - - 642,768 500,000 - 110,545 -

Accounts Receivables
(50%) - 50,000 100,000 150,000 200,000 250,000 330,000

Inventories 380,000 265,000 215,000 225,000 224,000 183,000 350,000

Advance Deposits &
Prepayments (25%) 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000

Total Current Assets 1,005,000 976,496 1,449,436 1,643,261 1,642,874 2,098,739 2,513,360
Fixed Assets

Fixed Assets at Cost 3,695,000 3,695,000 3,695,000 3,695,000 3,695,000 3,695,000 3,695,000
Less: Accumulated
Depreciation - (209,125) (418,250) (627,375) (836,500) (1,045,625) (1,254,750)

Fixed Assets Net 3,695,000 3,485,875 3,276,750 3,067,625 2,858,500 2,649,375 2,440,250
Intangibles 300,000 - - - - - -

Petty Cash - 106,925 82,028 - 367,870 98,140 -

Total Fixed Assets 3,995,000 3,592,800 3,358,778 4,710,886 3,226,370 2,747,515 2,440,250

TOTAL ASSETS 5,000,000 4,569,296 4,808,214 6,354,147 4,869,244 4,846,254 4,953,610

LIABILITIES AND EQUITY

Current Liabilities

Taxes Payable - 58,231 91,761 111,432 250,199 338,399 542,678

Total Current Liabilities - 58,231 91,761 111,432 250,199 338,399 542,678

Longterm Debt 2,000,000 1,601,496 1,502,992 1,389,712 1,259,440 1,109,628 937,343

Total Liabilities 2,000,000 1,659,727 1,594,753 1,501,144 1,509,639 1,448,027 1,480,021

Paid Up Capital 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000 3,000,000

Retained Earning - (90,431) 213,461 209,742 359,605 398,227 473,589

Total Equity 3,000,000 2,909,569 3,213,461 3,209,742 3,359,605 3,398,227 3,473,589

TOTAL LIABILITIES AND

EQUITY 5,000,000 4,569,296 4,808,214 4,710,886 4,869,244 4,846,254 4,953,610

31
 Cash Flow Statement
End of
Construction Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
SOURCES OF FUNDS

Operating Profit - 160,875 613,625 590,913 801,930 838,877 928,975

Add: Depreciation - 209,125 209,125 209,125 209,125 209,125 209,125

Total funds from
operation - 370,000 822,750 800,038 1,011,055 1,048,002 1,138,100
DFI Loans 2,000,000 - - - - - -
Paid Up Capital 3,000,000 - - - - - -
TOTAL SOURCES OF
FUNDS 5,000,000 370,000 822,750 800,038 1,011,055 1,048,002 1,138,100

APPLICATION OF FUNDS
Investment in Fixed
Assets 3,695,000 - - - - - -
Pre-production
Expenses 300,000 - - - - - -

Repayment of Loan - 98,504 113,280 130,272 149,812 172,284 198,127

Interest on Loan - 300,000 285,224 268,232 248,692 226,220 200,377

Payment of Income
Tax - - (48,694) 114,940 112,938 193,633 214,430
Increase in Current
Assets (other than
cash) 780,000 35,000 100,000 110,000 149,000 109,000 347,000
Short term
investments - 642,768 500,000 - 110,545 -
Total Application of
Funds 4,775,000 433,504 1,092,578 623,444 660,442 811,682 959,934

Cash Surplus/Deficit 225,000 (63,504) (269,828) 176,593 350,613 236,320 178,166

Cash at the
Beginning of Year - 225,000 161,496 (108,332) 68,261 418,874 655,194
Cash at the End of
Year 225,000 161,496 (108,332) 68,261 418,874 655,194 833,360

32
Income Statement

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Capacity Utilization

Sales (5%) 2,500,000 2,625,000 2,756,250 2,894,062 3,038,765 3,190,703

LESS: COST OF GOODS SOLD

Purchases 700,000 400,000 425,000 450,000 475,000 500,000

Manufaturing overhead 150,000 150,000 150,000 150,000 150,000 150,000

Software Update - - 150,000 - - 200,000

Transportation cost (10%) 100,000 110,000 121,000 133,100 146,410 161,051

Depreciation 209,125 209,125 209,125 209,125 209,125 209,125

Inventory Adjustment: add: Opening 380,000 265,000 215,000 225,000 224,000 183,000

less: Closing (265,000) (215,000) (225,000) (224,000) (183,000) (350,000)

Total COGS 1,274,125 919,125 1,045,125 943,225 1,021,535 1,053,176

Gross Profit 1,225,875 1,705,875 1,711,125 1,950,837 2,017,230 2,137,527

Less: OPERATING EXPENSES

General & Administrative Expenses
(2.5%) 1,040,000 1,066,000 1,092,650 1,119,966 1,147,965 1,176,645

Selling Expense (1%) 25,000 26,250 27,563 28,941 30,388 31,907

Total Operating Expenses 1,065,000 1,092,250 1,120,213 1,148,907 1,178,353 1,208,552

Operating Profit 160,875 613,625 590,913 801,930 838,877 928,975

Less: FINANCE COST

DFI Loan (15%) 300,000 285,224 268,232 248,692 226,220 200,377

Profit before Tax (139,125) 328,401 322,681 553,238 612,657 728,598

Tax @ 35% (48,694) 114,940 112,938 193,633 214,430 255,009

Net Profit (90,431) 213,461 209,742 359,605 398,227 473,589

33
Interest and Repayment Schedule

Weighted Average Cost of Capital,

Workings

2019 2020 2021 2022 2023 2024

34