Ans1: Would you recommend Migros to incentivize the use of online?

• History suggests that the old generations of Turkey were well known for their particular
interest in traditional stores. Physical stores on the streets and personally visiting them
for their daily requirements was an accepted Tradition in Turkey.
• If we consider the food market as our focus, in this case, 80% of its purchase was made
using traditional channels.
• But as time passed, i.e., from 2013 to 2018, the younger generation were the decision-
makers of purchases that opted for online modes majorly using mobiles, i.e., they
favored online shopping more than the traditional way.
• A growth rate of 32% has been seen in Turkey’s Internet retailing through compounding
touching TL 30.2 ($5) billion in 2018.

2013 2014 2015 2016 2017 2018

PC Ownership (%) 49.9 53.5 54.8 54.9 56.6 59.6
Internet Penetration (%) 48.9 53.8 55.9 61.2 66.8 72.9
Mobile Penetration (%) 90.9 92.5 93.5 94 96.4 97.7
E-commerce Volume (billion $) 7.4 8.6 9 10.2 11.6 12.4
E-commerce Number of Shoppers 10 14 15 17 21 25

• Some new developments in the Banking systems in Turkey have been seen which
promote online payments more, such as the launch of e-wallets and cards with pre-paid
features.
• The global market share was about 4.6% for online retail shopping, among which Asia
was at the top with 6.5% and Europe at 5.6%. These results led to predictions that if the
share of the online retail market reached 20%, the condition would be like “kill brick
and mortar.”

Fig 1.1: Turkish Grocery market Growth Potential (as of 3Q 2019)

• Looking at such trends, even Turkey entered the race to gain its market share in online
food retail. Thus, to gain maximum share, I strongly recommend Migros to incentivize
the use of online. This will only help Migros get some first movers’ advantage so that
in the coming years, people will have a strong sense of choice for Migros in the online
Food Retail market.

E-commerce
Number of
E-commerce Shoppers PC Ownership (%)
Volume (billion $) 9% 22%
5%

Internet Penetration
Mobile Penetration (%)
(%) 27%
37%

PC Ownership (%) Internet Penetration (%)

Mobile Penetration (%) E-commerce Volume (billion $)
E-commerce Number of Shoppers

Fig 1.2: Turkish Grocery market Growth Potential (as of 3Q 2019)

Ans. 2:
Would you recommend Migros to match the shipping speed of competitors like Getir?
Yes, we advise Migros to match the shipping speed of rivals like Getir because it improves the
overall customer experience. Being like Getir would boost customer happiness and adherence.
In Turkish food internet retail, an entrepreneur launched Getir, which positioned itself as a fast
quick on-demand player currently offering 1000 SKUs with delivery in under 10 minutes in
Istanbul. Getir is using a Mobile channel and fulfilling orders from small dark stores and vans
with 24/7 availability. With the motto “bringing happiness,” it grew at a rapid rate between
2015 and 2018. It can be easily elaborated that after the arrival of on-demand delivery services
in Turkey, the ingrained customer habits ate up traditional sales.

In February 2019, Migros decided to launch its fast delivery vertical, Hemen offering 1500
SKUs in under 30 minutes delivery time to compete. “Hemen” meant immediately in Turkish.
After seeing considerable demand for Hemen, Getir and Banabi were trying to outdo each other
in growth because they were start-ups with the main KPI as growth, unlike Migros with a focus
on Profitability. Also, to reach out to more customers, Migros waived Hemen’s delivery fee
for the first year. As of September 2019, Hemen was available in three cities and received 1500
orders per day on average, while Getir was rumored to have reached over 50000 orders per
day.
Ans 3: How would you use the different fulfillment options that Migros is evaluating
(dark store, mini dark store, store picking)? What data would you collect to consider the
options and inform your decision?

Dark Store: Centrally located store, which enables pickers to fulfill an increased number of
orders for four nearby stores per dark store without disturbing the offline customers at the store.

Mini Dark store: These are micro fulfillment centers in each physical store’s “Backroom” to
optimize the last-mile delivery for online customers, with 4,250 SKUs representing about 80%
of the most frequently ordered items.

Store Picking: Simple yet effective model wherein items were picked up from the nearest
physical store in the locality to fulfill online orders. The number of SKUs depended upon the
store size and ranged between 10,000 and 17,000.

Table 3.1: Comparison of different fulfillment options

Advantages Disadvantages

1. Dark 1. Optimized Logistics due to 1. Decreased sales from

Store fulfillment of orders for
multiple stores from a
single location.
2. Higher perfect order rate
than Store picking, i.e.,
65%.
2. Mini Dark 1. Saving the cost for
stores additional central stores,
i.e., Dark Stores.
2. Low pickup time and less
affected in-store traffic.
3. Store 1. Store associates did the
Picking picking, which led to cost-
cutting and increased
utilization of resources.
2. Increased delivery speed
with pickup stores near
the order fulfillment
destination.
offline stores can affect
the staff's morale.
2. Capacity utilization was
less, i.e., only 59.7%.
1. A low number of SKUs
provides customers with
fewer options.
2. Out-of-Stock rate was
higher as compared to
dark stores.
1. Discrepancy in the actual
store inventory leads to
low perfect order rates &
customer satisfaction.
2. Pickers were unwilling to
help in the stores during
their downtime because
they had no incentives.
For the data collection part, some essential data categories could prove beneficial in making
the decision. Following is a few of them:

1. Since the Food retail market is online, the customer usually interacts with our online
website to order Food. So, if we need our customers to prefer us over others, our website
should be well structured, easy to use, and Fast to load to make fast decisions. Once
ordered, we have the options mentioned above to select from. So, the speed at which
the customer can receive the Food/parcel data would be essential to consider while
making an informed decision.
2. Our service to provide the goods must be reliable, and it may vary in every available
option; therefore, we need to measure the reliability of delivering the goods using our
three chances with the help of past data on success rate. This would help to evaluate the
most reliable option and to make an informed decision.
3. From placing an order on an online retail website to delivery, security plays a vital role
since the data related to our customer’s choices and some important personal
information is also included in this, therefor in an online mode, the services used to host
the website should be using secured transmission and payment gateway to avoid
intrusion of hackers in any of the process. Once the product is to be delivered, the order
must be safely delivered to the exact customer for whom the order is for. This also
counts as an essential factor in selecting which one of our options is more secure.
4. Depending on our pricing model and the urgency to which of the three options the
customer will choose to get the delivery. Thus, this data also is one of the decision-
making which of the three options the customer will decide to get the delivery. Thus,
this data also is one of the decision-making parameters.

Number of SKUs Ave. Picking time Perfect Order Rate Number of Orders Fulfilled/day

Store Pick 10,000-17,000 22 minutes 62% 350

Dark Store 10,000 12 minutes 80% 400

Mini Dark Store 4,250 20 minutes 65% 206