Tesco launched a "virtual store" mobile app in South Korea that allowed customers to scan product barcodes to view information and place orders for delivery, leveraging the country's tech-savvy population and widespread smartphone usage to provide a more convenient shopping experience without needing to expand its physical store presence. However, the initiative struggled with high delivery costs and failed to gain significant customer traction.

1. Virtual Store By:
Ajay Srinivasan
Sneha ShashiKumar
Business Model Presentation Souvik Sen
Susanne Pihl

2. Introduction
Value Proposition
Customer Segment
Value Chain and Scope of Activities
Strategic Control
Conclusion

3. Tesco People of South Korea
3rd Largest Retailer in The World Population of 50 Million, ~80% in
Urban Area
Present in 14 Countries, Revenue of Technology Driven
$94,185 Billion in 2011

4. Very Busy People
2nd Most Hardworking People
Long Work Hours Very Less NO. of Leaves
Shopping A Dreaded Task
Long Queue Easy To Access To Store
Only on Weekends Other Easy Means

5. E-Mart is a Big Rival
NO. 1 Retailer in South Korea
Large NO. of Stores
Position of Tesco
Cannot Open New Stores
? To Be NO.1 in South Korea
Strict Gov. Regulations
? Increase Sales Without
Increasing NO. Of Stores Opposition of Mom-Pop Stores

6. Smart Phone User Subway
15 Million Smart Phone Users Free Internet on the Subway
~40 Million Smart Phone Users by
2014 Widely used by South Korean
Lots of Place for ADs
Demographic Location
of Population
80% People Stay in Urban Area
Technology Friendly People

7. 2D Images of Products Metro Entrances and Platform
Tablets and Smart Phone To Scan Items Delivered to Customers
Bridge the Gap between Online & Physical Shopping

8. Bring The Store To The People
Shop On-The-Go
Waiting Time At Station Equal
Shopping Time

9. Convenient Delivery Secure Online Payment
Order Before 1pm,
Delivered On Same Day No Cash Payment Hassle
Accommodate Delivery Changes Tie With O2, App work on
Android, iOS, Symbian
Set Delivery Date 3 Weeks in Advance

10. People in Korea work 2193 hours a
year, the highest rate in the OECD
where the average is 1 749 hours.
5:30 am up
11-12 pm
6:30 Leave
Arrive
home
home 39-year-old Lee.
A civil servant at the
ministry of agriculture
9 pm or
8:30 Arrive
later Leave
at work
work

11. • Work long hours
• Very little peronal time
• Shop at night or in weekend  So crowded
• Prefer fresh food
• Often Singles or no children
• Tech savy
• Buying power
Conveinient location, shop on the go.
Make waiting time to shopping time
Hassle free payment
New unique experience
Convenient delivery
Wellknown company, branded
products, fresh items

12. Korean society is aging rapidly, and government policies are struggling to keep up with
the pace of change. However, many ordinary Koreans are not prepared to give up on
their long tradition of respect and care for the elderly. (Jarrod Hall/The Epoch Times.)

13. Those Aged 65 and Above
By 1990: 5 %
By 2012: 11,8 %
By 2050: 37,6 %
That is 5.6 million people above 65 in 2012
60 % of population has
smartphone. Age group expand

14. • Shop few items often
• Often limited mobility
• Flexible shopping and delivery hours
• Often have a caretaker/family for shopping
• Cooking an issue. Help needed
• Sceptical to new technology
• Price important
Convenience. Caretakers can shop on
their way to/from work
Convenience: Retiree shop from
home, no travel, store come to them
Convenience: Skip Q and commute to
store, delivery at doorstep
Fresh items, known brands,
Delivery fee can be an issue

15. Virtual store and Catering service
Skip cooking
Caretaker shop and provide meals on the go
Or retiree order from home

16. Tradition for women to stops
working when married
50 % of women between
15-64 are home runners
2010: 54.6 % of households
have children.
Only 33,9 % Korean families use
childcare

17. • Shop often; - fresh food and rising prises
• Shop bulk items (Diapers etc.)
• Cook at home
• Go by subway to parks/play areas
• Flexible times during day for delivery
• Healthy food and childrens items important
• Shopping difficult with children
Skip nightmare shopping with kids in
store. Hassle free
Convenience: Shop comes to her.
Delivery: Do not have to carry items.
Delivery fee can be an issue

19. Shop comes into costumers home
Buy when seen
Expose costumer to Virtual shop

20. Shop when need appear
Ad to shopping chart instantly
Convenient real time shopping;-Store
comes to costumer every where

21. Convenience:
Save time - Shop anytime
- Shop where
Wating time to active time
you are
- Delivery at
New cool shopping experience
doorstep
Brand
- Branded
company
- Branded
Hassle free shopping products
Selection
New cool shopping experience
- Broad
Store comes to her home - Fresh

22. Homeplus virtual shopping 7 eleven E-mart
Higher price (delivery) Expensive Low price
- Convenient location - Conveinient location on - Location inconvenience
the way
- Convenient opening hours - Convenient opening hours - Limited opening hours
- Convenient delivery - No delivery, carry home - Normally carry home
- Hassle free payment - Time consuming payment - Time consuming payment
- Fresh items - Ready meals/ not fresh - Fresh items
- Broad selection - Limited (targeted) selection - Broad selection
- Branded products - Branded products - Branded products
- Waste time to active time Foreign and Fancy Pain the ……..
- Real time shopping
New unique experience Fast culture National treasury

23. High
Low
E-mart 7 Eleven HomePlus Virtual store

24. Ordering Delivery
Packaging

25. More than 500 products
Scanning of any code
Ordering

26. Super Market
Warehouse
Packaging

27. Time slots-Interval of 2 hours.
Ordering before 1 pm, goods delivered
on the same day.
Delivery during weekends preferred.
Delivery

28. ‘Virtual fridge’ inside Gatwick -Stock
up while waiting for your plane.
Pick a delivery slot date/time
( up to 3 weeks ahead)

29. Customer Scan & Place
Order
Tesco
Home plus Delivery
Charges
ADs In
Online
Subway Payment Delivery
Interactive
Packaging
Display
Commission On
Posting Ads
Suppliers
Tesco Gatwick

30. Grocery shopping while waiting for their friends at
the station foyer.
Cold Storage
Virtual Shops at Bugis and Boon Lay
Subways
Train Platform Don’t have Larger Advertising
Space
Analyst Feel it’s a Failed Attempt
A lack of strategy
Besides strategy, everything else fails

31. Sustaining Appropriability Competitive
profitability Regime Advantage
• Complementary • E Mart business vs
• Create market wave assets Tesco Business
• Value proposition to • Control of industry • First mover advantage
create market architecture • Customer focus
presence
• Tech ego of people
Superior Value Proposition

32. Tesco identified the fact that 15 million smart phone users
Korean’s were adept in using smart were there in Korea
phones to the fullest.
Tesco’s strategy was to target Tesco believed that reaching the
the technological ego of the critical mass to the population shall
young office going Koreans enable its market presence.

33. Tesco identified the fact that 15 million smart phone users
Korean’s were adept in using smart were there in Korea
phones to the fullest.
Tesco’s strategy was to target Tesco believed that reaching the
the technological ego of the critical mass to the population shall
young office going Koreans enable its market presence.

34. Capturing the
voice of customer
was the most
important strategy
!!
Tesco’s strategy of having entered Korea with Samsung was to identify the
mentality of Korean people
Korean’s were tired waiting at long queues for getting their items billed.
First Mover advantage – Virtual Store

35. Market control using Red Ocean Strategy Tesco competed in Korean market
1 which was ruled by their competitor
E-Mart
RED OCEAN STRATEGY 2 Tesco’s target was to beat E-Mart
and become No.1 in Korea
Compete in existing market space
1
Beat the competition The people of Korea were tired of
2 3 long queues in billing counters
3 Exploit Existing Demand
Tesco provided items and lower cost
4 Make the value-cost-trade-off 4 and hence concentrated on
providing better value
Align the system of firm’s activities to a
5 strategic choice of differentiation OR low Tesco strategic intent was to
cost 5 differentiate itself from its
competitor

36. Poor Customer Logistic issues
planning
Poor planning
Higher delivery cost
Failure to provide due customer Big investment on delivery vans
service
Failure to predict the readiness of Spending too much capital before
the consumer market producing any profit
Customer acquisition costs - Branding Expanding too quickly before trying
to establish in a specific market

37. Order Stores to people
Packaging Value Proposition
Delivery Shop on the go
Handling Display*
Waiting Time to
Scope of Activities Shopping time
Customer Segment
Strategic Control
People of South Korea
Products Sold Tech Driven
Delivery Charges Young Working people
Commission* House Wife
Value Capture

38. 15 million smart phone users were there in Korea
Strong Technological capabilities

39. Future of Shopping
First Mover Advantage
Superior Value Proposition
Leveraging the E-Commerce
Smart Shopping