Instantnia - Business Success due to Serving the Low Confident Residents in Qatar - Example

Business Plan of Instantnia

Table of Contents

Introduction4

Overview of business idea4

Micro-level Market5

Macro Market7

Macro Industry11

Business model and feasibility13

Conclusion16

Reference list17

• Introduction

Online shopping has increased all over the world because it simplifies the experience and requires less of time. The increasing work pressures and a disruptive work-life balance have made it easier for people to indulge in online shopping (Engagement Bureau, 2016). Moreover, the presence of a single platform with a variety of products makes it convenient for the people to shop. The cheap prices offered online also attract the shoppers. Therefore, people prefer online shopping to offline ones (Hoekman and Nicita, 2010). The paper will analyse the problems faced by online shoppers of Qatar and in turn will provide a solution to it by proposing a business plan.

• Overview of business idea

Qatar is a Middle-Eastern country, where people are tech savvy and rely highly on the internet for gaining adequate information (Engagement Bureau, 2016). However, the confidence of the residents of Qatar on online shopping has dropped because of the increase in fraudulent activities (Syed, 2016). Moreover, there are times when charges for online shopping are debited from the accounts of the shopper but ultimately, the products fail to reach the customers (Amer, et al., 2013). Therefore, this has caused a decline in the confidence level of the shoppers in Qatar (Abdallah, 2011). The residents apply the ‘cash-on-delivery’ option instead of paying online because of the lack of confidence on the online sites (Bhuian, 2016). Only 14% of the Qatar population is observed to indulge in online shopping and this has reduced the pace of growth in e-commerce (Syed, 2016).

In Qatar, the percentage of credit card holders is also low, because the residents of that country face difficulties in trusting the system. Only 14% of the population of Qatar have credit cards and out of them, only a few indulge in online shopping (Bhuian, 2016). Therefore, the business plan will be, to set up a small sized company that will act as a mediator between the customers and the online brands. The intermediary will help all those clients who want to purchase products from the online forum but have low confidence in the system (Abdallah, 2011). Since, in Qatar, there are rarely any kinds of businesses that serve the particular service, therefore, the introduced idea will be a success.

There are numerous compelling benefits of the service provided by Instantnia. One of these will be, to assist the section of the population who possess few knowledge of the internet. These refer to the aged people who are unaware of the technological developments and lack the knowledge of operating computers for online purchases (AlGhamdi, et al., 2012). The service also allows the section of the population who have low confidence in online purchases, to place orders without any kind of threat (Amer, et al., 2013). The service will enjoy competitive advantage in the Qatar market because there are hardly any other companies that serve such mediator services.

• Micro-level Market

Key market segments and details of transactions

Instantnia will segment the Qatar market as per the age of the people. In this perspective, the service provided by Instantnia will serve people belonging to the age group 18-25 years, 26-40 years and above 40 years. In each of the segments, the buying patterns are different because the decisions vary as per the age group (Abuqamar, Coomans and Louckx, 2011). Instantnia will offer its services to all the segments but focus specifically on the middle and old aged people, which mean that its focus will be on age groups 26-40 along with above 40 years section of the population. Since, the middle-aged people are the busiest in their work life; therefore, Instantnia will simplify their lives by providing them with the facility of purchasing online products without spending time on choosing it from the sites. Moreover, the low confidence in online purchasing is observed mostly in the middle aged and above 40 years section of the population (Syed, 2016). Since, the aged people are not tech savvy and have a low confidence in online shopping; therefore, Instantnia will be a profitable business in Qatar (AlGhamdi, et al., 2012). Therefore, from the discussion, it is evident that the customers will be people belonging to the age group 26-40 and above 40 years.

Instantnia will set an office where customers having low confidence on online shopping but willing to purchase online, will arrive and place their orders. However, the orders will not be limited to apparels and electronic items, but will cover grocery items as well (Hoekman and Nicita, 2010). This will make Instantnia attractive, because it will allow the customers to choose from a wide variety of products of their choice. The agents of Instantnia will place these products for order. However, only a few of the online stores will be given priority by Instantnia and these refer to Amazon.com, the-box.me, ikea.com, freshqatar.com, qbay.com and beautepop.com (Abuqamar, Coomans and Louckx, 2011).

In order to proceed with the business, Instantnia will allow the customers to visit their office and place their orders. Apart from that, a website will also be introduced for the aged groups who have difficulty in arriving at Instantnia’s office. Since residents of Qatar prefer Cash-On-Delivery system, the product price and service charges will rely on it (Hoekman and Nicita, 2010). However, the system of paying instantly in the office while ordering the product will also be available, in order to enhance the flexibility for the customers. The charge for the service provided by Instantnia will be kept minimal after launching the business, in order to attract customers after which it will gradually be increased. In this manner, Instantnia will deal with the transactions.

The system of COD will be offered only for the customers with low confidence in the start-up business and for those who are aged, having the difficulty of arriving at the office for placing orders (Abdallah, 2011). Thus, from the discussion, it is clear that the aged group of population in Qatar will be given the option of placing orders in Instantnia, through either phone calls or their website. This option will be available to the aged and working class of the population (Eid, 2011). On the contrary, the option of arriving at the office of Instantnia and placing orders will be given to the working group, who prefer such an alternative.

For conducting the research, secondary method is the most suitable and this has been used for finding out the relevant information. For understanding about the market segments, the consumer preference for online shopping has been considered. It has been determined that 49% of the Qatar population accesses the internet for purchasing products. Therefore, the aim of Instantnia is the same 49% of the population who indulge in online shopping at Qatar.

• Macro Market

In order to analyse the macro market, research has been conducted through PEST analysis.

PEST analysis of Qatar’s online shopping market

Political

Figure 1: Qatar Political Stability

(Source: The Global Economy, 2015)

Political stability is measured by the index of points, whereby -2.5 reflects weakness and 2.5 shows the strength. Figure 1 clearly highlights that, Qatar is politically stable although the average points have declined in the year 2014. This makes it profitable for Instantnia to operate in Qatar. In terms of business freedom, the overall score has increased to 71.4 (The Global Economy, 2015). This makes it favourable for start-up businesses to operate in Qatar. From the perspective of fiscal freedom, there have hardly been any changes.

Economic

Apart from information on political stability, the fact that only a minimal corporate tax of 10% is imposed on foreign firms makes it easier for businesses to flourish at Qatar. Moreover, there is lack of any regulation regarding minimum wages for employees, which makes it profitable for start-up businesses to generate revenue. Additionally, the country occupies a higher position from the perspective of subsidy provision by the Government. This in turn reduces the cost of operation for the start-up ventures (Qatar, 2016).

Another element, which makes it easier for the newly launched businesses to operate in Qatar, is the low rate of inflation. At Qatar, the inflation rate is only 3%, which means, the disposable income of the people is high and this will encourage organisations to offer more of its products and services (Qatar, 2016). On the contrary, for corporations, the lower inflation rate reduces the raw material prices required for producing the final product.

Social

In terms of standard of living, the social condition is better at Qatar. This means that, there is a greater demand for high priced items at Qatar and this will make it profitable for start-up business ventures to attain success (Bhuian, et al., 2013). Moreover, the people belonging to the age group of 26-35 years make most of the purchases online. Nearly 42% prefer online shopping to the in-store shopping (Bhuian, 2016). Thus, the consumer preferences have changed and this has affected the online companies like Amazon.com, ikea.com, the-box.me, freshqatar.com, qbay.com and beautepop.com positively. The reason behind online purchases is the availability of competitive pricing and convenience for the shoppers (Bhuian, et al., 2013).

Technological

Small enterprises have increased the rate of ICT (Information and Communication Technology) adoption from the past four years (Manochehri, Al-Esmail and Ashrafi, 2012). This has increased from nearly 6% to more than 40%. However, for the medium scale enterprises lack web presence and a lower percentage of 6% applied e-commerce in their business operations (AlGhamdi, et al., 2012). However, most of the companies use online procurement in order to run their businesses. The total expenditure of 6% on IT by SMEs (Small and Medium Scale Enterprises) in Qatar, clearly reflects that technological developments have failed to reach the optimum mark (Al Dhameen, 2013). Thus, there is a negative environmental condition at Qatar.

The PEST analysis makes it evident that, Instantnia will be highly successful while operating at Qatar because the region is politically stable. Moreover, the Government supports start-up businesses by providing subsidy. This will encourage Instantnia to set up its venture of a mediator between the online brands and their customers (Haron, 2016). The low inflation rate and absence of minimum wages rule will reduce its expenditure at a greater extent (Qatar, 2016). From this perspective, Instantnia enjoys a favourable position. However, the lack of investments on technological up-gradation by the government and SMEs has made it difficult for operating in Qatar (AlGhamdi, et al., 2012). Thus, apart from technological situation at Qatar, the overall market is attractive for Instantnia’s operation.

• Macro Industry

In order to gain significant information on retail industry of Qatar, Porter’s five forces are essential.

Porter’s five forces

Rivalry- High

The rivalry among Qatar supermarkets is high. For instance, the top retail chains such as Lulu Hypermarket, Al Meera, Spinneys, Carrefour and Family Food Centre (Palmer, 2016). Marks and Spencer, is another retail chain that is famous for offering grocery items along with apparels (Palmer, 2016). These outlets are also one-stop shops, where every kind of item is available (Powell, 2012). Therefore, Instantnia faces a high degree of risk from these rivals as these allow customers to judge the product before purchasing it.

Moreover, apps like Grofers have developed which provides the same services as Instantnia and delivers grocery items to people (Powell, 2012). Hence, the rivalry is high in Qatar.

Threat of substitutes- Low

Although there is no threat faced by the service provided by Instantnia in Qatar, there are huge supermarket outlets that offer a variety of products ranging from apparels to food items of different brands. This has made it difficult for the start-ups to differentiate their products. Moreover, the retail outlets at Qatar utilise CSR (Corporate Social Responsibility) for differentiating their product (Powell, 2012). This will make it difficult for Instantnia to attract customers, since there is no scope of distinguishing its method of offering services.

Buyer power- High

The buyer power is high at Qatar because there are huge options for customers in purchasing products. For instance, various retail outlets such as Marks and Spencer sell both grocery items and apparels. This allows the customers to visit the stores and choose the items from those places (Bhuian, et al., 2013). Apart from the mentioned supermarket, there are large categories of retail chains such as Lulu Hypermarket, Al Meera, Spinneys, Carrefour and Family Food Centre that offer a variety of items (Palmer, 2016). When an outlet charges higher price for a product, the buyers at Qatar have the power of switching their choices. Moreover, the apps like Grofers, which provide the same facility like Instantnia, allow customers to switch over to them. This makes the buyer power high.

Supplier power- Low

The suppliers of retail outlets are local market and textile companies are numerous in Qatar. Therefore, the retail chains such as Lulu Hypermarket, Al Meera, Spinneys, Carrefour and Family Food Centre have the opportunity of bargaining with the suppliers. The reason behind it is that presence of huge suppliers (Palmer, 2016). Therefore, a high price charged by a supplier may force the retail outlets to change their sources. In case of apps like Grofers, the suppliers are also the local markets along with apparel companies (Powell, 2012). The discussion clearly highlights the fact that in Qatar, the supplier power is low because there are numerous brands and stores distributing their products through retail outlets and apps like Grofers.

Threat of entrants- Moderate

In Qatar, the Government does not charge the corporate taxes from the domestic start-ups. This makes it easier for the new business ventures to easily enter the retail market for offering apparels and food items. The low inflation rate of of 3% has reduced the cost of raw materials, which favour the setting up of business (Qatar, 2016). In Qatar market, it has raised the threat of entrants. However, the fact that there are numerous retail chains serving different products and is a one stop-shop for customers, makes it difficult for new entrants to compete in the market. This in turn offsets the threat of entrants for the existing businesses (Powell, 2012).

An analysis of the retail industry reveals the fact that, it is attractive from the perspective of threat of suppliers and supplier power since both are low. Therefore, Instantnia will be able to conduct its business without any difficulty. However, Instantnia has to deal with the a high degree of competition existing at Qatar (Powell, 2012). Apart from that fact, since the consumer’s power is high, therefore, Instantnia has to provide discounts in order to attract the customers to avail its products.

• Business model and feasibility

An analysis of the micro level market clearly shows that, Instantnia has a chance of attaining success by serving the working section of the population belonging to the age group 26-40 years and above 40 years. The reason behind attaining success is the presence of low confidence among the population (Syed, 2016). A macro market review on the contrary highlights that, the stability in political environment along with the favorable economic condition in Qatar, makes the country highly attractive for start-ups. By conducting Porter’s five forces analysis, an idea regarding macro industry has been gained. Although there is the lack of a mediator providing online shopping services at Qatar, hence, Instantnia will achieve competitive advantage. This shows that, the threat of substitutes is low in Qatar (Bhuian, et al., 2013). However, rivalry is high in the market because of retailers. The retailers such as Lulu Hypermarket, Al Meera, Spinneys, Carrefour and Family Food Centre provide a wide range of products at a single place for customers (Palmer, 2016). For the stated reason, it is a threat to Instantnia. Nonetheless, buyer power is high in Qatar, for which, Instantnia has to lower its service prices by offering discounts in order to tackle it (Bhuian, et al., 2013). This discussion clearly highlights that Qatar is an attractive market for launching the mediator services.

Figure 2: The Business Model Canvas

(Source: Author’s creation)

In order to achieve success, Instantnia has to follow a business model by collaborating with key partners such as Amazon.com, the-box.me, ikea.com, freshqatar.com, qbay.com, beautepop.com. This will help Instantnia to increase the variety of products offered by it. However, for generating value for customer, the key resources essential for operation are staff members and internet facilities. However, for developing a better relationship with customers, Instantnia has to provide a space in their website for them to fill. Apart from it, feedback forms have to be arranged, because it will help Instantnia to improve its services based on the customer’s review (Haron, 2016).

In an attempt to take the idea forward, Instantnia has to spend on fixed cost like electricity bills and variable costs such as salaries of staff members. In order to promote its business, the company has to spend on advertisements (Eid, 2011). In the end of the business plan and implementation, Instantnia has a chance in attaining revenues from working groups and the senior citizens.

• Conclusion

The confidence among people in Qatar regarding online shopping has lowered because of fraudulent activities. The business idea emerged from this issue and Instantnia will be successful in its operations, since it will serve the low confident residents in Qatar. It has been determined that the online shoppers mostly belong to the age group 26-40 years and above 40 years. Therefore, Instantnia will serve them in Qatar. An analysis of the macro level market clearly shows that, Qatar is profitable for start-ups as there is political stability and the inflation rate is lower. The macro level industry, on the contrary highlights that, Instantnia has to offer its services at a low price for dealing with the highly competitive market. However, in order to proceed with the idea and successfully launch the business, Instantnia has to follow the business model canvas.

• Reference list

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AlGhamdi, R., Nguyen, J., Nguyen, A. and Drew, S., 2012. Factors influencing e-commerce adoption by retailers in Saudi Arabia: A quantitative analysis. International Journal of Electronic Commerce Studies, 3(1), p.83.

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