E-Cafe: A Smartphone Retail Shop And Repair Service In Brixton, Southern London

Revenue Expectations

‘E-Cafe’ is a small scale retail offline outlet which will be situated in the heart of Southern London at Brixton that will also have their presence in e-commerce sector. Brixton is mainly a residential area in the Southern district of London having a prominent street market and a substantial presence of the retail sector. This retail shop will be set up with intent of selling smartphones of different brands available at different price points. However, the shop is not just looking to generate its revenue out of commission from selling smartphones as the owners expect to make service income from non authorized service and repairs. The small scale shop will be set up as a sole proprietorship business from a young tech enthusiast entrepreneur who wanted to convert his passion for smartphones and gadgets into his profession. The main reason for opting for a proprietorship business structure is to sail through a hassle free legal set up process with minimal cost implications and to retain total operational control over his business (Henry 2021). Also considering the size of the business, the proprietorship business structure best served the purpose.

E-Cafe expects a total of 80% worth of revenue to be generated from the sale of products which is termed as product revenue with smartphones to be dominating product sales. Some of the smartphone brands which the retail shop will sell are that of Apple, Samsung, Oppo, Vivo, Xiaomi, Lenovo, OnePlus and Motorola. Smartphones of all different price points will be held for sale which includes the budget category, the value for money category and the premium smartphone category. Other than smartphones, some of the other products which will also be sold comprises of tablets, laptops, smartwatches, smartspeakers and other related accessories. When it comes to consumer electronic products, these mostly come with one year of brand warranty, after which customers may have to shell out exorbitant prices to get their products repaired. As a result, E-Cafe will employ professional experts with prior brand service experience who will account for the service team of the business. E-cafe estimates 20% worth of total revenue to arise from service income is providing repair services to be priced low and competitively when compared to brand service rates.

The Covid-19 pandemic has plagued the majority of 2020 with different nations imposing lockdowns and social distancing norms which resulted in adversely affecting the economy. The effects of the pandemic have also had an impact on the UK market posing unprecedented challenges for the small scale and medium sized enterprises considering a business standpoint. However, Covid-19 has resulted in a digital revolution worldwide which has led to changes in consumer buying behaviour, preferences and market dynamics (Mckinsey, 2022). The demand for e-commerce and online retail has seen a surge in the United Kingdom as more and more consumers have preferably started purchasing products such as food, groceries, electronics, toiletries and gifts online. According to recent statistics, in 2020, e-commerce in the UK has seen a 25% increase year on year with the pandemic nearly contributing to £5.3 billion in the country. The total revenue was previously forecasted to grow at a rate of 11% per annum which grew actually at 19% in 2020 (Mintel, 2022).

Market Trends

When it comes to consumer electronics, consumer preferences for buying products may vary. While there may be a wide audience which have shifted to online buying as a result of pandemic, there still exist a large proportion of traditional customers who love visiting the store to first have hands on experience or a look at the product before actually making the purchase. This segment was affected by the pandemic as stores had to shut down but as the restrictions begin to ease and the economy progresses towards recovery, targeting this demographic is equally important as that of the online demographic. E-Cafe looks to take advantage of this opportunity concerning the digital revolution so as to maximize upon sales. Another opportunity presented in front of E-Cafe is with respect to repairs. Granted, brand warranty and authorized repairs are more trustworthy, but many don’t like to spend a significant amount of money on repairs once warranty has expired. Also, premium brands such as Apple and Samsung are known to charge exorbitant prices for repair services, E-Cafe can look to capitalize upon this opportunity to generate service income by charging competitive prices which falls in line with consumer expectations.

Smartphones with a total estimated 53.58 million users are ubiquitous in United Kingdom with 99% of individuals between the age group 16 and 34 years owning a device and 96% in between 35 and 54 years. Samsung and Apple are market leaders when it comes to the smartphone market (Statista, 2022). With all the latest technological advancements, an improvement in design, transitioning into a notchless smartphone, smartphone photography, functionality & aesthetics, an increase in demand for online services (healthcare, business, education, content) and 5G mobile broadband technology; the future of smartphones is bright (Deloitte, 2022).

E-Cafe as a traditional retail store expects to cater to the wide offline demographic that prefer to buy products offline especially when it comes to electronics instead of purchasing them online through e-commerce platforms. This customer segment mostly constitutes individual customers belonging to the age group in between 30 years and 50 years of age with families which have a high demand for electronic products. The online customer segment will mostly belong to the age group 18 years and 35 years of age. Furthermore, since the store will sell all the three categories of smartphones, it expects to be well received by a wide income group segment which includes price conscious customers as well. Individual consumers will range from young teenagers, college students, working professionals, parents and the business class as the product range is expected to have a wide appeal. Lastly, there is another segment which the business is looking to cater to which includes the segment that mostly search products and review online but prefer purchasing them offline.

1. Catering to Customers:A retail shop in order to survive must need to satisfy its customers by taking care of them in all aspects. It is all about creating an experience for customers that allows them to come back and visit. Adding a sense of personal touch is key (Burns 2016).
2. Inventory Management:Inventory management is an essential aspect of successfully operating a retail business. E-Cafe must have access to the latest generation products and must avoid conditions such as overstocking and understocking. This is because overstocking has cost implications while understocking results in lost sales.
3. Store Location:Location can play a significant role when it comes to deciding the success or failure of a retail store. An appropriate location which is easily accessible for consumers is in best interests because an appropriate location helps to increase customers which help drive the sales volume.
4. Salesmanship Expertise:The business should have well trained salesmen who know the art of selling. Salesmen should try understanding from a customer’s perspective, their needs & preferences, customer behaviour and must have a reasonable knowledge about the product being sold.
5. Reasonable Pricing:The price competitiveness within the retail sector is stringent. As a result, products and services are required to be sold at competitive prices which are priced below that of peers and other retailers. Prices must be based upon product quality, the general price level and should inculcate a minimum degree of consumer expectations (Kuratko 2016).

1. Consistency of Brand & Domain Name:An online retailer must always opt for a simple and memorable brand or domain name which must be consistent. Consistency is important as changing the name constantly can hinder credibility and hurt the sales traffic visiting (Ansoff et al. 2018).
2. Design: The design should be attractive enough in order to entice consumers and products must be presented in an aesthetically pleasing fashion. The user interface must be simple and intuitive without any unnecessary complexities. Lastly, information presented must be transparent.
3. Multi Channel Marketing:The importance of multi channel marketing cannot be much stressed. Promotion with the help of social media marketing, content marketing, email marketing and influencer marketing are some of the digital marketing techniques which can help drive sales numbers. Alternatively, the use of search engine optimization and ppc marketing is highly recommended in the case of e-commerce (Charlesworth 2018).
4. Multiple payment methods: Since online buying is all about providing customers with preference, this must also extend to payment options. Online customers love that they receive flexibility when it comes to choosing the payment option. Payment methods must comprise of online payment (debit cards credit cards and internet banking), third party payment (Google Pay, Apple Pay, PayPal etc) and offline cash on delivery payment.
5. Personalization: Offering of periodic deals and discounts will make customers even happier which helps customers revisit or recommending to their known people. This is also a technique for indirect marketing which helps the business grow (Chaffey and Chadwick 2019).

1. Alternative Electronic Products:Smartphones have always been the most dominating consumer electronic products over a long time. However, E-Cafe will also offer other consumer electronic products as well. Tablets which include entry level tablets from Lenovo to premium level tablets from Apple and Samsung will also be sold. Another hardware product which the retail outlet expects to sell is laptops with specific associated brands which include Lenovo, Dell and Apple. The PC market in UK has reached $10.7 billion within 2021 out of which tablets account for $2.6 billion. These are great alternatives to the smartphone which will also be sold by the retail store. Some of the other niche electronic product categories which the retail store will also sell are smartspeakers, smartwatches, professional studio wired headsets and wireless earbuds.
2. Related Accessories:Although consumer electronic products are the principal sources of product revenue for the store, there is no doubt that smartphone related accessories can also help to drive sales numbers. Furthermore, the profit margins of such accessories are usually high. Related accessories comprises of products such as tempered glass, screen protectors, wireless chargers, power banks, car mounts, smartphone covers, smartphone skins, usb cables and gaming controllers (Business Insider, 2022). Offering related accessories help in proving the customer with flexibility and different options to choose from, while from a business standpoint can increase revenue figure.
3. Repair Service:Many customers do not wish to pay as premium a price for service fees during product repairs. Brands such as Samsung, Apple and One Plus can cost customers a hefty service fee if they wish to get their smartphones repaired in the case of damage or defect if the product has surpassed the brand warranty period. Thus, with the help of hiring a set of skilled service technicians, providing non-authorized yet reliable repair service facilities to customers at competitive prices can really help with service income and is also expected to be the unique selling points of the business.
4. Insurance and Guarantee Plans:Lastly, with smartphone purchases, insurance and guarantee plans are becoming all the more popular where customers are provided with insurance plans which provides coverage against different circumstances which include damages, fraud, embezzlements and guaranteed buybacks. This is another potential stream of revenue which the store will provide to its customers.

(Source: Author)

Abbreviated as the BMC, the business model canvas is a popular entrepreneurial tool in strategic management which allows an entrepreneur to describe, design and reinvent the business model (Ojasalo and Ojasalo 2018). The business model canvas helps in breaking down the business model of an organization into a set of easily understandable segments (Sort and Nielsen 2018). A small scale business can best use the BMC in focusing one’s time and attention into identifying how the different components of a business are related to one another (Keane, Cormican and Sheahan 2018). This tool helps in the setting of an overarching framework which an entrepreneur can use in developing strategic & business plans or any business strategies (Dudin et al. 2015).

Customer Segments Targeted

There are several key partners of E-Cafe. One of the main key partners to the retail store are the wholesalers with whom the business has to maintain cordial relationships with as these wholesalers are individuals or groups which will supply the products that can be sold to the final customers. These suppliers will range across the entire product portfolio of the business which also includes related accessory products. E-Cafe will also have to search for a website platform vendor who shall be vested with the responsibility of building a website with an intuitive user interface so as to enable the online business model as well. Another important partner because of the online business is an appropriate choice of delivery partners who will deliver the online orders to the final customers. Since the entrepreneur will also engage in digital marketing which is imperative for the success of online business, tying up with an appropriate third-party marketing agency also holds significance. Lastly, since the business intends to also provide repair services to final customers, hiring of skilled & experienced service technicians is also key to success.

The key business activities of E-Cafe for the most part involves selling the product portfolio and service portfolio to a wide demographic through offline retail store sales and through online across the website platform and e-commerce platform. However, these are the primary business activities which will help drive sales. Other than primary business activities, there are important secondary business activities as well. The main secondary business activity comprises of inventory management. Since the scope of operations is highly dependent upon inventories, maintaining a high efficiency level is important in order to avoid stock out’s or higher cost implications. Marketing is another important secondary business activity for which a third party marketing agency will be hired. The importance of marketing cannot be underestimated as the business will have to rely upon traditional and digital marketing to help increase sales. Lastly, salesmanship is also an important activity for the offline store which requires hiring of experienced sales staff who has crafted the art of selling to customers.

E-Cafe looks to create value for its customers. Although, the term ‘value’ may be subjective, the business looks to provide real value by understanding the needs and preferences of the customers and delivering upon the same. Competitive pricing is one of the most important aspects of creating and delivering value to customers. Offering of deals, discounts, vouchers, freebies and personalized offers is one of the most effective techniques in valuing the customers. The intended pricing strategy when it comes to provision of repair services is a prime example of how the business will help create value for its customers considering the exorbitant market prices of brand service centres. Timeliness when it comes to provision of service repairs or when it comes to delivery of products in online orders is also an important consideration when it comes to creating value. The art of salesmanship looks to understand the needs of the customers that help enrich the customer experience in retail outlets with customers having access to demo units which the customers may try before purchasing. Having a friendly user interface on the website along with offering different payment method options also helps to enrich the experience. Lastly, customer satisfaction is at the forefront of value proposition and all the different initiatives ultimately results in a satisfied customer.

Opportunities Presented

Managing customer relationships is an important aspect of any business which also holds true for E-Cafe. Just as a business is required to maintain cordial relationship with their key partners, the same is equally applicable to customers as well. After all, modern marketing holds ‘customer as king’. One of the main benefits of maintaining sound relationship with customers is because of the word of mouth strategy which is an indirect marketing that cannot be controlled directly by any business. The word of mouth is especially important in the case of traditional offline sales. Obtaining feedback from customers is quite a popular way of showing that one cares. Provision of after sales service which include calling up customers to inquire about any potential issues helps in strengthening the relationship with customers. It is not always a smooth sail for every business as customer complaints are quite common in any business. The art is in managing customer complaints and providing solutions as timely as possible. The salesmanship function also helps to build customer relationships if the business is able to hire professional salesmen who go above and beyond in understanding the customer’s frame of mind and their needs. E-Cafe can also maintain cordial relationships with the help of periodic newsletters or potential emails.

E-Cafe as discussed previously will cater to a wide demographic category with sales coming from offline and online customers. The intended target market in the case of traditional offline sales comprises of individuals with a family who belong to the age group in between 30 and 50 years of age. Marketing strategies need to be created differently for drawing such a crowd with a special emphasis on traditional marketing techniques. The intended target market segment in the case of online sales mostly comprise of tech savvy individuals and tech enthusiast adults who belong to the age group 18 and 30 years of age. This segment mostly comprises of a young generation of college goers who can be targeted with the help of digital marketing techniques and the use of social media.

The key resources of the business comprises of the retail store, human resource personnel and other assets. The retail store is one of the key assets which the business possesses and an advantageous location is in best interests when it comes to drawing consumers. Furthermore, the human resource personnel is the most important intangible resource in the case of E-Cafe which will comprise of experienced sales staff, professional service technicians, an experienced marketing team, an experienced information technology team and lastly the delivery team. The importance of human resources cannot be undermined owing to their contribution in the success of the business venture. The business needs to appropriately and optimally utilize their resources and assets for generating a high return on assets.

The three main channels of distribution for E-Cafe comprise of retail store, online website, e-commerce platforms and social media handles. The retail store will help the business in selling products and services to cater to the offline demographic segment. The most important factor to consider in this regards is location and convenience. The e-commerce website and social media handles such as Facebook, Twitter and Instagram will help promote online sales and customer engagement. Lastly, the business also intends to tie up with e-commerce platforms which include Amazon UK and Ebay to sell products to customers. The culmination of all three channels will help drive total sales and is in the best interests for the business. The most important attributes to consider in the case of online distribution channels are simplicity, user friendly interface, flexibility & convenience, and timely delivery.

Smartphone Market in the UK

One of the main costs associated with operations consists of delivery, freight and transportation expenses which the business will have to incur to obtain products from wholesalers. Delivery expenses also extend to delivery of products to final customers in case of online business. Another important source of cost comprises of salaries and fees that is the most important part of operating and administrative overheads. This is because of the fact that the business has to invest in professional service technicians, experiences salesmen, an information technology team and also hiring the services of a marketing agency. Few other costs include the likes of website costs, platform licence fee, and other miscellaneous overheads. An understanding into the different costs associated with the business is exponential given the fact that the business will initially run on low profit margins for keeping prices as competitive as possible.

There are many different primary and secondary sources of revenue which the business can depend upon for generating revenue. The main core operations of the business are product sales across all the different channels of distribution. This is also followed by provision of service which includes repairs at competitive prices which is anticipated as the key selling points of the business. Additionally, the business will also sell related accessories, insurance plans and extended warranty plans to generate additional revenue. Lastly, the business will also earn indirect income from selling of advertisement slots on online website and by making rational investments to generate returns.

Summary & Conclusion

Given the discussions presented in this report, it can be concluded upon that the business model canvas is an important entrepreneurial tool in strategic management which helps the entrepreneur in considering all the different elements of the business model (Joyce and Paquin 2016). The analysis of the business model canvas of E-Cafe in this report provides a comprehensive overview of how the entrepreneur intends to run, operate and grow the business in the United Kingdom market. If the business venture comes to fruition, the entrepreneur can have a vision to expand operations by setting up of new traditional retail stores in other regions of London which helps to create a brand name. Lastly, with the help of this report, one can conclude the importance of customers in business and how modern businesses need to be set up for providing some sort of value in order to witness growth, success, stability and expansion.

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