My Errand Business Plan

MYERRAND, LLC.
MyErrand
Business Plan
Prepared By: Michael Thomas
2011
This business plan is the exclusive property of Michael Thomas. No portion of this
business plan may be copied or reproduced without the consent of the author.
Opening this business plan constitutes acceptance of the confidentiality agreement
available at http://www.myerrand.com/bplan.html. For questions regarding
acceptable use of this plan please contact [email protected]
Table of Contents
Executive Summary ....................................................................................... 4
The Opportunity .......................................................................................... 4
The Business .............................................................................................. 4
Capital Needs ............................................................................................. 5
Business Description....................................................................................... 6
General Description ..................................................................................... 6
Service Description ...................................................................................... 6
Unique Features .......................................................................................... 7
Key Success Factors .................................................................................... 8
Growth Opportunities................................................................................... 9
Industry Analysis ......................................................................................... 10
State of the Industry ................................................................................. 10
Types of Services ...................................................................................... 11
Trends ..................................................................................................... 12
Market Analysis ........................................................................................... 13
Target Market ........................................................................................... 14
Secondary Market ..................................................................................... 16
MyErrand Consumer Survey ....................................................................... 18
Competition .............................................................................................. 18
Indirect Competition .................................................................................. 20
Market Share ............................................................................................ 21
Pricing Strategy ........................................................................................ 22
Marketing Plan .......................................................................................... 23
Pre-Launch ............................................................................................ 23
Post-Launch ........................................................................................... 23
Location ...................................................................................................... 25
Management ............................................................................................... 27
Legal Structure ......................................................................................... 27
Organizational Structure ............................................................................ 27
Management Team .................................................................................... 28
Key Employees ......................................................................................... 28
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Compensation ........................................................................................... 29
Employee Benefits ..................................................................................... 29
Outside Resources ..................................................................................... 30
Operations .................................................................................................. 31
Facility Management .................................................................................. 31
Errand Operational Descriptions .................................................................. 31
Web site .................................................................................................. 35
Point of Sale ............................................................................................. 37
Credit Card Processing ............................................................................... 37
Payroll ..................................................................................................... 37
Location Layout......................................................................................... 38
Milestone Schedule....................................................................................... 40
Critical Risks................................................................................................ 41
Harvest/Exit Strategy ................................................................................... 42
Financials .................................................................................................... 43
Capital Requirements ................................................................................. 43
Key Assumptions ....................................................................................... 43
Start Up Costs .......................................................................................... 47
Operating Expenses ................................................................................... 48
Break Even ............................................................................................... 50
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Table of Figures
Table 1 - MyErrand 3 Year Financial Summary ................................................... 5
Table 2 - Average Time Spent Per Day on Activity ............................................ 14
Table 3 - Top Non-Government Employers in the Indianapolis MSA .................... 17
Table 4 - Respondents Likely to use service like MyErrand for Home Delivery ............................ 18
Table 5 - MyErrand Competitive Analysis......................................................... 19
Table 6 - Annual Customer and Delivery Information ........................................ 21
Table 7 - MyErrand Customer Pricing for Services ............................................ 22
Table 8 – Retail Sales Volume (5 mile radius) .................................................. 25
Table 9 - Major Employers near 1015 3rd Avenue SW...................................... 26
Table 10 – Potential Vendors near 1015 3rd Avenue SW .................................. 26
Table 11 - Employee Compensation ................................................................ 29
Figure
Figure
Figure
Figure
Figure
1 - MyErrand Delivery Area .................................................................. 15
2 - Organizational Structure ................................................................ 27
3 - Restaurant Delivery Service Flow Chart ............................................ 32
4 - Location Layout ............................................................................. 39
5- Break Even Analysis ....................................................................... 50
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Executive Summary
The Opportunity
Meet Sarah, an account executive for a large financial
company in downtown Indianapolis. As a young professional,
she is working full-time for her employer and then going home
to her second full-time job of managing a household. She
often spends her lunch breaks running errands, which
sometimes has her getting back to the office a little late. Her
list of things to accomplish is never finished, and as much as
she would hate to admit it, she is often distracted in the
afternoons. Instead of focusing on the big presentation next
week, her mind sometimes wanders to the things she has to
do after work. Simple things like what she going to feed her
family for dinner.
Sarah has tried to give up some of these simple distractions before. Several dry
cleaners, a pharmacy, and an online grocer all offer to pick-up and drop-off orders
for her. The problem is that the grocer only delivers a few mornings and evenings
each week with a 3 to 5 hour delivery window. The pharmacy only delivers
weekdays between 3:00pm and 8:00pm, and the dry cleaner picks-up and dropsoff twice a week sometime between 9:00am and 5:00pm if she leaves her clothes
in a bag outside. These services allow her to multi-task only so long as she is
willing to be stuck in one place waiting half the day for them to show up.
If only she could schedule all three to occur at the same time so that she didn’t
have to spend her day waiting.
The Business
MyErrand is a residential supply chain company enabling a better quality of life
through an online shopping and delivery experience. It facilitates delivery of
perishable, time-sensitive, and non-packaged items between retailers and
consumers, providing a cost-effective means to conduct commerce in the ―last mile‖
of the supply chain. MyErrand’s target customer is middle-class and affluent allparent working households. These households currently average 3,885 working
hours per year, and this is a number that has been increasing over the last
decade.1
MyErrand will not only market to these households directly but will also offer this
service as a work/life balance benefit to employers. 81% of employees are
1
National Statistics – Snapshots of Work and Family in America study
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unhappy with their work/life balance. Stress related to excessive work hours and
lack of work life balance has become a large problem for employers. According to
the Stress Institute of America’s latest figures stress is costing U.S. employers
about $300 billion per year in lost productivity, healthcare and replacement costs.2
MyErrand is a cost-effective way for these businesses to reduce stress, and build a
supportive company culture where employees can focus on their jobs while at work.
Retailers and service providers will also benefit from partnering with MyErrand
through its turn-key online and delivery solutions. Offering their goods and
services through MyErrand these businesses will increase sales through access to
MyErrand’s growing base of consumers.
MyErrand is not the first company to sell and deliver consumer products like
groceries, dry cleaning, and prescriptions. However, the company’s unique delivery
model is designed to add value for consumers, employers, and its vendors.
MyErrand also reduces costs by introducing efficiencies in the running of errands by
limiting the number of vendors and targeting affluent areas of a city, and by
creating dense customer groups by marketing to employers.
Capital Needs
MyErrand will require a startup investment of $230,000. With loans from family
and friends totaling $80,000, MyErrand further seeks a commercial bank loan of
$150,000 to successfully launch its operations. A more detailed list of start-up
expenses can be found in the financials section.
Projected Financial Snapshot
Table 1 - MyErrand 3 Year Financial Summary
Revenue
Net Income
ROE
2
Year 1
$1,568,130
($39,311)
(0.49)
Year 2
$1,881,765
$48,654
0.61
Year 3
$2,090,840
$61,204
0.77
Corporate Voices for Working Families - Business Impacts of Flexibility
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Business Description
General Description
MyErrand is a residential supply chain company enabling a better quality of life
through an online shopping and delivery experience. The company will market the
products and services of its partnered retailers and service providers, pick up
orders from their locations, and facilitate delivery. Customers can order groceries,
convenience items, prescriptions, photofinishing, dry cleaning, and more through
MyErrand’s Web site, by phone, or in person at an employer’s work site.
The purpose of MyErrand is to favorably impact our customer’s work/life balance
and improve their overall quality of life. Located in the Indianapolis, Indiana suburb
of Carmel, and operating as a Limited Liability Company (LLC), MyErrand will target
middle-class and affluent all-parent working families.
Service Description
The target user for MyErrand’s service is all-parent working middle class and
affluent families. MyErrand will reach this market by directly selling its services to
the consumer within its delivery area and by marketing its services to employers as
a work/life balance benefit. Each service is designed to meet the needs of the
consumer in each of these settings.
Delivery Area Service
MyErrand will deliver to households within a five mile radius of its warehouse.
Customers placing an order online or by phone can request pick-up or drop-off of
products within a 15 minute delivery window. Each errand has its own standard
service time and some have additional fees associated with them, but customers
can track orders online and receive email or text messages when their orders are
ready for delivery.
Restaurant Delivery Service
Restaurant delivery will be available for a fee to anyone inside of MyErrand’s
delivery area. Customers can have meals from many of their favorite Carmel,
Indiana restaurants delivered to their home or office, allowing them more time to
enjoy their lunch hour or just saving them the hassle of getting it themselves.
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Employee Work/Life Program
MyErrand will operate or provide services to on-site pick-up and drop-off locations
in the workplace. Employers can now make it convenient and affordable for
employees to not have to worry about completing basic tasks. Designed to allow
employees to concentrate on work and increase their free time outside of work;
MyErrand’s Work/Life program allows employees to drop-off and pick-up completed
errands at their work site at the beginning and end of each work day.
Retailer and Service Provider Solutions
MyErrand’s benefit to retailers and service providers through its turn-key online and
delivery solution. However, the benefits of this service go beyond just the sale of
their goods and services. 43% of regular home shoppers said the delivery
experience and delivery options could influence their choice of retailer.3 Retailers
can access MyErrand’s web service schedule their own next day and in some cases
same day delivery to their customers in our delivery area and on their own terms.
This program lets our retail partners offer delivery without incurring car payments,
commercial insurance, a driver’s salary and benefits, repair bills, or the risk of an
accident. MyErrand let’s retailers offer the convenience of delivery with a simple
consistent cost structure.
Unique Features
“Pizza” Delivery Model
Peapod and FreshDirect, which will be discussed in more detail in the Industry
Analysis section on page 10, use one central facility to serve customers across an
entire city using ―FedEx‖ style routes. The problem is that unlike package delivery
the customer needs to or overwhelmingly prefers to be there when something like
groceries is dropped off. Satisfying this preference creates a lot of inefficiency in
the route model, to keep delivery prices low this has meant using two to five hour
delivery windows. Instead MyErrand will offer on-demand delivery for customers
within five miles of its warehouse; a delivery will usually arrive at the customer’s
location within 30 to 60 minutes of their request.
Convenience Store Delivery
MyErrand is located close to the customer, because of this it can also deliver
conveniences that its competitors cannot. Sometimes customers cannot wait a day
3
Interactive Media in Retail Group, 2010
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or more for the few items they need, if they are out of toilet paper, laundry
detergent, and diapers only MyErrand can deliver a limited selection of consumer
staples in 30-60 minutes.
B2B/B2C Concept
While the end-user is the individual, MyErrand will also market its services to large
employers. This service will be marketed to businesses as a work/life balance
benefit for their employees. By selling the delivery wholesale and covering
everyone at a location MyErrand will create dense customer groups that can access
its services for little or no cost. Not only does MyErrand’s solutions reduce
employee stress for an employer, but it helps solve the problem of low customer
density has consistently been a large problem and frequent cause of failure of ―last
mile‖ businesses.
Key Success Factors
High Customer Service Levels
It will not always be MyErrand’s fault, but its management and drivers must make a
customer’s problem their own. Other courier and delivery services are only there to
drop off a package; MyErrand is there to create a friendly customer service
experience at the customer’s doorstep.
Efficient Customer Interactions and Delivery
Efficient routing of deliveries and interactions with customers is essential to
MyErrand’s bottom line. This necessitates that the web site shopping process needs
to be very straightforward and intuitive. Every order must be clearly labeled and
each package needs to identify if there are other packages that are part of the
order; the labeling needs to also state how many packages are room-temperature,
refrigerated, frozen, or stored in an alternate location (e.g. Dry cleaning that is
hung up).
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Growth Opportunities
Unparalleled Analytics Collection and Behavior Marketing Potential
Some companies can collect massive amounts of data but irritate consumers when
they use it, for example facebook.com, because using the data doesn’t give the
customer anything. Other companies collect somewhat less data but customers
appreciate the use of it to customize their experience, like Amazon suggesting
books based on past purchases. Like Amazon, MyErrand can use the data it
collects to enhance the user experience by displaying more relevant and timely
information. Customers will tell us their important dates, information about their
household, sync their calendars and facebook accounts because the company can
use it to make their life easier. Then by shopping the site consumers will tell
MyErrand their tastes and preferences by what products they buy, how often they
buy them, other pages they view before making a purchase, their sensitivity to
price, brand loyalty, and volumes of other information.
Lifestyle & Entertainment Services
Once MyErrand has built its customer base and helped them save time it makes
sense that it would help them find good ways to spend it. MyErrand could work
with theaters, amusement places, gyms, bowling alleys, clubs, attractions, festivals,
and other lifestyle and entertainment providers. MyErrand would negotiate
discounts for its members while earning a commission on sales.
Online Appointment/Reservations Scheduling
MyErrand could build into its site the ability to set appointments or make
reservations with restaurants, beauty salons and spas, doctors’ offices, dentists,
automotive repair shops, veterinarians, real estate agents, financial planners, event
planners, and others. Not only would this be sold as a service to these businesses
but it adds to the customer experience, add another level of data to their profile,
and creates additional cross-marketing opportunities. For example, if a user makes
an appointment with a family doctor MyErrand could display the customers
preferred cough/cold items, facial tissues, and chicken noodle soup.
Residential Community Program
MyErrand can deliver real value for residential communities looking to set
themselves apart by creating a more upscale, resident friendly, environment. For a
monthly fee per apartment MyErrand will deliver its products and services to each
of the community’s residents. To make the service affordable MyErrand could offer
different service levels, perhaps with a slightly larger delivery window or making
free delivery available only on evenings and weekends.
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Industry Analysis
State of the Industry
The ―Last Mile of the Supply Chain‖ best describes MyErrand’s industry. The entire
category is loosely defined as the home delivery portion of the buying experience
and the industry as a whole is very fragmented. While some leaders have emerged
for specific types of products or services, category killers within this segment, there
is no clear leader or definition as to what a firm in this industry should be. Firms
that could be categorized as ―Last Mile firms‖ include: Errand services, restaurant
delivery services, online grocers, mobile auto maintenance, mobile dry cleaners,
and any other firm who both sells and delivers goods or services that are
traditionally sold through a storefront to the customer’s doorstep.
Grocery Category Killers – Peapod & Fresh Direct
Two firms, Peapod and Fresh Direct, have emerged as category killers in online
grocery delivery. Both firms use a FedEx route style delivery model with both
unattended and attended delivery. Attended delivery is usually offered with a twohour delivery window. They also both charge about the same for delivery, $6 to
$15, depending on the market and where the order is going.
Peapod, which nearly went bankrupt when the dot-com bubble burst, was
purchased by Royal Ahold and now works together with its supermarket chains Stop
& Shop and Giant Food. Peapod has grown in size and now serves the Chicago,
Milwaukee, New York City, Washington D.C., Boston, and other markets. The
company also expanded into the Indianapolis market in October, 2010.4 Although
Peapod is a wholly owned subsidiary that is not reported separately it is estimated
to have revenues of $410.3 Million per year making it the 47th largest online
retailer.5
Fresh Direct is based in Long Island City, New York and primarily serves the five
boroughs of New York City and limited areas of New Jersey. The company is
however looking to expand and this year announced plans to expand further in New
York and into New Jersey, as well as start delivery in areas of Connecticut. The
CEO of Fresh Direct has also stated in several interviews the possibility of an initial
public stock offering (IPO).6 Fresh Direct is a privately held company but its annual
4
http://www.peapod.com/consumerIndex.jhtml;jsessionid=H2R2LXRHKYBTCCQBD0WSFEQ
http://www.internetretailer.com/top500/list/
6
http://www.forbes.com/2010/06/29/freshdirect-online-grocery-braddock-cmo-networkgrocery.html
5
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revenues are estimated at approximately $240 Million earning it the rank of the 70th
in online sales.7
Part-time personal assistants, errand services, and virtual concierge
There are, with little variation, two types of concierge programs available today.
These two services are the part time personal assistant or errand services, and the
virtual concierge.
Part time personal assistants and errand services will perform almost any task with
services ranging from grocery shopping to event planning, and data entry to dinner
reservations. These businesses charge anywhere from $10 to $100 per hour for
their services, mileage is usually extra, and where services are performed one on
one until the tasks is compete.
Virtual concierge programs are programs where employees can interact with the
concierge online or by phone. These programs offer services like the, trip planning,
requesting golf tee times, purchasing tickets, dinner reservations, car rental, and
wake-up calls. There is never face to face interaction between the client and the
customer.
The Rest of the “Last Mile”
While several chain restaurants has created successful delivery models but retail
delivery has remained very fragmented. Most of the industry is made up of small
businesses that were either independent or small franchise start-ups, it is
commonly added as a niche market to differentiate themselves from larger chain
category-killers.
Types of Services
Weekly Routes
This model is popular with mobile dry cleaning and auto maintenance. These firms
run routes that cover different areas of town on different days, much like city
garbage collection, and customers usually schedule service in advance or the
provider gives them a way to signal for service visible from the road.
7
http://www.internetretailer.com/top500/list/
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FexEx (Route) Delivery
The FedEx model is the dominate method for grocery delivery because it is the
most efficient way to deliver across a large area from a single facility. However,
this method is best suited for orders that are not time or temperature sensitive,
and where the driver can leave a package even if the customer is not home to
accept delivery.
Point to Point Delivery
The point to point delivery method is used predominately by restaurant delivery
services, errand services, and couriers. This service relates most closely to a taxi
service for products. The driver usually travels to a location to collect goods for a
single customer and transports them directly to the customer’s location.
Trends
In the late 1990s there were a host of firms launched to fill this niche market.
Fueled by overly easy access to capital and the euphoria that was the dot com
bubble these firms tried nearly every delivery solution imaginable including many
that were grossly impractical. Webvan is perhaps the most well-known and
spectacular of the failures, having gone public and achieved a market cap of $8
billion before massive over spending on capital goods compared to market size
chewed through its cash and it went bankrupt. Today, the story is very different.
Having taken notice of the growth of Peapod and FreshDirect many national
retailers are giving in-store pick-up and home delivery another look. Kmart has
launched a new service called MyGofer which offers in-store pick-up in markets
across the country and is test marketing delivery in 11 urban markets.8 Safeway, a
grocery store chain predominately out west, has begun offering delivery in several
of its California markets. Amazon.com, which invested in two dot com era online
grocers, is also offering grocery delivery by operating out of one of Safeway’s
warehouses and serving the Seattle, Washington area.9 There is even a rumor now
that Walmart could begin testing grocery delivery this year in San Jose.10
8
ChicagoBusiness.com – Sears’ MyGofer to add liquor to menu for home deliveries Sept. 20,
2010
9
http://www.sosemarketing.com/2010/11/08/amazon-fresh-will-the-grocery-delivery-gonational/
10
http://www.bloomberg.com/news/2011-04-01/wal-mart-said-to-plan-test-of-onlinegrocery-delivery-service.html
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Market Analysis
Most Americans are not happy with the relationship between how much time they
spend doing the things that they want to do as compared to the things they have to
do. It really isn’t a surprise; the average married couple has lost almost five hours
a week of free time in the last decade.11 Approximately 43.5 million Americans—
the majority of them women—served as unpaid caregivers to a family member over
the age of 50 in 2008.12 With an aging population the trend of working more hours,
and the related stress, is expected to increase well into the future.

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81% of Americans are unhappy with their work/life balance13
A recent study in Canada found that 82% of respondents would take a pay
cut to take a job that guaranteed better work/life balance14
Middle income married couples work 3,885 hours a year; 247 hours more
than 10 years ago15
For most the workday is 8 hours, but the average time between leaving
home in the morning and returning in the evening 11 hours and 18
minutes.16
Employees ―fritter away‖ 125 minutes a day at work, outside of their lunch17
Indiana employees ranked 2nd for most time wasted, 168 minutes a day,
costing Indiana employers $25.1 Billion18
The national average cost is $5,720 but in Indiana the lost productivity
amounts to $7,705 a year19
Money Value of Time
The ―money value of time‖ is the idea that as you delay action on certain
opportunities in life the monetary value of those opportunities decreases. The
value of completing a project a sooner could lead to another project and eventually
a promotion. In a similar way your time available to spend with family diminishes
as children grow up, move out, and start a family of their own. Someone will see
better results from exercise when they are younger; you also learn new things
faster earlier in life. Time is a finite resource and however it’s spent it is gone once
11
National Statistics – Snapshots of Work and Family in America study
U.S. Presidents Study of Work/Life Balance – March 2010
13
Monster 2004 Work/Life Balance Study
14
http://money.canoe.ca/money/business/canada/archives/2010/09/20100902110404.html
15
National Statistics – Snapshots of Work and Family in America study
16
Time Institute
17
Salary.com and AOL Survey 2005
18
Salary.com and AOL Survey 2005
19
The Salary/AOL study estimated costs of $25.1 Billion, this was divided among the
3,257,604 individuals over 16 that are in the workforce according to the 2005-2009
American FactFinder survey.
12
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it passes. MyErrand asks consumers what is the opportunity cost of the simplest
tasks.
Time Study
Table 2 - Average Time Spent Per Day on Activity
Married Mother
Married Fathers
Employed Full Time
Employed Full Time
Purchasing Goods &
36 minutes
23 minutes
Services
Lawn & Garden Care
6 minutes
14 minutes
Food Prep & Clean-Up
47 minutes
16 minutes
Housework
53 minutes
13 minutes
Work Related Travel
1hour 24 minutes
1 hour 28 minutes
Working & Related
5 hours 11 minutes
6 hours 7 minutes
Activities
http://www.bls.gov/news.release/atus2.t01.htm
Target Market
MyErrand’s target market is middle-class and affluent households within its delivery
area. MyErrand will deliver to any address within a five mile radius from its location
at 1015 3rd Avenue Southwest in Carmel, Indiana. The delivery area covers 78.5
square miles with a total population of 142,435 and 43,727 occupied housing units.
The median household income of the combined delivery area is $70,898, average
household income is $105,782, and the income per capita is $42,112.20 This is
20.5% higher than the State average of $34,943 and equates to combined income
of all households of $4.63 Billion.21
The average annual expenditure for households with incomes of $100,000 $119,999 is $97,576 per year. This translates to total annual expenditures of $4.27
Billion for households within MyErrand’s delivery area. Of those expenditures
23.6% is spent on goods and services MyErrand delivers.22 This gives MyErrand a
market size of approximately $1 Billion. Detailed information about retails sales
volume for the delivery area will be discussed in the Location section on page 25.
Age Demographics
MyErrand’s target age demographic within the market is those who would identify
as Generation X (32 to 46 years old) or Baby Boomers (47 to 65 years old). In a
poll taken by Peapod asking for what age group their customers belonged to 54%
20
21
22
Cityfeet.com Real Estate Listing for 1015 3rd Avenue Southwest
http://www.stats.indiana.edu/sip/rank/pcpi1.html
http://www.bls.gov/cex/2009/Standard/higherincome.pdf
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responded that they were born between 1965 and 1979. An additional 29% of
respondents identified themselves as ―Baby Boomers‖ born 1946 to 1964. Only 4%
reported being a Senior and 13% said they were born after 1980.23
Looking at the target market 33.29% of residents are aged 30 to 49 with an
additional 27.1% being children under 17 years of age.24 This means that roughly
60% of the population is made up of families with school aged children. An
additional 15.82% are aged 50 to 64 making up the bulk of the ―Baby Boomers,‖
the second largest customer age demographic in their survey.
Income Demographics
The target income demographic for
Table 3 % of Households By Income Delivery Area
MyErrand is families with a household
$60,000 to $74,999
12.5%
income of $60,000 a year or more. Of
$75,000
to
$99,999
20.53%
all the households in the delivery area
$100,000 to $124,999
11.38%
59.08% of them have an income of
$125,000 +
14.67%
higher than $60,000. Of households
within the delivery 12.5% earn between $60,000 and $74,999 a year. The largest
income group is those bringing home $75,000 to $99,999, they make up 20.53% of
all households. 11.38% of households have a total income of 100,000 to 124,999
and 14.67% earn $125,000 a year or more.
Figure 1 - MyErrand Delivery Area
23
Peapod Delivers – Online Poll
http://www.cityfeet.com/Commercial/ForLease/1001-3rd-Avenue-Sw-Carmel-IN-4603213640191L1277699L0.aspx
24
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Secondary Market
MyErrand’s secondary market is large employers that it will market its services to
employers as a work/life balance benefit.
According to the Stress Institute of America’s latest figures stress is costing U.S.
employers about $300 billion per year in lost productivity, healthcare and
replacement costs.25 One of the ways organizations are counteracting these
stresses is by instituting or enhancing their Health and Productivity (H&P) programs.
Companies with the most effective H&P programs experienced superior human
capital and financial outcomes: 11 percent higher revenue per employee, lower
medical trends by 1.2 percentage points, 1.8 fewer days absent per employee and
28 percent higher shareholder returns. High-H&P-effectiveness companies are also
more likely to have lower health care costs, lower levels of presenteeism, fewer lost
days due to disabilities and lower levels of turnover relative to their industry
peers.26
However, there is increasing evidence that organizations today have excessive
levels of stress impacting the effectiveness of their H&P efforts. If employees aren’t
able to cope, or if support is lacking, stress can harm the organization, through
greater physical illness and/or psychological disorders. The top three sources of
stress affecting U.S. organizations today are:27
1. Excessive work hours (78%)
2. Lack of Work/Life balance (68%)
3. Fears of Job Loss (67%)
The two greatest causes of stress in U.S. organizations, even greater than the fear
of job loss, are time related. In 2007/2008 the same study showed only 5% of
firms were taking actions to reduce stress from ―long hours, doing more with less‖
and 16% of firms acting to reduce work/life balance stress.28 However, those
number have increased significantly as 21% of U.S. organization are taking actions
to reduce stress from excessive work-loads or long hours, and 38% of companies
are taking actions to reduce work/life balance stress.29 This represents a dramatic
increase in the number of firms taking action on these sources of stress.
25
Corporate Voices for Working Families - Business Impacts of Flexibility
2009/2010 [email protected] Report – Watson Wyatt Worldwide (page 2)
27
2009/2010 [email protected] Report – Watson Wyatt Worldwide (page 19)
28
An Employer’s Guide to Employee Assistance Programs – Center for Prevention and
Health Services December 2008
29
2009/2010 [email protected] Report – Watson Wyatt Worldwide
26
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Table 3 - Top Non-Government Employers in the Indianapolis MSA
Name of Employer
Clarian Health Partners Inc.
Eli Lilly and Company
St Vincent Hosp & Health Care
IUPUI
Community Health Network
Roche Diagnostics
St Francis Hospital & Health
Centers
WellPoint Inc.
Wishard Health Services
AT&T
Defense Fin & Accounting Svc
Chase Bank
Hewlett Packard
Meridian Citizens Mutl Insur
Sallie Mae Inc
American Untd Mutl Insur Holdg
Raytheon Technical Services
Dow Agrosciences LLC
Indianapolis Star
Ivy Tech Community College Ind
Charles Schwab & Co.
Simon Property Group LP
Capital Group Companies
Care Group LLP
Covance Central Laboratory Ser
University of Indianapolis
Pearson Education Inc.
Finish Line Inc
OrthoIndy
Baker & Daniels LLP
Ice Miller, LLP
Barnes & Thornburg LLP
Industry
Healthcare
Pharmaceutical
Healthcare
University
Healthcare
Analytical Lab
Instrument Mfg.
Medical & Surgical
Hospitals
Insurance Carriers
Medical & Surgical
Hospitals
Communication
Svcs
Accounting
Commercial Banking
Computer &
Software Mfg
Insurance
Finance
Finance
Defense Electronics
Manufacturing
Farm Products
Newspaper
Publishing
Junior College
Investment Banking
Real Estate
Finance & Insurance
Services
Health Services
Med. Lab
Colleges &
Universities
Book & Educational
Product Distrib.
Corp HQ
Health Services
Attorneys
Attorneys
Attorneys
# of Employees
12,763
11,550
10,640
7,066
5,341
3,900
4,152
3,950
3,364
3,000
2,600
2,500
2,500
2,000
1,700
1,500
1,500
1,300
1,200
1,172
1,113
1,100
1,000
1,000
1,000
850
820
800
736
681
515
500
Source: IndyPartnership.com
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MyErrand Consumer Survey
MyErrand’s first consumer survey
was conducted through surveys
Table 4 - Respondents Likely to use service
distributed to employees at
like MyErrand for Home Delivery
Raytheon Systems Company in
Very Unlikely
12 20%
Fort Wayne and also through a
Unlikely
9
15%
request to participate in a survey
Undecided
12 20%
on the web site
Likely
21 34%
fortwaynerestaurants.com. The
Very Likely
7
11%
survey received 108 responses
and after removing responses by
Total
61 100%
individuals under the age of 20 or
with household incomes of less than $60,000 there were 61 responses that
matched MyErrand’s demographic criteria. The respondents were 62% female and
38% male, 13% were aged 20 to 29, 28% aged 30 to 39, 30% aged 40 to 49, 25%
aged 50 to 59, and 5% aged 60 or over.
Results of the survey show that 45% of respondents would be ―likely‖ or ―very
likely‖ to take advantage of a service like MyErrand that offered home delivery for a
fee. 59% would be similarly interested in the service if it was offered to them
through their employer in a situation where they could drop-off and pick-up before
or after work. When asked to select from a list of frequently run errands those
which they currently needed to run and respondents selected an average of 2.77
errands.
Competition
Peapod.com
A new entrant into the Indianapolis market, Peapod announced it would begin
servicing the area in October of 2010.30 A wholly owned subsidiary of Ahold USA,
Peapod is one of the nation’s leading internet grocers. Ahold USA’s revenue of
$74.8 Billion and employs 170,000.31 In addition to its new site in Indianapolis,
Peapod operates in a number of markets including Chicago, New York, Washington
DC, Milwaukee, Maryland, Rhode Island, New Jersey, Connecticut, Massachusetts,
and Southeast Wisconsin.32 It is reported that Peapod has revenues of
approximately $119.5 Million.33 Peapod offers delivery on Tuesday, Thursday,
30
31
32
33
http://www.progressivegrocer.com/top-story-peapod_reaches_indianapolis-31421.html
Reference USA – Ahold USA, Inc. Corporate Family Tree
Peapod.com
Reference USA – Ahold USA, Inc. Corporate Family Tree
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18 | P a g e
Saturday, and Sunday of each week to all of the zip codes in MyErrand’s delivery
area except 46074.
Order-In.biz
A Carmel, Indiana based restaurant delivery service delivering to the Carmel and
Fishers, Indiana areas. Order-In offers delivery during the hours of 10am to 2pm
and 4pm to 9:30pm Monday through Friday, noon to 9:30pm Saturday, and noon
to 9:00pm Sunday. The cost of delivery for the customer is $4.99 per restaurant;
Order-In also charges the restaurant a 35% service fee.
Lighten Your Load (LYL) Concierge Service
An Indianapolis based concierge service, serving the Indianapolis metropolitan area.
LYL Concierge Service is a member of the International Concierge and Errand
Association (ICEA) owned by Jim Huguenard. The hours of operation for LYL
Concierge are 7:30am to 6:00pm Monday thru Friday. A sample rate of $10 per
hour is listed on the company’s web site. Mileage is also charged to the customer
at the current IRS rate, which is currently $0.49 per mile. Both the hourly wage
and mileage are billed from when the time that the LYL employee leaves the
business’ location until they return to it.
Table 5 - MyErrand Competitive Analysis
Price
Peapod
$9.95 +
$1.38 Fuel
Surcharge
Weston
Cleaners
Order-In.biz
Free
$4.99
LYL
Concierge
MyErrand
$10/hour +
$0.49/mile
Product
Selection
Full Line
Grocery
N/A
N/A
Almost
Anything
Grocery,
Photos,
Prescriptions,
& Dry
Cleaning
Product
Delivery
Time
The Next
Tue/Thurs
Sat./Sun
3 hr window
N/A
N/A
1 Day
Notice
Required
1 day
Service
Selection
Save $2.00
Dry
Cleaning
Restaurant
Delivery
Almost
Anything
Convenience
Items and
Restaurant
Meals
Service
Delivery
Time
5½ hr
delivery
window
40-60 min
1 Day
Notice
Required
30-60 min
3 Days
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19 | P a g e
Indirect Competition
Super Centers
Wal-Mart and Meijer both operate stores within the delivery area of MyErrand’s
warehouse. Super centers offer greater convenience than other retail outlets by
carrying a number of different product categories including grocery, pharmacy,
clothing, electronics, and office supplies. Super centers also have several retail
spaces at the front of their stores that often include a nail salon, vision center, shoe
repair, a bank, and a restaurant. While these mega retailers offer convenience of
one-stop shopping customer service is generally pretty low. Items are very spread
out and checkout lines are typically long, making them inconvenient for
convenience items and small purchases.
Pizza Delivery
Pizza delivery offers the convenience of ready to eat food quickly and inexpensively.
There are a number of regional and national chains, as well as many independents,
in the Indianapolis market. These restaurants typically deliver pizzas, sandwiches,
and wings within 30-40 minutes. The process for producing and delivering a costeffective, consistent, good tasting product has been perfected through innovation
over the last 30 years. However, while the process is perfected the selection is
very limited, MyErrand’s advantage is in its ability to deliver not only from a variety
of restaurants but complement those orders with other products at the same time.
Amazon.com
A Fortune 500 company, Amazon.com began operations in 1994 offering one of the
largest selections of books available anywhere. It has since expanded into CDs,
electronics, apparel and shoes, computers and software, toys and games, jewelry
and watches, and even groceries. In 2009 Amazon.com recorded sales of $24.5
Billion sold through Amazon.com and its subsidiaries.34 The company operates 19
fulfillment centers arcoss the country including two in Indiana in the towns of
Whitestown and Plainsfield. Amazon.com offers free five to nine day shipping on
most orders of $25 or more; a premium service, Amazon Prime, upgrades
customers to free two-day shipping for $79 a year.35
Employee Internet Usage Monitoring Software
In 2005 Websense, a company selling software so that employers can monitor and
restrict employee internet access, estimated that personal internet use cost
34
35
ReferenceUSA – Amazon.com company profile
http://www.amazon.com/prime
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20 | P a g e
employers $178 Billion a year.36 Selling software tools to companies that allows
them to monitor employee internet use has spawned an entire industry. While
these companies do have the advantage of being able to provide strong metrics
that are easily connected to their product use, MyErrand has three advantages over
this type of monitoring. This type of software generally increases employee stress
and dissatisfaction. It is also important to note that internet misuse is a symptom
of the problem and not the problem of itself; MyErrand’s service instead targets a
contributor to employee stress and dissatisfaction.
Market Share
Delivery Area
According to results of the MyErrand Consumer Survey discussed on page 18 a total
of 45% of consumers were likely or very likely to pay $5 per trip to use a service
like MyErrand to have items delivered to their home. Of the respondents making
more than $60,000 a year 11% were very likely and 34% said they would be likely
to use this service. There is a total of 43,727 occupied housing units within 5 miles
of MyErrand’s location, 59% or 25,834 of them fit into this target income
demographic. This would represent 2,842 homes ―Very Likely‖ and 8,784 homes
―Likely‖ to use a service like MyErrand. MyErrand estimates that it can capture
1,744 customers (15%) of the ―Very Likely‖ and ―Likely‖ users in year one, 2,093
(18%) by year two, and 2,325 (20%) in year three. MyErrand divided these
customers up into six different user profiles ranging from heavy to occasional users,
see ―Revenues –Delivery Area‖ under Key Assumptions beginning on page 43 for
more details.
Table 6 - Annual Customer and Delivery Information
Year 1
Year 2
Year 3
# of Errands
46,074
55,289
61,432
# of Deliveries
27,747
33,297
36,996
# of Customers
1,744
2,093
2,325
36
http://files.shareholder.com/downloads/WBSN/0x0x155638/8d693e02-a2f3-4854-9edda5a3e7f51c94/285208.pdf
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Pricing Strategy
MyErrand’s pick-up / drop-off fee was set based on the delivery fee charged by
Order-In.biz, the restaurant delivery service in Carmel, Indiana. The additional fee
for grocery delivery brings the fee in line with Peapod ($9.95 + $1.38 fuel
surcharge). Because free unattended pick-up and drop-off of dry cleaning is
available through weekly routes to remain competitive with this service MyErrand
will not have an additional fee for this errand beyond the pick-up / drop-off fee.
Table 7 - MyErrand Customer Pricing for Services
Pick-up / Drop-off Fee
Convenience Delivery
Restaurant Delivery
Dry Cleaning & Laundry
Grocery Shopping
Photofinishing
Prescription Delivery
Pay Per Use
$5 + Per Errand Fees
X
X
X
$7
$2
$4
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