Opportunity Description
We aim to address the problem of needless food waste that occurs all around the world. Much of this waste can be attributed to the inefficiencies of the grocery shopping itself. For any number of reasons, shoppers purchase food in excess, or without a specific plan for how they will use a given item. A simplified example: suppose a shopper purchases a ripe tomato because it is being sold for a fair price, he enjoys tomatoes, and assumes he will use it in a dish soon. Over the course of the following week, however, the individual fails to consume the tomato. He dines out with friends, chooses to prepare meals that do not require tomatoes, or simply forgets he had purchased the tomato at all. The tomato spoils and he throws it out. He has not only misused his money, but he has disallowed the possibility for any other person consuming the tomato. Our customer feels upset at this waste. We hope to provide a solution for our customers that will reduce grocery buying inefficiencies and make our customers’ lives better.
Our customer is the socially conscious grocery shopper. They are adults with middle to high income, and middle to high education level. Our product is best suited to individuals who do want to prepare food at home. Our customer is willing to change his grocery shopping habits in an effort to waste less food.
The solution is Mela. Mela is a subscription service that makes the grocery buying more efficient and reducing food waste is its primary objective. Mela uses an algorithm that provides curated weekly menus based on food preferences, lifestyle, and budget. Users complete an initial questionnaire to create a custom food preference profile (for themselves and/or their household) as well as their weekly budget. This initial capture of information will generate a unique meal plan deliverable for the user for the first week of service. Each subsequent week, users will input how they found the previous week’s items, how many meals they will prepare at home for the upcoming week, and if they have any specific item requests. By providing feedback each week, the algorithm will get better and better at providing the user with meal plans that suit the taste preferences and consumption patterns of the household. The deliverables will include the appropriate meal plans with specific recipes, and a grocery list with very specific quantities of each ingredient to purchase. By providing such detailed instructions in both the purchasing and preparation stages, Mela allows the customer to reduce his/her waste of food items. Additionally, has partnered with mega-chain Walmart to provide an option for consumers who do not enjoy any part of the grocery shopping experience. Users may opt to have the contents of their weekly grocery list delivered directly to their homes for an additional fee.
Our customer is willing to change his/her buying habits in order to reduce food waste. Mela’s matching of food purchase to usage reduces waste and eases the sense of social guilt that our customer normally feels. Mela not only allows the user to confront this pain point, but also gives access to an algorithm that will come to know the household’s preferences and consumption patterns perhaps better than the user himself. The algorithm will develop over time to understand the users’ brand loyalties, price sensitivity, and propensity for trying new recipes.
Mela provides users with a uniquely intelligent interface, and deliverables that will reduce food waste as well as simplify the meal planning process. Mela takes the guesswork out of meal planning, preparation, and consumption. Mela will attract customers because of the ability to feel better about one’s net social impact while simultaneously simplifying the entire grocery buying and meal planning processes. Please see Appendix 1 for the Value Proposition Canvas and a more detailed look at Mela’s value proposition and the opportunity it addresses.
Customer Discovery
Our customer discovery and research was focused largely on understanding the willingness of consumers to change their shopping preferences in order to make it efficient in terms of their purchase patterns and reducing the wastage of food that arises from excess purchase of groceries. We conducted a primary survey initially to establish this link to justify our assumptions. The survey was not limited to a particular demographic and was conducted across the internet, intended to target consumers in North America, Europe and the Asia Pacific Region. We received a total of 100 responses with the majority being outside of the IE community.

Some of the findings from this survey are mentioned below: * 60 percent of our respondents claimed that they do not waste the food that they purchased regularly. However, when we asked the same group on the percentage of food that they waste, we realized that more than 30 percent of our respondents were claiming that they were wasting 10 to 20 percent of the food that they were purchasing. We concluded from this that people at the onset maybe unwilling to admit that they are regularly wasting food but end up doing so. * Another interesting statistic that we established from our survey was that about 80 percent of our respondents stated that they were willing to change the way that they buy and consume their groceries in order to reduce food wastage. This showed that consumers are indeed looking for ways to optimize the way they purchase their groceries. * 70 percent of our respondents said that they enjoy doing grocery shopping in person and almost 65 percent said that they think it is important to buy groceries in person. This was a valuable insight that influenced our planning. We had not anticipated such a large number expecting to be inclined to liking shopping in person. As such, we realized that we had to tweak our initial product idea to ensure that this large demographic is not alienated from our final solution. We had originally intended all Mela users to receive the grocery items directly to their door every week, but this result showed us that this approach would turn off many potential users.
Based on an external report; we saw a clear trend in digital technology changing the shopping preferences around the world. The growth of online grocery shopping is largely driven by the Millennials (age 21-34) and Generation Z (age 15-20). The willingness to use online order delivery is over 50 percent in all the regions of the world among these groups and the willingness to use online subscriptions is as high as 60 percent in the Asia Pacific, Middle East and Latin America. This market is expected to grow with the remaining respondents claiming that they are willing to do so in the future.
China’s rapid urbanization coupled with high population density, low labor costs and mobile penetration along with concerns for food safety are increasingly driving consumers online.
The online grocery shopping market in the US alone was estimated to be at US$ 25 billion in 2014 and has seen a compound annual growth rate (CAGR) of 25 to 30 percent over the last five years. The expected CAGR for the next few years in a US$600 billion industry worldwide is expected to be 21.1 percent.
We have also identified some trends and facts that can affect our industry and ultimately play an important role in our product offerings: * The average transaction size is much larger for food and beverage shopping online ($80 online vs. $30 offline) 3 * Millennials are increasingly willing to pay premium for same day delivery of their groceries. * Prices and product quality are increasingly becoming the top two attributes that drives people to switch stores and grocery providers. 1 * Order placements will increasingly be done via mobile devices. 1 * Automatic online subscription will become the preferred mode of payment. 1 * Payment gateways will be less dependent on banking infrastructure. (e.g. Blockchain)
The above trends will have multi-dimensional effects on our business: * Given the proliferation of competitors and the low entry barriers, our product offering will have to strive to establish credibility and exceed expectations by ensuring that orders must meet the requirements and preferences of the consumers and are delivered in a timely and safe manner. * The final website/app will have to ensure that it is easy to use and the data required to be captured from the consumers on a weekly basis is done in a simple and secure way avoiding any confusion that leads them to abandon their final checkout. * Cuisine preferences and dietary restrictions will continue to differ, change and evolve across the various geographies. As such, our offering will have to ensure that we are dynamic enough to understand these changing needs and to capture them in our product. * As the nature of the business becomes global, the need to ensure a consistent product offering across geographies will become critical. Third party providers used for delivery and supplies will have to be scrutinized and standardized to maintain quality.
We have also further analyzed our customer delivery using the Research Development Tool (see Appendix 2).
Team Analysis (1 page)
What do a Singaporean banker, an American former Peace Corps volunteer and an Italian engineer have in common? They are all thirty-something aged men that love cuisine, making messes in the kitchen, and reading labels on food packaging. They are also the type to get irritated when they see someone take a plastic bag for one loaf of bread in the supermarket.
Their passion for food goes beyond the kitchen. They understand that food is one of the essential resources for humanity, yet food wastage is a problem ignored by many, whereas those who are conscious about it struggle to find an efficient solution to wastage.
Their experiences in developing countries in South America and Southeast Asia opened their eyes to the importance of social impact, and during their IMBA at IE Business School they seek to join forces to create something that could revolutionize the way people do their day-to-day grocery shopping and immensely reducing the amount of food waste generated around the world.
Dan has a track record of building teams and execution planning that he has matured during his years as a Peace Corps volunteer in Costa Rica. He will be the CEO of Mela and be in charge of managing the team, bring on partners and investors and develop strategic relationships. The team requires a programmer with strong modeling skills to come up with the algorithm to analyze member’s food usage, relate it to their preferences and create a solid food plan.
Claudio can code in several languages (Sql, C++, Asp.net, etc.) and in his previous job worked in the customer analytics team of one of the biggest bank in UK, he is an expert in neural networks and predictive modeling and can create the algorithm that the team needs at least for the Beta testing.
Yash, a former banking relationship manager, offers the team his sales skills and will be in charge of the business development and project management. He will be focusing on communication and listening to the voice of the customer during usability tests and focus groups and (based on that insight) formulate together with Dan a vision, a strategy, and a product road map.
At this point the three key figures that the team is missing are:
- An online marketing consultant, somebody with a clear vision and strategy to build the initial customer base of Mela
- A nutritionist or dietitian that will help Claudio in the development of an appropriate dietary planning component to Mela’s algorithm
- Pending sufficient Series A funding, an excellent programmer expert in predictive modeling will join the team to help take the algorithm to the next level
We intend to permanently fill the online marketing consultant position, using the IE talent pool resource. At this time, we do not feel the need to have a permanent dietitian added to the team, and will seek temporary consulting services to meet this need and considering bringing someone on board permanently at a later date.
The personal relationship of the three co-founders is excellent; very good friends that do not mind talking things through when disagreements or conflicts arise. The individual feedback and arguments are always constructive and the passion that the three members have towards the problem and the creation of Mela will help overcome any potential point of contrast. The equity split will be structured at: 40% to Dan and 30% each to Claudio and Yash, due to the fact that Dan originated the idea and will also commit the majority of the first installment of capital needed to start the venture. Given the skills and the objectives that the three members will have in the launch of Mela, Dan will be CEO, Claudio will become CTO and Yash will be the CMO of the venture.
Risk Analysis (1 page)
The three main areas that can present a risk for our company are related to the unpredictable dynamics of the market, the lack of funding for continuous of time and the possibility, especially at early stages, to get outcompeted by some players interested in our ideas that have more funds or are more skilled than us.
Market risk
As evidenced by our survey results, the majority of people proclaim to be willing to change their grocery buying habits to eliminate waste, but it is difficult to predict what percentage will actually do it given the solution provided. This is probably why the majority of our competitors in the market struggle to reach a stable customer base as it involves changing day-to-day habits that people have had for their entire adult lives. That’s why that the solution we create must be as user-friendly as possible, and at the same time be able to radically improve the way people do their grocery shopping. We estimate this risk to be quite high, and that’s why the founding team want to produce a highly flexible product that can be easily modified according to customer needs and evolution. In terms of timeline, these risks will threaten Mela’s development and growth early and often. As a team, we must stay open-minded, and remain true to the customer we seek to serve. Thanks to our market research and customer development, we feel confident that Mela can be the market leader in meal planning subscription services by tapping into the consumers’ desire to reduce negative social impact. But as our views or those of the market evolve, we must stay agile to move ahead of our competitors.
Lack of funding
Being three students with no income we have a limited amount of resources to launch our product and start to generate revenue. Once our MBA program comes to an end in 9 months we will need a source of income to keep working on the idea or, more ideally, sufficient funding from investors in order to dedicate 100% of our time to the venture. This is certainly a variable that can be kept under control to a certain extent, for example, working on a deadline to have our Series A presentation ready for October 2016. This will entirely depend on how much time will be spent on writing code and come up with a good preliminary algorithm and interface. This will be probably the first problem we face in product development. As we build Mela and open it to beta testing, we can show proof of concept to investors in our efforts to get funded and transform Mela into the market leader.
Get outcompeted in the market
This is a problem that can manifest both at early stage and when the product is already launched. If somebody very interested in our concept has more skills than us – for example in the technical side – can come up with a better predictive algorithm for the food plan and hence easily replicate the concept. We do not own any intellectual property besides our own algorithm itself. In this sense the most important asset we have is a good algorithm – the better it is, the more difficult it will be for competitors or other players to replicate it, and the fewer problems we will have. We hope to avoid this problem by hiring a top-notch specialist to help refine and perfect the predictive algorithm. The potential problem of more powerful competitors pushing Mela out of the market is an external threat that we will counter by developing the product internally to capture the market potential.

Appendix 1
Value Proposition Canvas

Appendix 2
Research Dashboard
Based on: Getting to Plan B, by John Mullins and Randy Komisar, 2009 Presumptions (your opinions before facts) | Hypotheses (specific indicators to verify presumptions) | Metrics & Measures (data to test hypotheses) | Findings & Results (patterns of your data) | Insights & Adjustments (to shape your idea) | People are wasteful with food items they have purchased | Grocery shoppers throw out a significant proportion of their purchases unused | Survey question asking respondents what percentage of their grocery purchases go unused and thrown out | Respondents’ answers varied widely (from 5-40%), but a majority of respondents answered 15-25% | People do generally admit to wasting a significant amount of food when asked for an estimation, but as seen below want to view themselves as non-wasteful | People realize they waste food | Grocery shoppers would agree that they waste a significant amount of food | Survey question asking respondents to rate themselves using 1-5 scale on how wasteful they are with food | 1 Strongly disagree: 10%2 Disagree: 40%3 Neutral 16%4 Agree 28%5 Strongly Agree 6% | People like to think that they are not wasteful, despite admitting to wasting food. Mela must expose the inefficiencies in grocery buying and its connect to waste. | People are socially conscious by nature | Grocery shoppers would be willing to change habits to reduce waste | Survey question asking respondents to rate on a scale of 1-5 how willing they would be to change their grocery related habits to reduce food waste | 1 Strongly disagree: 5%2 Disagree: 6%3 Neutral 11%4 Agree 51%5 Strongly Agree 27% | Critical point for Mela: people are willing to change behavior. We must provide the tool to tap into the desire to feel that society is bettered by waste reduction. | People want the easiest grocery shopping experience possible | Grocery shoppers would prefer home delivery of their groceries to shopping in person | Survey question asking respondents to rate on a scale of 1-5 how important they think it is to buy grocery items in person, and how much they enjoy grocery shopping | 1 Strongly disagree: 6%2 Disagree: 12%3 Neutral 15%4 Agree 45%5 Strongly Agree 22% | Home delivery is not a major motivator for users, so we must focus on the social responsibility and waste reduction as Mela’s value adding point of difference. |

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[ 1 ]. http://www.nielsen.com/content/dam/nielsenglobal/vn/docs/Reports/2015/Nielsen%20Global%20E-Commerce%20and%20The%20New%20Retail%20Report%20APRIL%202015%20(Digital).pdf
[ 2 ]. http://www.nielsen.com/us/en/insights/news/2011/five-things-to-know-about-online-grocery-shopping.html
[ 3 ]. https://www.visioncritical.com/grocery-wars/