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Online Grocers: Finding And Executing the Right Model

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Nora A

on 29 September 2013

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Transcript of Online Grocers: Finding And Executing the Right Model

Online Grocers: Finding And Executing the Right Model
Introduction
What could be easier than ordering your groceries online and having them delivered to your doorstep at a time you choose !

The Online grocers offering to you these services!
Advantages Vs Disadvantages
Advantages:
No more driving to store
Less time and gas consuming
No waiting in the check-out lines

Disadvantages:
Giving up the social experience of shopping
Business Models
There are three business models or approaches for online grocery:
1- Start Fresh
2- Leverage Out
3- Local Build
Local Build Approach
FreshDirect exemplifies the third and most common online grocery business model: Local Build.

Other examples: Gopher Grocery, Greenling, Inland Marine.

These local online groceries focus on knowing their local customers, high-quality fresh produce, low costs and convenient delivery.
Outlines
* Introduction
* Advantages And Disadvantages
* Online Grocery Business Models
* Start Fresh
* Leverage Out
* Local Build

Start Fresh Approach
start fresh approach of Webvan, launched in 1990.

Their business model:
start a totally new nationwide, online grocery distribution system serving 10 cities at first, and then expanding to additional major cities.
Webvan
Most pundits and investors thought the entire online grocery business model was either a failure of fraud!

For these reasons:
* Costs of building entirely new distribution system of warehouses and truck fleets.
* The expense of marketing.
* Huge IT infrastructure.
Webvan compounded its problem by:

* offering below-market prices.
* Free delivery of even small orders at just about any time of the day.

Sam's Club, Tesco, BJ's
... and many other firms are leveraging their existing nationwide distribution supply chin systems and their thousands of local store!

Example:
Sam's Club offers to customers a "Click N' Pick" service which means: order online, pick it up at the nearest Sam's Club store and you won't even have to stand in line to pay for your groceries. Or having it delivered by the local stores.
Leverage Out Approach
FreshDirect
FreshDirect has introduced the many customer centric ideas such as:
* Favorites:
track each customer's past purchases then present them on screen for reordering.
* Recommender system:
recommends a products for you.
* Rating System:
for its own products, so customers what looks good.
* Web apps: applications for smart phones.

Nora Al- Harran.
IT 316 E-Commerce.
Full transcript