grocery etailing

8/6/2019 Grocery Etailing

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HED 460

Internet Grocery (E-grocery) Very few consumers shop Internet for

groceries

1 in 5 Internet users who are the primaryhousehold grocery shopper are interested

42% would like to spend less time shoppingfor groceries

Almost 40% Internet users enjoy shoppingfor groceries


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HED 460

Internet Grocery (E-grocery) E-grocery can boost loyalty and increase

market share

E-grocery is projected to be 2% of totalgrocery shopping


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HED 460

Webvan pureplay Launched June 1999 Hi capital

Hub and spoke strategy $260 mil. Sales in 2000

$1 bil. expenses

Acquired HomeGrocer.com in August 2000 Mid 2003 relaunch in S. CA??

CEO resigned ~ March/April 2001

Shut down July 9 2001


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HED 460

Peapod Launched 1989

Profit 1

st

Q 2001 in Chicago market Various strategies (from supermarkets

to dedicated distribution centers)

Acquired in 2000 by Royal Ahold ($73mil.)

Pulled out of some markets and alignedwith different Ahold supermarket chains


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HED 460

Sav

e

my

u

se

rn

am

e

&

pass

wo

rd

New to Peapod?

Groceries foryour home

Groceries foryour business


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HED 460


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HED 460

Tesco U.K. Reports profit

1 mil customers/ 90,000 orders/week 90% customers reached with existing

store network lower delivery costs

National store base

Bought US GroceryWorks.com (35%)(Safeway owns 50%)


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HED 460


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HED 460

Regionals PublixDirect small dedicated warehouses

Palm Beach/Broward Counties 28 zip codesplus 13 more by 2002

2002 Atlanta and Orlando


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HED 460


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HED 460

RegionalsAlbertsons

Central warehouse/existing stores 37 states: Seattle, Las Vegas, LosAngeles, Vancouver, San Diego

Average order $110/52 items Produce and meat in top 10 items

$9.95 deliver, $5.95 pickup


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HED 460


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HED 460

Delivery Models Next day service

2 hour delivery window

$19.95/month. $9.95/order

Order-on-demand (ensenda) 60 minute delivery window

Pre-scheduled, unattended delivery (mostare out of business) $35/month

Receptacles/refrigerators


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HED 460

Fulfillment Models Stores

Pick, pack, deliver special carts

Use existing assets

Distribution Centers/Warehouses

Hand held radio frequency scanners tohelp pick products

Delivery to consumers


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HED 460

Fulfillment Logistics provider

Whyrunout.com

California based Statler Bros. stores Purchased customer referral rights fromWebvan, webvan emailed giving options

Deliver drycleaning, film, health/beauty More than one store ($9.95, + $1.00 each)

Deliver 2:30-8:30 p.m.


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HED 460

Fulfillment logistics provider

Ensenda

Delivery service in local markets Uses existing stock from local retailers

Delivery within 60 minutes

Couriers in 75-100 markets $19.95 delivery charge

>sales and >order size reported


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HED 460


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HED 460

Preferred Service Models

29

47

28

67

23

51

23

46

0

10

20

30

4050

60

70

S

torePickup

Delivery

C-

S

tore/media

C-

Store/meals

All Internet

Interested


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HED 460

Financials Few making profit

Grocery profit is usually 1-2% Potential profit percent of up to 12%

Infrastructure and volume are the main

barriers to profits


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HED 460

Future

Not dead

Partner with large food retailers Focus on concentrated urban areas

with wealthier clients (volume/profit)

Lack of national supermarket chainmeans success of local e-tailers


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HED 460

Fulfillment Issues

Product availability

Order processing Delivery

Returns

Customer service


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HED 460

Fulfillment4

4

0

0

00

40

0

600

0

0

F f b Ex

V f .

b

V f h

BL


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HED 460

Keeping Customers in the Loop

Circuit City

Local store pick-up (Express pickup)

Identify up to three local stores

Checks availability at the local stores

With Express

Pickup no shipping

Pick up at customers convenience


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HED 460

Keeping Customers in the Loop

Staples

Enter zip code at start of shopping for real-timeinventory availability

Anything in-stock is available for next daydelivery


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HED 460

Returns

4

0

0

0

0

40

0

60

Re u n E pe en e

Re u ned

T u Ha e

N E e


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HED 460

Order Status (capability)

4 4

4 4

0

0

0

0

40

0

60

00

0

00

C n a O de pped T a ng

u e a

Mu anne


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HED 460

Returns/Back Orders

4

0

4

6

R

M


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HED 460

Fulfillment Cost as % of Revenue

4

0

4

6

0

46

0

T da Yea

u e a

Mu anne


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HED 460

Fulfillment Challenges Lowering fulfillment costs

Distributing globally Lowering total fulfillment costs

Managing peak season volume

Keeping up with order volume

grocery etailing

Documents