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8/6/2019 Grocery Etailing
1/30
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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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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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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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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Sav
e
my
u
se
rn
am
e
&
pass
wo
rd
New to Peapod?
Groceries foryour home
Groceries foryour business
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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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Regionals PublixDirect small dedicated warehouses
Palm Beach/Broward Counties 28 zip codesplus 13 more by 2002
2002 Atlanta and Orlando
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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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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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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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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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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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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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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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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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Fulfillment Issues
Product availability
Order processing Delivery
Returns
Customer service
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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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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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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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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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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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Returns/Back Orders
4
0
4
6
R
M
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Fulfillment Cost as % of Revenue
4
0
4
6
0
46
0
T da Yea
u e a
Mu anne
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Fulfillment Challenges Lowering fulfillment costs
Distributing globally Lowering total fulfillment costs
Managing peak season volume
Keeping up with order volume
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