Post on 19-Jul-2015
HED 460
Internet Grocery (E-grocery) Very few consumers shop Internet for
groceries 1 in 5 Internet users who are the primary
household grocery shopper are interested 42% would like to spend less time shopping
for groceries Almost 40% Internet users enjoy shopping
for groceriesRationhome.com
HED 460
Internet Grocery (E-grocery) E-grocery can boost loyalty and increase
market share E-grocery is projected to be 2% of total
grocery shopping
Rationhome.com
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 2001Rationhome.com
HED 460
Peapod Launched 1989 Profit 1st Q 2001 in Chicago market Various strategies (from supermarkets
to dedicated distribution centers) Acquired in 2000 by Royal Ahold ($73
mil.) Pulled out of some markets and aligned
with different Ahold supermarket chains Rationhome.com
HED 460
Save my username & password
New to Peapod?
Groceries foryour home
Groceries foryour business
Rationhome.com
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%)Rationhome.com
HED 460
Regionals PublixDirect – small dedicated warehouses
Palm Beach/Broward Counties 28 zip codes plus 13 more by 2002
2002 Atlanta and Orlando
Rationhome.com
HED 460
Regionals Albertson’s
Central warehouse/existing stores 37 states: Seattle, Las Vegas, Los
Angeles, Vancouver, San Diego Average order $110/52 items Produce and meat in top 10 items $9.95 deliver, $5.95 pickup
Rationhome.com
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 (most are out of business) $35/month Receptacles/refrigerators
Rationhome.com
HED 460
Fulfillment Models Stores
Pick, pack, deliver – special carts Use existing assets
Distribution Centers/Warehouses Hand held radio frequency scanners
to help pick products Delivery to consumers
Rationhome.com
HED 460
Fulfillment – Logistics provider Whyrunout.com
California based – Statler Bros. stores Purchased customer referral rights from
Webvan, 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.
Rationhome.com
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
Rationhome.com
HED 460
Preferred Service Models
29
47
28
67
23
51
23
46
010203040506070
Stor
e Pi
ckup
Del
iver
y
C-St
ore/
med
ia
C-St
ore/
mea
ls
All I nternetI nterestedRationhome.com
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
Rationhome.com
HED 460
Future Not dead Partner with large food retailers Focus on concentrated urban areas
with wealthier clients (volume/profit) Lack of national supermarket chain
means success of local e-tailers
Rationhome.com
HED 460
Fulfillment Issues
Product availability Order processing Delivery Returns Customer service
Rationhome.com
HED 460
Fulfillment87 85 84
78 75
49
0102030405060708090
Fulf illment Capabilit ies Expected
Verify rcpt .AvailableVerify shipStat usBack orderLocal return
Rationhome.com
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 customer’s convenience
Rationhome.com
HED 460
Keeping Customers in the Loop
Staples Enter zip code at start of shopping for real-time
inventory availability Anything in-stock is available for next day
delivery
Rationhome.com
HED 460
Returns
29
41
53
0
10
20
30
40
50
60
Ret urn Experience
Ret urnedToo much HassleNo Effect
Rationhome.com
HED 460
Order Status (capability)
94.597.491.7
53.8
83.3
48.7
77.8
48.7
0102030405060708090
100
Conf irm Back Order Shipped Tracking
Pure PlayMult i-channel
Rationhome.com
HED 460
Returns/Back Orders
4.3
5.1
3
5.9
0
1
2
3
4
5
6
Ret urns Back Order
Pure PlayMult i-channel
Rationhome.com
HED 460
Fulfillment Cost as % of Revenue19
1314
11
02468
101214161820
Today 2 Years
Pure PlayMult i-channel
Rationhome.com