It had Initially set up a goal of getting a hold of 5% of the grocery market In New York, but they were not able to do this till 2011, only after having expanded to other states and the greater part of New York. In 2007, workers at company wanted to unionize due to low wages and an Immigration audit later on In the year led to mass resignations from workers, and the workforce was reduced to almost half. However, In the midst of all these challenges Fresh Direct was able to develop their 4 minute meal line which greatly boosted sales (Chatterer & Lassoer, 2004).
SOOT Analysis Strengths Convenience Is their greatest attribute, by selling and delivering grocery products online. Fresh Direct does not paying high rent to store their products, eliminating the middleman. Advanced product Inventory software. Reputable brand name. Weaknesses High CEO turnover. Customers want to be able to see touch and smell their products before they buy them.
Slow expansion and company growth. Only serve selected zip codes areas Opportunities Potential expansion to other areas. Customer rating of products Freeholders increase sales of organic foods. Smartened APS to order food Threats High parking flees in NYC. High rise of gas prices.
High levels of traffic congestion. Competition from other local grocery stores and online services such as, Amazon, Montenegro, Peapod. 1 OFF Threat of New Entrants: Low New entrants would require a large amount of capital and experience in the grocery industry. They would also need an understanding the advanced technology needed as well as relationships with local suppliers.
Threat of Substitute Products and Services: Low The local suppliers, distributors and corner stores are other options of customers o buy fresh food.
But Freeholders is familiar of its brand name, and mostly customer are loyal with Freeholders Bargaining Power of Suppliers: Medium Freeholders has known by its brand its customers are loyal with its products. If the supplier has its own good brand in market they can easy access with local shops or supermarket; but Freeholders has already had good relationships with suppliers and local stores.
Bargaining Power of Buyers: High In the modern era the awareness of the online customer is high; they have access everything by using of internet and ability to analysis the price and quality of Freeholders and its competitor and can switch over very easily. Intensity of Rivalry among Competitors in the Industry: High The Fresh Direct has advance online and food technology and had good expertise in management but Fresh Direct is weak to delivery coverage and daily food usage products. Underscores and Yourselves are entering Fresh Direct main focusing area and offering saving in bulk.
Montenegro offered its customers a large selection of brand name and specialist non-perishable items that were difficult to find in a local market.
STRATEGY USED Running a supermarket at the center of New York City is not an easy task. The high cost rent of NYC real estate properties and limited selections of products due to insufficient amount of spaces have plagued retailers frequently. Fresh Direct, an online supermarket based in NYC, capitalizes on the wonder of technology and overcomes the difficulties of high rent and limited selections of products.
Firstly, the company focuses its business only in NYC and its neighboring areas. In order to lower the cost of rent, this online supermarket rents a huge warehouse with the size of five football fields in the industrial zone at Queens.
This huge warehouse enables the company to offer a selection of products five times more in comparison with that of its main competitors at NYC. In addition, the location at lower rent industrial region helps the company to save considerably in terms of rent expenses. Secondly, the company manages to maintain the freshness of its products.
As for freshness, consider that while the average grocer may have seven to nine days of seafood inventory, Fresh Directs seafood stock turns each day. Stock is typically purchased direct from the docks the morning of delivery in order to fulfill orders placed the prior night. The firm buys what it sells and shoplifting can’t happen through a website, so loss from waste and theft plummets.
Thirdly, the extra expenses of Fresh Direct are low in comparison to traditional grocery shops. The company does not have to install the money and energy sucking open-air refrigerators since all customers purchase online.
Moreover, shoplifting does not happen at Fresh Direct because thieves cannot steal away products from an Nowadays, the service of Fresh Direct is so popular that many apartments at NYC are redesigned with common refrigerators in order to receive delivery from Fresh Direct when customers are not home. In the past five years, the number of grocery stores has decreased nearly 30% since the presence of Fresh Direct. All the online grocery retailing business continued to mature, all players needed to pay attention to customer perception.
Online retailing giant Amazon.
Com had entered the dry goods grocery delivery business, posing a threat to other online retailers because of its existing loyal customer base and legendary customer service. Creating a grocery section in 2006, Amazon offered over 10,000 nonperishable items including among time staples, from Kellogg to Jiffy pop’. The selection of dry goods rather than perishables meant Amazon, unlike Fresh Direct and Peapod, did not have to worry about delivery costs on time and climate sensitive items.
However, even Amazon suffered grocery delivery failures. From out of stock problems, delivery glitches, and Web site technical outages, online grocery retailers needed to serve their online customers Just like they would serve the customers who come into their physical stores. Even though Fresh Direct had been able to woo local New Yorkers, gaining a Fast Company Local Hero’ award in 2006, the company had to absorb hundreds of thousands of dollars in parking tickets to get its customers its orders within the delivery window’.
And in early 2007, New York City government proposed a congestion charge for traffic entering Manhattan, adding to Fresh Directs delivery expenses. The rising cost of fuel was also a potential threat. Even though Fresh Direct included a fuel surcharges to orders based on the average retail price of gasoline, these expenses coupled with penalties accrued from parking violations might have put significant pressure on Fresh Directs ability to achieve its target profit levels.