Fresh Direct case bus497a PDF

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Christopher Violet BUS 497A Case Analysis: FreshDirect The key success factors for FreshDirect are effective selling, cost management, information control, efficient supply chain, and a unique business industry model. FreshDirect offers its consumers a necessary product coupled with convenience and cost efficiency that is singularly unique in its market. FreshDirect focuses its business only in New York City (NYC) and its neighboring areas; with the increasing value consumers place on convenience this company offers accessibility and convenience which is ideal for someone with a busy schedule (Bortz, 2013). This company has claimed its competitive advantage by providing the same products as its competitors at a lower price and by adding benefits that exceed those of its competitors. This allows FreshDirect to create a greater value for its customers and a greater profit for itself. Likewise, without an actual storefront this company doesn’t have to pay expensive rent for a retail space; this could potentially increase their operating margins by six or seven percent and give them a lead over traditional supermarkets (Eisner, 2011, p.408). FreshDirect has created a make-to-order philosophy that other competitors do not utilize. Considering that while the average supermarket may have seven to nine days of seafood inventory, FreshDirect focuses on providing products that were made to the customer’s specific order. Implementing this strategy has created a business model that was unique within the grocery business community and offers the customers alternatives to the standardized cuts and choices at most traditional supermarkets (Eisner, 2011, p.406). With recent expansion to Delaware and other parts of New York, cofounder Jason Ackerman explains that “at FreshDirect our business model is based on our unique farm-to-table offering and convenient service structure, and we're thrilled to be able to expand this promise to new customers (FreshDirect, 2013).” FreshDirect orders both fresh and dry products from individual growers and producers and gets other products directly from farms, dairies, and fisheries. With this they are able to provide the best quality of food in comparison to competitors who rely on a third party. They are able to build a relationship with their suppliers and in return receive reduced prices on purchases which enable greater savings for its customers (Eisner, 2011, p.404).

In addition, by eliminating the middle man the company can create an efficient supply chain to help maintain the freshness of its products. This make-to-order philosophy gives FreshDirect an effective operating strategy. Without the middle man the company then saves money with not having to import products from various vendors whereas their competitors have those extra expenses. Secondly, without the presence of an actual storefront FreshDirect eliminates the threat of shoplifting which plummets the amount of loss and waste they take into inventory count. This serves as an advantage for FreshDirect because the company only needs to buy what it sells whereas traditional supermarkets have the extra expense of having to replace stolen goods.

Operating out of its production center in Long Island, this huge warehouse enables the company to offer a similar selection of products with a higher quality in comparison with that of its competitors. With FreshDirect operating mainly in the NYC area it enhances the value of its product by adding the convenience of shopping right

at home and having your groceries delivered directly to your door or even your job. This is appealing to the majority of New Yorkers who live a busy lifestyle and cannot find the time to go to traditional super markets. Consumers value their time as much as they do their money and this company offers easy accessibility along with quality low priced products which makes their customers value their service. In this fast-paced and very populated environment FreshDirect’s service becomes more valuable to its consumers because it allows them to avoid the traffic congestion and the use of crowded public transportation. Furthermore, FreshDirect has adopted a strategy that makes their operation unique amongst their competitors.

Nowadays, the service of FreshDirect has become very popular that many apartments in NYC are redesigned with common refrigerators in order to receive delivery from FreshDirect when customers are not home. Called the FreshDirect Preferred Building Program, the initiative has Fresh Direct working with a Brooklyn, N.Y. based residential sales and marketing firm, to install refrigerator and freezer units in common areas dedicated to receive and hold FreshDirect deliveries (FreshDirect, 2006). Buildings participating in the program will receive reserved early-delivery timeslots which gives FreshDirect and advantage over competitors by making it possible for customers to receive groceries while they are not home. Although having competitors fail at the same task, FreshDirect has learned from the mistakes of their successors such as Webvan and has managed to become NYC’s number one online grocer (Cruz, 2013).

References Bortz, D. (2013, May 24). Online Grocery Shopping: A Primer Retrieved from http://money.msn.com/how-tobudget/online-grocery-shopping-a-primer Cruz, J. (2013, March 14). FreshDirect vs. Peapod Retrieved from http://www.businessweek.com/articles/2013-0314/freshdirect-vs-dot-peapod-new-yorks-online-food-fight Eisner, A. B. (2011). Is It Really Fresh? In Dess, G.G., Lumpkin, G. T., Eisner, A. B. & McNamara, G. (Eds.), Strategic Management (DeMeritt Special Edition), (pp. 404-420). Boston: McGraw-Hill.

(2006, February 28). FreshDirect preferred building program. Retrieved from Progressive Grocer website: http://www.progressivegrocer.com/top-story-freshdirect_launches_preferred_building_program-9517.html (2013, September 9) FreshDirect Launches Service Expansion Retrieved from http://blog.freshdirect.com/author/pr/...