Case Study in LeShop
IMD-5-0615
v. 27.11.2003
INTERNATIONAL
Research Associate Rebecca
Chung prepared this case under the supervision of
Professor Nirmalya Kumar as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation.
Since its April 1998 launch, LeShop, the first virtual supermarket in Switzerland, had established itself as the leading online grocery service in the country. It had managed to survive where many more famous and better-funded pure play online grocers in the US like Streamline and Webvan had gone bankrupt. LeShop had outperformed the online operations of all the major supermarkets in Switzerland. However, despite the impressive
63% share of the online Swiss grocery market and anticipated net sales of CHF 13 million in 2002 (refer to Exhibit 1), the operations had not yet managed to break even.
Relative to other European countries, online grocery sales were underdeveloped in Switzerland by a factor of 18. Only 0.05% of the total grocery market was online (€12 million) (refer to
Exhibit 2), compared to 0.88% in the United Kingdom (€934 million) and 0.76% in Paris (€171 million). Only 35% of Swiss adults were aware of the existence of online grocery services, compared to 96% in the UK and 94% in Paris. An impatient
Christian Wanner, CEO of LeShop, observed:
Unfortunately, unlike the UK or Paris markets where key traditional players like Tesco and Carrefour heavily advertise their online service, the dominant brick and mortar supermarkets in Switzerland like
Migros and Coop are not actively pushing online sales. Instead, we are fighting a lonely battle as “pure play” in trying to get the Swiss people to change their habits and shop online for groceries. If the online grocery market in Switzerland had just one-third of the development of the UK or Paris, we would already be at breakeven.
LeShop faced several challenges in its fight for profitability.
How to make a
v. 27.11.2003
INTERNATIONAL
Research Associate Rebecca
Chung prepared this case under the supervision of
Professor Nirmalya Kumar as a basis for class discussion rather than to illustrate either effective or ineffective handling of a business situation.
Since its April 1998 launch, LeShop, the first virtual supermarket in Switzerland, had established itself as the leading online grocery service in the country. It had managed to survive where many more famous and better-funded pure play online grocers in the US like Streamline and Webvan had gone bankrupt. LeShop had outperformed the online operations of all the major supermarkets in Switzerland. However, despite the impressive
63% share of the online Swiss grocery market and anticipated net sales of CHF 13 million in 2002 (refer to Exhibit 1), the operations had not yet managed to break even.
Relative to other European countries, online grocery sales were underdeveloped in Switzerland by a factor of 18. Only 0.05% of the total grocery market was online (€12 million) (refer to
Exhibit 2), compared to 0.88% in the United Kingdom (€934 million) and 0.76% in Paris (€171 million). Only 35% of Swiss adults were aware of the existence of online grocery services, compared to 96% in the UK and 94% in Paris. An impatient
Christian Wanner, CEO of LeShop, observed:
Unfortunately, unlike the UK or Paris markets where key traditional players like Tesco and Carrefour heavily advertise their online service, the dominant brick and mortar supermarkets in Switzerland like
Migros and Coop are not actively pushing online sales. Instead, we are fighting a lonely battle as “pure play” in trying to get the Swiss people to change their habits and shop online for groceries. If the online grocery market in Switzerland had just one-third of the development of the UK or Paris, we would already be at breakeven.
LeShop faced several challenges in its fight for profitability.
How to make a