Fresh Direct Case Study
Company Name: FreshDirect
Website Address: http://www.freshdirect.com
Industry: Online Grocery
FreshDirect is an online grocery launched in 2001 that offers shopping and delivery services to around 300 zip codes in the tri state area of New York (www.freshdirect.com). The current CEO of FreshDirect is Mr. Jason Ackerman, who is also a cofounder of the firm, whilst the chairman is Jim Manzi. FreshDirect serves over 600,000 customers, and in 2010 it claimed revenues of more than $250 million, representing an increase of $20 million from the previous year (Bloomberg BusinessWeek, 2012). FreshDirect has had many ups and downs. 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 FreshDirect was able to develop their 4 minute meal line which greatly boosted sales (Chatterjee & Laseter, 2004). SWOT ANALYSIS
|Internal Strengths |Internal Weaknesses | |Creation of value through marketing and sales approaches by |Area of business coverage is limited. To reduce risk diversification | |advertising on billboards and commercials. |is needed. | |Product prices are relatively lower compared to their competitors, |The organization mainly relies on online food grocery, thus tapping | |creating incentive for customers to buy. |into a new industry can be really hard. | |Expert employees who are efficient meaning that products are delivered| | |and produced efficiently. | | |External Opportunities |External Threats | |New York City demographics are becoming over-populated. |Global recession means that exchange rates are high, increasing | |Older generations cannot get out of the house a lot. Thus demand for |business costs. | |the industry increases as the population ages. |Increase in interest rates lower consumer spending decreasing sales. | |Socio-cultural changes mean that people have less time to shop and | | |cook. | | |Technological factors such as increases internet access means that | | |FreshDirect talks to customers easily. | |
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Porter’s five forces model was designed to analyze the competition in a business environment, and FreshDirect is no different since it is affected mostly by these forces as well (Dess, Lumpkin & Eisner, 2007). The threat of new entrants in the online grocery sector is quite low. This is because the costs of starting up and making impact in the market are quite high. Nonetheless, competition is present...