Grocery Gateway

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Grocery Gateway

Prepared by: Jeff Smith

Grocery Gateway: Customer Delivery Operations
Nature of the business:
* Located in the Toronto Area, Grocery Gateway has been the largest online grocer since November 2001. They have approximately 125,000 registered consumers. These consumers shop online, picking their products from a selection of 6500 products that include dry goods, health and beauty products, alcoholic beverage, fresh produce and even frozen foods. The broad/generic industry is the food industry. The narrow product is groceries. The core product is food, the actual product is groceries delivered, and the augmented product is good customer service and convenience. Orders are to be a minimum purchase of 60$ including an 8$ delivery fee and could be altered up to 14 hours before delivery. Grocery gateway service area was about 3200 square km incorporating roughly 7 million people. Currently, in 2001 the internet retailing market is in its growth stages making it inaccessible to many potential clients. Objectives:

* Currently, Grocery Gateway is happy to provide high levels of customer service at relatively low costs. The company desires to improve its delivery efficiency to allow them to make 4 deliveries per hour, helping them to achieve their goal of delivering 5000 orders per day within 3 years. They also wish to reduce delivery windows to 30 minutes. After focusing on brand awareness for the first 2 years, they have decided that the business plan from this point forward should be focused on aggressive growth and to become cash flow positive in 2001 based on a variable costs basis. Problem Statement:

* Grocery gateway’s delivery operations are currently delivering 2.7 deliveries per hour which is far below the projected 4 per hour. This must be remedied as targeted goals must be met. * Sub issue – She only has one week to make a decision

Internal analysis:
S.W.O.T Analysis:
* Strengths
* Good customer service and largest customer base in the industry * Very few competitors
* Good Logistics and large warehouse facilities
* Highly profitable
* Competitively priced
* Wide selection
* Easy to use
* Customers could pay at the door instead of giving their credit card number over the internet. * Weaknesses
* New company
* Delivery times are too slow.
* Small trucks that can only accommodate a small amount of deliveries * Sales dropped during the summer.
* Customers could not place orders lower than $60.
* Marketing strategies appear to be low.
* By being solely online, may not reach their target markets. * People using this service must plan out their deliveries in advance so as to not run out of food to soon. * People are unable to test for freshness and quality of fruits a vegetables * Opportunities

* Could potentially expand outside the GTA.
* Huge market.
* Have consumers pay online, minimizing time the driver must spend at each location. * Threats
* With today’s economy, people will not be willing to pay extra and will simply go to the local grocery store to get their food. * People may not know about their company.
* Losing profits and potentially consumers.
4 P’s Analysis:
* Product:
* This website was Canada’s largest direct online grocer. Currently Grocery gateway offers upwards of 6500 products that include dry goods, fresh and frozen foods, beauty and cleaning supplies, wine, spirits and beer. A secondary revenue stream would also be delivery revenues at 8$ per order * Price:

* Orders must be a minimum purchase of 60$ and consumers are expected to pay an 8$ delivery fee. All products were competitively priced. * Promotion:
* For the first two years of operation, management was mainly focused on brand-awareness. Being an e-commerce business, Gateway grocers currently resides online. On their website...
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