Q1. Why to invest in grocery delivery?

The major reasons to invest in grocery delivery are as follows:

• Today’s customer is all about convenience and they prefer things which are
more convenient
• Lack of time to buy things from store as everyone is mostly busy with the
work.
• Grocery is a basic necessity and even if the economy is down, people won’t
stop buying grocery
• The demand will never decreases
• It is expected to grow at the rate of 25-30%
• It works on repetitive orders as the customers will need the same things on
a regular basis
• People are relying more on online shopping
• High frequency of purchase
• It is expected to be the fastest growing segment
• The customers in this sector are loyal and sticky among all other things

Q2. (A) Would there come a day when most grocery shopping will be
done online?
(B)If so, how would Amazon compete with established retail chains
like Safeway, which was energetically opening online channels and
already had a string of warehouses nationwide?
Ans.
(A) Today’s customers are changing their purchase preferences at a rapid rate,
their buying habits are evolving. Consumers are either Digital Natives or Digital
Migrants (Millennial). They are young, working adults and like to adopt online
shopping rather than going to 10 different product outlets in a grocery store or
supermarket. Online shopping impacts on all three major aspects a consumer
consider important-
 Price
 Convenience
 Quality
(B) In order to compete with Safeway, Amazon must:
 Open its own distribution centers to serve customers in shorter lead time
 Use its competence – “Distribution”, to provide flexible delivery time
 Educate customers about convenience over price in online shopping
 Use of technology to offer customers more options to shop (Recipe List,
Past orders, Reminder system etc.)
 Focus on today’s customers most prominent problem – “Time constrained”
 A loyalty program for regular customers ( Prime Fresh)
 A responsive customer feedback system
 Testimonials of customers

Q3. What Competencies need to be developed for winning the digital

shelf in the online grocery?
 High Volume of Sales
 Efficient Inventory Management
 Constant Evaluation of Products and Promotions
 Long Lead times- Most of Online Grocers required customers to order one
day in advance
 Most of customers preferred Brick and mortar stores
 Need for own logistics system to keep food at appropriate temperature.
 Need for customer density to avoid partially empty trucks
 Amazon must continue to streamline sourcing: local farms and mass
merchants
  Amazon’s delivery system (fulfilment) to be modified to reduce cost as
much as possible
 Explore strategic partnerships and developing synergy with existing delivery
services
 Developing “Digital Packaging”: ratings/reviews/product descriptions
 Prioritizing marketing based on reach/effectiveness/potential

Q4. Should the company continue refining its business model in

Seattle or expand to another city? What factors should it take into
account when planning its next move?
Yes! AmazonFresh should expand to other major cities with a lot of affluent
customers
• The main reason of failure of Webvan was high cost of maintaining a
warehouse when demand was low
• AmazonFresh can use the warehouse of Safeway and customize it for
Amazon’s use
• AmazonFresh has to adopt a subscription model to lock-in customers for
larger and consistent orders
• The focus should be on high service level and not on price as Safeway’s
similar orders are already 24% cheaper
• The ideal market for expansion would be downtown locations Los Angeles,
San Francisco, New York, Chicago, Houston
• AmazonFresh should consider acquiring a regional fresh produce store such
as Trader Joe or Sprouts or Whole Foods so that it can expand the product
portfolio and still avoid wastages due to expiry thus providing low cost and
convenience
• Amazon should stick to its key competence of fast delivery, logistics and
innovative webpage and app technologies and outsource procurement