Internet Grocery (E-grocery)

Very few consumers shop Internet for groceries 1 in 5 Internet users who are the primary household grocery shopper are interested 42% would like to spend less time shopping for groceries Almost 40% Internet users enjoy shopping for groceries
HED 460

Internet Grocery (E-grocery)



E-grocery can boost loyalty and increase market share E-grocery is projected to be 2% of total grocery shopping

HED 460

Webvan
    

pureplay

Launched June 1999 Hi capital Hub and spoke strategy $260 mil. Sales in 2000 $1 bil. expenses Acquired HomeGrocer.com in August 2000


Mid 2003 relaunch in S. CA??

 

CEO resigned ~ March/April 2001 Shut down July 9 2001

HED 460

Peapod
Launched 1989  Profit 1st Q 2001 in Chicago market  Various strategies (from supermarkets to dedicated distribution centers)  Acquired in 2000 by Royal Ahold ($73 mil.)  Pulled out of some markets and aligned with different Ahold supermarket chains HED 460


New to Peapod?

S a v e m y u s e r n a m e & p a s s w o r d

Groceries for your home

Groceries for your business

HED 460

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Tesco


U.K.

Reports profit  1 mil customers/ 90,000 orders/week  90% customers reached with existing store network lower delivery costs  National store base  Bought US GroceryWorks.com (35%)
(Safeway owns 50%)
HED 460

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Regionals


PublixDirect

small dedicated warehouses  Palm Beach/Broward Counties 28 zip codes plus 13 more by 2002  2002 Atlanta and Orlando

HED 460

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Regionals


Albertson s
Central warehouse/existing stores  37 states: Seattle, Las Vegas, Los Angeles, Vancouver, San Diego  Average order $110/52 items  Produce and meat in top 10 items  $9.95 deliver, $5.95 pickup


HED 460

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Delivery Models


Next day service

 

2 hour delivery window $19.95/month. $9.95/order 60 minute delivery window

Order-on-demand (ensenda)


Pre-scheduled, unattended delivery (most are out of business)

 

$35/month Receptacles/refrigerators

HED 460

Fulfillment Models
Stores  Pick, pack, deliver special carts  Use existing assets  Distribution Centers/Warehouses  Hand held radio frequency scanners to help pick products  Delivery to consumers HED 460


Fulfillment


Logistics provider

Whyrunout.com
California based Statler Bros. stores  Purchased customer referral rights from Webvan, webvan emailed giving options  Deliver drycleaning, film, health/beauty  More than one store ($9.95, + $1.00 each)  Deliver 2:30-8:30 p.m.


HED 460

Fulfillment


logistics provider

Ensenda
Delivery service in local markets  Uses existing stock from local retailers  Delivery within 60 minutes  Couriers in 75-100 markets  $19.95 delivery charge  >sales and >order size reported


HED 460

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Preferred Service Models

70 60 50 40 30 20 10 0
67 47 29 28 51 46

23

23

CStore/media

Store Pickup

All Internet Interested

CStore/meals

Delivery

HED 460

Financials
Few making profit  Grocery profit is usually 1-2%  Potential profit percent of up to 12%  Infrastructure and volume are the main barriers to profits


HED 460

Future
Not dead  Partner with large food retailers  Focus on concentrated urban areas with wealthier clients (volume/profit)



Lack of national supermarket chain means success of local e-tailers

HED 460

Fulfillment Issues
    

Product availability Order processing Delivery Returns Customer service

HED 460

Fulfillment
0 0 0 60 0 40 0 0 0 0 F f b Ex 4 V B L f V f b h . 4

HED 460

Keeping Customers in the Loop



Circuit City
    

Local store pick-up (Express pickup) Identify up to three local stores Checks availability at the local stores With Express Pickup no shipping Pick up at customer s convenience

HED 460

Keeping Customers in the Loop



Staples


Enter zip code at start of shopping for real-time inventory availability Anything in-stock is available for next day delivery

HED 460

Returns
60 0 40 0 0 0 0 Re u n E pe en e Re u ned T u Ha N E e e 4

HED 460

Order Status
00 0 0 0 60 0 40 0 0 0 0
4 4

(capability)

ue Mu

a anne

C n

O de

pped

T a

ng

HED 460

Returns/Back Orders
6 4 4

0 R

HED 460

Fulfillment Cost as % of Revenue

0 6 4 0 6 4 0 T da Yea 4 ue Mu a anne

HED 460

Fulfillment Challenges
Lowering fulfillment costs  Distributing globally  Lowering total fulfillment costs  Managing peak season volume  Keeping up with order volume

HED 460