Case Study Report

COMPANY NAME/WEBSITE/INDUSTRY
Fresh Direct / FreshDirect.com / Online Grocery Store
BACKGROUND/HISTORY
Fresh Direct is an online grocery store in Long Island City, Queens New York. The company was started in 1999 by Joseph Fedele and Jason Ackerman. Joseph Fedele has been in the grocery business since 1993 and Jason Ackerman was an investment banker when they decided to create Fresh Direct. Joseph was the CEO until 2004 when Jason succeeded him, but he only stayed at this position for seven months. After going through a few more CEO's Jason moved back to the position of CEO and is currently still holding the position. [ (Fresh Direct, Our People, Leadership) ] There are several online grocery stores in the market now and Fresh Direct still ranks as one of the top nine websites. [ (Boswell) ]
SWOT ANALYSIS StrengthsStrong marketing campaignLess inventory than grocery storesBetter variety of fresh foodsDelivery of order to front doorPick up from facilityCorporate DeliveryPre-prepared itemsChef prepared meals for business meetings | WeaknessesOnline Market is very competitiveLess packaged goods compared to grocery storesCost of goods higher than grocery storesLimited delivery areaNumerous parking ticketsFuel costs | OpportunitiesExpand to larger delivery marketMore technology users in the world that will use online ordering | ThreatsNational grocery store chains moving into areaNew online grocery stores in the marketTarnished reputation from paying low wages |
ANALYSIS VIA PORTER’S FIVE FORCES MODEL
Bargaining Power of Buyers

-Loyalty is essential for business growth.
-When customers have special requirements that are met by vendor they will sty with the vendor.
-Limited selections means that customers will pay more for the options that are available.

Threat of Substitute Products / Services
-Substitutions will affect the quality which means the product will be inferior.
-The freshest products should not be substituted.
New Entrants:
-Strong distribution network means other companies will pay more for products.
-Having easy to use website makes customers loyal.
-Location is key for successful business.

Competitive Environment

Intensity of Rivalry in the Industry

Bargaining Power of Suppliers

-If multiple suppliers are trying to earn business, the customers will receive the best price for goods.
-As more vendors enter the market, the suppliers will lose their bargaining power.
-When suppliers are dependent on high volume they lose bargaining power because the customers will threaten to cut volumes.

STRATEGY USED Fresh Direct created their competitive advantage based on the focus strategy. The focus strategy is when a company only targets a narrow market segment of an industry. With delivery options to a limited area and shipping limited to certain area Fresh Direct is targeting one geographic region to built their brand. In order to help keep the differentiation focus strategy, Fresh Direct uses a make-to-order philosophy (Dess, 2012) that allowed them to set up a supply chain that would allow them to fill their customer's specific orders. This strategy allowed Fresh Direct to set up a one of a kind business model that give them a competitive advantage over brick and mortar grocery stores. This strategy will not work for the average retail store but this strategy will work for a specialty retail stores. The specialty stores would be successful whether they were an e-commerce or a brick and mortar store. Of course for companies to grow their strategies have to be changed to match their growth goals. Once established in the market, Fresh Direct still focused on a specific geographic region but they changed their product offerings to keep their customers coming back for all their grocery purchases.
THE ISSUES AND CHALLENGES FACING THIS COMPANY The companies competitive advantage can be sustained by improving their product offerings that they offer in their market. Fresh Direct has already started sustaining their competitive advantage by using and promoting their fresh product offering they purchase from local farms. When customers know they are helping to support the local markets they are more willing to purchase the products. Fresh Direct has also partnered with local well know restaurants to provide customers with concept meals, prepare at home complete meals and four minute meals that are ready to eat right out of the microwave. These ideas where developed early on and are still offered today. The company has seen its ups and downs when dealing with employees, product quality and delivery issues. The company has received had to pay an excessive amount of parking tickets and with the rising cost of fuel they are having difficulty hitting their profit goals. Some customers have not be satisfied with the quality of the food they received. In order to correct this, Fresh Direct established a rating system so the customers would know what they were buying so there was no surprises when the items were delivered. The most recent challenge is the truck drivers joined the local union because they were being asked to drive for twelve to fourteen hours a day and faced punishment if they refused to drive. In order for the company to be successful their employees have to know that they are appreciated in order to get the best work from them.
COURSE OF ACTION RECOMMENDED Fresh direct seems to be doing the right things for their customers and now they need to make sure the employees are taken care of in order to reduce employee turnover and keep moral up and to keep the productivity up in the facility. To keep the competitive advantage I would change from the focus strategy of the geographic region to a differentiation strategy and start to expand my delivery area to the north east. Once the packing and logistics is worked out on the expansion to the northeast I would look to the entire east coast and continue to move until we were delivering in California.
OPINION
The case study was a good example of while there is success in business, there are always internal items that can affect the company. With the labor issues that were occurring, I can see why the there was several changes in the CEO position but ultimately one of the original co-founders stepped back into the CEO position. Since then the company has seen a stable leadership structure that will lead them into the future.

REFERENCES
Boswell, W. (n.d.). Online Grocery Shopping: The Top nine Websites. Retrieved January 22, 2015, from About.Com: http://websearch.about.com/od/onlineshippingsearch/tp/online-grocery-shopping.htm

Dess, G., Lumpkin, G. & Eisner, A. (2012). Strategic Management (pg. 126). Boston: McGraw-Hill Irwin

Fresh Direct, Our People, Leadership. (n.d.). Retrieved January 22, 2015, from FreshDirect: https://www.freshdirect.com/browse.jsp?id=about_ourteam_ldrship