Case 1 Research proposal Online grocery retailing In this case you will prepare a research proposal for a company interested to enter the market of online grocery retailing. Everybody’s busy, so everything’s got to give. The very new service industry of online groceries (that is grocery shopping online and the home delivery of the purchased items) has grown to address today’s consumer demands of convenience and time savings. Perhaps the best-known provider in the industry is Peapod.com*, an operation that began outside Chicago. Since its founding in 1989, it has expanded to nearly a dozen metropolitan markets, serving over 350,000 customers in 2009. Other competitors sense the market potential, and many firms share space in the marketplace, including alice.com (which ships all orders for free) or netgrocer.com (which covers towns and rural areas, with no annual fee); as well as many as-yet-local providers. Since 2003, the online grocery market has grown at a 20 percent compounded annual rate to touch $ 3.75 billion in online sales in 2008. Industry experts predict continued strong growth (though their numbers vary wildly) in the online food shopping segment.
These online grocery services provide virtual stores through which the electronic visitor navigates, as if pushing shopping cart in a traditional grocer. The user clicks on items to purchase, which are placed in the user’s cart. When complete, the user is “checked out,” specifying a delivery date and time (often paying a premium for narrower windows of delivery time precision, such as from 1 to 1:30 compared to 1 to 4 P.M.).
Users pay annual dues and delivery costs proportionate to each shopping bill. The software allows the user to store his or her preferences in a personal shopping list, which may be altered, adding or deleting items as deemed necessary each e-visit. Across the various providers, the software also usually allows facile consumer comparison; for example, the SKUs in a particular category may be sorted by brand name, by price, by value (price per ounce, for example), by what is on “feature” (sale and of purchase promotions), by various dietetic (such as “healthy,” “low fat”), and so on. The user may write in “notes,” to specify in more detail, for example, “Please pick up green (unripe) bananas, not yellow ones,” or, “If Fancy Feast is out of beef, please get turkey instead,” which instruct the professional shopper to the user’s particular preferences.
Categories of items that can be purchased are continually expanding, from foods to drugstore items and other merchandise. Most users are women, employed full-time, and married, with household incomes that exceed $120,000. Online grocery providers tend to conduct the online business very well, if customers’ satisfaction, repeat visits, and word-of-mouth are any indicators. That is, the software provided, the merchandise selected, the delivery reliability, and so on, are valued by the customer, with few complaints. However, home delivery of food is not a particularly profitable industry. One of the major paths to profit is in selling the data that result from the visitors’ trips to the Web site. A local chain of pizza delivery services is thinking about expanding to online grocery delivery services and has contacted you as a consultant. Management is certain that by learning from the templates of the current providers in other markets, they can run the logistics of the business.
They expect to beat competition in terms of delivery speed as their flexible delivery infrastructure is already in place. Management also intends to create a competitive advantage in the software setup, if they understand the consumers’ mind-set as they travel through the e-grocery stores. They want to know just what a user is thinking from the first click onto the Web site to the last “Done Shopping” click off the site. This knowledge would allow them to offer better advice to their software developers in terms of what features would facilitate the visitors’ traversal of the grocery store. Data like these would help improve the system, and it would also lend great insight to the consumers’ decision processes. Your assignment Management has asked you to prepare a one-page research proposal to address their decision problem(s).
Make sure to clearly define the decision and research problems, as well as the information needed. You will not do the actual research, but specify the decision problem(s), research question(s), and the research needed to answer these question(s). Make sure to focus on the most important issues, i.e., your analysis of the case; what you propose and why. Tip: Take into account the case grading criteria (given in the course outline) while writing your case brief.