MN304 Lecture 3 and 4: FreshDirect Success and Competitive Advantage
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Questions and Answers

What is a key reason why earlier online grocery efforts failed?

  • Inefficient supply chain
  • Unwillingness of customers to entrust someone else to pick their produce (correct)
  • Limited selection and high prices
  • Lack of farm-to-table freshness

    • What is a significant advantage provided by FreshDirect using technology?

  • Limited selection
  • High prices
  • Farm-to-table freshness (correct)
  • Conventional way of shopping

    • What does the concept of 'product-market fit' convey?

  • The efficiency of the supply chain
  • The selection of products available online
  • The willingness of customers to entrust someone else to pick their produce
  • The degree to which a product satisfies market demand (correct)

    • Why were most customers initially fine with the conventional way of shopping for groceries?

    <p>Unwillingness to entrust someone else to pick their produce</p> Signup and view all the answers

    What played a role in strengthening the key resources for competitive advantage for FreshDirect?

    <p>Efficient supply chain</p> Signup and view all the answers

    Why did the online grocery business initially fail?

    <p>Lack of product-market fit</p> Signup and view all the answers

    What is one of the advantages of using FreshDirect according to the text?

    <p>Availability of one-click recipes</p> Signup and view all the answers

    What is the main focus of FreshDirect's product mix as mentioned in the text?

    <p>Heavy on fresh produce</p> Signup and view all the answers

    How does FreshDirect's inventory turnover compare to traditional grocers?

    <p>197 times a year versus 40 times a year for traditional grocers</p> Signup and view all the answers

    What allows FreshDirect to benefit from additional delivery savings?

    <p>Scale and use of recycled biodiesel fuel</p> Signup and view all the answers

    What does the high efficiency of worker shifts lead to for FreshDirect?

    <p>60 percent lower labor costs</p> Signup and view all the answers

    What contributes to FreshDirect's success in retaining customers according to the text?

    <p>Re-creating orders at a rival site represents another switching cost</p> Signup and view all the answers

    What does the FreshDirect model allow the firm to build?

    <p>A data asset used for product recommendations and marketing campaigns</p> Signup and view all the answers

    What helps FreshDirect crush costs that plague traditional grocers?

    <p>Highly efficient worker shifts and lower labor costs</p> Signup and view all the answers

    Study Notes

    Online Grocery Failures

    • Early online grocery efforts failed due to inadequate logistics and inefficient supply chains.

    FreshDirect's Advantages

    • FreshDirect's technology enables efficient order fulfillment, leading to cost savings and competitiveness.
    • FreshDirect's model allows for building strong customer relationships and retaining customers.
    • High efficiency of worker shifts leads to increased productivity and lower labor costs.
    • FreshDirect's route optimization technology enables additional delivery savings.

    Product-Market Fit

    • Product-market fit refers to the alignment of a product's features with the needs of a specific market.

    Traditional Grocery Shopping

    • Most customers initially preferred traditional grocery shopping due to habit and familiarity.

    Competitive Advantage

    • Strong relationships with suppliers and high-volume purchasing played a key role in strengthening FreshDirect's key resources for competitive advantage.

    Online Grocery Challenges

    • The online grocery business initially failed due to difficulties in achieving efficient logistics and supply chains.

    FreshDirect Benefits

    • One of the advantages of using FreshDirect is increased convenience and time-saving.

    Product Mix

    • The main focus of FreshDirect's product mix is on high-quality, fresh produce and meat products.

    Inventory Turnover

    • FreshDirect's inventory turnover is faster than traditional grocers, reducing waste and costs.

    Cost Savings

    • FreshDirect's efficient supply chain and logistics help the firm crush costs that plague traditional grocers.

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    Description

    Test your understanding of why earlier online grocery efforts failed and how FreshDirect succeeded, the key resources for competitive advantage offered by technology, product-market fit, and the role of time in strengthening these resources.

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