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Fresh Direct Case Study

2836 words - 12 pages

Summary:
FreshDirect was launched in July 2001 by Joseph Fedele and Jason Ackerman. FreshDirect is a New York City based online grocery store with a state of the art production center, top-notch personnel, leading edge manufacturing software, the highest standard of cleanliness, health & safety, and an informative and user-friendly website. System efficiencies include: a cost-effective operational design; no middleman; a central production and distribution location; well designed order and delivery protocols; and a policy of no slotting allowances. These system characteristics enable FreshDirect to maintain a high product quality while keeping product prices low, therefore their promise to ...view middle of the document...

They have a great reputation of delivering high quality organic grocery items at a low cost. Their great customer service and their extremely high standards for cleanliness, health and safety all contribute to building an excellent brand.
Innovative food-quality rating system: This rating system has been implemented on the company’s website. It allows the customer to view the facility, provides specific nutrient information of the products, allows price comparison, and provides detailed information about the paying and delivery options.
Daily Produce Rating System: The implementation of the Daily Produce Rating System has positively modified consumers buying patterns. They are now able to better decide which perishable items to buy without smelling, feeling, and seeing. The system ranks the quality of the fruits and vegetables which are being distributed by the company the following day.
State of art production facility including an efficient supply chain: A 300,000 square foot facility and an efficient supply chain enables the company to quicker process orders, keep food fresher, and provides tighter controls. The supply chain eliminates the middle man, reduces operational cost and offers high quality products at a low cost. Due to the unique relationships with growers and producers, the company enjoys reduced purchases prices which are passed onto the customers. Products are directly ordered from the producer and are then shipped to FreshDirect’s production center to be distributed. This results in not paying a high amount of rent to store their products.
Weaknesses:
Online ordering: FreshDirect is only available to customers with internet access and customers have to be at home within a 2 hours delivery window. They carry double the amount of perishable food items, yet only a small fraction of packaged goods. This puts FreshDirect at a disadvantage to other stores due to the fact that they are not a one stop shop for customers. Online ordering enables the customer to touch, smell, and feel items.
Transportation issue: FreshDirect’s trucks receive a high amount of traffic tickets each week due to parking violations. They also contribute to the pollution and congestion within the city. They only focus on delivering within selected zip codes. More info in Appendix A.
Organic company: They claim to be an organic company, yet are overusing packaging such as shrink-wrap and card boxes and contribute to the pollution within the city.
Opportunities:
Business expansion: Online grocery sales are projected to grow by 9.5% annually. It is forecasted that this industry will not only grow but also absorb a large portion of the total grocery sales. The CEO of FreshDirect thinks that online grocery sales could account for as much as 20% or more of total grocery sales within the next 10 years. In 2010, the online grocery segment accounted for less than 2% of total sales. By 2014, it is projected that this number will increase to around 13.5...

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