E-Grocery Retailing - Coursework Example

Contents Contents 1 Executive summary 2 Introduction 3 The key issues 7 It has been seen that consumers would be more interested in reducing the shipping costs and the cost has to be reduced by getting the sharing of assets with other companies, consolidation of shipments and by getting good timing.( Mearian, Lucas,2000) There has to be a way where by which the information would be shared like the business analytics and massive computing power and algorithm that can bring the logistics cost down and this model of example can be seen in the American airlines that has been able to meet the equipment and personnel. (Kay, Emily ,2000)For overcoming the shipping problems, it has to be overcome with business analytics. There has to be step in protecting shipments from pilfering and damage and there should be step in ensuring proper labeling and chain of custody and latest technologies like biometrics would increase the cost a little but will increase the customer satisfaction. There has to be using sensors , GPRS that could help to assure proper treatment of packages like keeping appropriate temperature controls, careful handling of fragile shipments and will be making sure that location would not be going astray.( Bowles, Jerry) The necessary logistics include tracking that should be accessible by online, scheduling, coordinating and monitoring. (Bowles, Jerry )Many businesses would be feeling pressure to invest for the concept of outsourcing logistics, and that would mean that the costs of traditional approaches would be growing and the potential for saving money through efficiency would be rising. (Bowles, Jerry )That can be simply done by sharing truck space. Logistics could be considered as a key competitive factor for the retail industry.( Bowles, Jerry) Organizations would have based their success on superior, IT-driven logistics.( Bowles, Jerry) It has been seen that e-retailers has been vulnerable to logistical failures, and dotcoms has been going bankrupt as they have been weak in this problem.( Bowles, Jerry) 7 Conclusion 11 References 13 Executive summary It has been seen that in in e-grocery retailing, the success would be dependent on linking logistics with marketing.( Holstrom, ,2001) Marketing and logistics should be planned hand-in-hand in all phases of development. The e-grocery retailing for survival should not be copying the traditional retailing to Internet. There has to be creation of competitiveness that should be created by using the power of the Internet and the home delivery model and that has to be used for developing new value for the service that has been offered to the customers. The e-grocery will be the perfect method for developing unique healthy good relationships with consumers. The e-grocery retailing should be used for integrating consumers to its information systems and would be bringing daily groceries to their doorstep. The e-grocery would be having the advantage of less cost, and it can have the advantage of not being positioned in multiple retail locations. There can be advantage in the form of less or zero rent, parking charge and property costs. There would be better management of inventory from the e-grocers and there would be chance for the reduction of inventory holding costs from the side of e-grocers and there would be the additional advantage of increased or high inventory turnover costs. The additional advantage of these are the facts that the e-grocers would be having less spoilage of products and there would be less lead times that would be happening from the producer to the consumer and there has been key advantage of selling more perishable products. The e-grocers would be the best persons to have the additional advantage of collecting the consumer buying habits and preferences. The e-grocers would be bringing around a high growth for the industry and there has been many voiced concern over the diminishing of doing sales spontaneous and that has been countered by the growth of Amazon.com that had helped the growth of online sales by innovative marketing. There have been huge incremental sales of using e-grocery like the replacement of tooth brush every three months and these could be tracked well using a computer database and that will include less costs only and would be more time efficient for the consumer. The e-grocer retailing would be dropping short of the traditional retail stores in the form of not having a location, brand name to be associated with and the large customer base that the traditional retail format would be having. There has been no issue of having an exercise when it comes to online retailing and that can be a distraction in these modern health conscious customers. The consumers would be having the trust and loyalty factor with the traditional format and that would be absent from the online media. The e-grocery has been found wanting in certain cases in the area of order fulfillment and home delivery. The traditional markets would be scoring brownie points in these aspects as the consumers would be going directly and purchasing it. The other biggest disadvantage would be the computer database management system and that would mean advanced countries in the telecommunication area would be holding an advantage. Introduction Every retailer would be facing many challenges like having to manage and coordinate a large number of local, regional, and international warehouses across complex, global supply chains. (Read, Jason, 2000) There would be a contrasting demand of customers asking for more variety of products that has to be delivered faster. For fulfilling the customer needs and demands the complete and accurate picture of the inventory has to be met by the organization. That means the logistic supply chain cost has to be kept low for the organizations. That means the organization should be looking at optimizing the transportation management with the warehouse and that would be helping the organization to meet the store needs. There has been growing interest on the consumers who would be pointing and clicking their way through the online media to get hold of products and the online retailing has been seen as grocery stores and pharmacies. There has been business that would be selling the consumer products online and that can be termed as e-tailers and e-groceries. There have been an increasing number of consumers who would be buying groceries online and the reasons are because of better prices, there has been larger selection, there has been convenience, and there have been timesavings. The biggest appealing of the consumers that has been seen as grocery retailing has been the difficulty for the people to shops and that can include physical disability, the looking after small children and there has been lack of adequate transportation and there would be increased busy life style and that can include the driving to shopping for traditional stores. The Internet grocery market has been seen as the extension of home-shopping .The sector has been seen as a sector that will be witnessing high growth and there would be good increase in the future. There has been high annual growth in the internet sales and that has been witnessed in the expanded markets of US and UK.The consumers has been seen as passionate in buying of goods through internet and that has meant that there has been many advantages that can be offered over the internet. That would include the offering of the wide range of products, the comparison of prices and the delivery that can be convenient time. The retailers would be giving the option of offering an online channel through which the products would be sold and there has been a wide range of niche specialized retailers. The biggest obstacle that the retailers would be facing will be the costs and complexity of establishing an online service. There should be effort on the part of online grocers to increase the distribution networks, improve the stock availability, enhance the functionality of websites, the price competition that would be evolving between the sites, and other issues like the environmental issues. That has meant that more online retailers has been introducing the measures like reducing the number of plastic bags and using more environmental friendly fuel efficient vehicles. (Maddali, P,2003) There should be high number of broadband connections in the country and that would be the main pivotal factor in building the high broadband connections. That would be the main factor like online groceries that would be developing website designs and there would be advantage of developments. The biggest problem that the online grocers would be facing would be the problem of recession as the amount that has been spends on the Internet sales has come down. The value proposition that the e-grocers has been showing has been due to the single source solution for the busy consumer and that would be providing information about the products and services. There has been customization of the shopping list that can be termed as weekly and the personalized shopping would be giving the additional benefit of shopping online and that can be termed as comparison of traditional stores and there would be storing of weekly orders that would be helping the repeat orders simple. (Lee, L., 2003) There has been a negative of online grocery shopping that has been said by the consumers and that would include the plan and thinking process that would be going before the purchase has been done. That would include the delivery schedule that has to be done before getting hooked into online purchase media. There has been consumers who would be thrilled at the prospect of going to the retailing shop at the spur of the moment and they would be happy to combine the retailing activity with other activities and these other activities would be including the rent of dvd,video,or dropping children to school, dropping husband to work and so on. There would be additional interest of going through the enjoyment of buying through the purchasing activities and e-grocers scheduling type can create a disinterest on the mind of the consumers. There have been other factors that has been created negatively like the shipping costs, credit card security, the need of the product that has been immediate, the social aspect of shopping directly. (Kumar, N., 2001) There has been instance like the orders that has been placed for less that dollar fifty would be charged extra shipping charge in the range of dollar 5 to dollar 20 and that can shoot the cost of the product much higher than anticipated. There has been threat of credit card theft or the security issue that would be remaining on the top of the mind and there have been instances of fraudulent credit card issues on the sites of grocery retailers. There have been many consumers who would doubt about the freshness of the product and there are consumers who would be feeling the happiness of buying the products by smelling and squeezing the products before buying it. The feeling of touch and smell would be the main block that the online grocery retailing or any other online sales media would be facing very highly. Internet grocery retailing is increasingly considered a key innovation capability in improving the efficiency of interaction between retailers and customers, and provides competitive advantages such as responsiveness and flexibility. For a traditional grocery retailer, the size of the customer base can grow over time but is significantly confined in geographical space. In contrast, an Internet grocery retailer with the appropriate infrastructure can draw customers from a wide-ranging geographical area (e.g., the entire Eastern coast of Australia). Online grocery retailers are often faced with the challenge of revising their logistics practices to improve efficiencies to ensure current competitive advantages are maintained. The biggest advantage that the online media would be offering is the convenience factor and it is in this background that the study has been done on the freight, packaging, storage and control requirements for an online grocery retailer seeking to minimize logistical costs, increase the geographical coverage and maximize flexibility for customers. The key issues It has been seen that consumers would be more interested in reducing the shipping costs and the cost has to be reduced by getting the sharing of assets with other companies, consolidation of shipments and by getting good timing.( Mearian, Lucas,2000) There has to be a way where by which the information would be shared like the business analytics and massive computing power and algorithm that can bring the logistics cost down and this model of example can be seen in the American airlines that has been able to meet the equipment and personnel. (Kay, Emily ,2000)For overcoming the shipping problems, it has to be overcome with business analytics. There has to be step in protecting shipments from pilfering and damage and there should be step in ensuring proper labeling and chain of custody and latest technologies like biometrics would increase the cost a little but will increase the customer satisfaction. There has to be using sensors , GPRS that could help to assure proper treatment of packages like keeping appropriate temperature controls, careful handling of fragile shipments and will be making sure that location would not be going astray.( Bowles, Jerry) The necessary logistics include tracking that should be accessible by online, scheduling, coordinating and monitoring. (Bowles, Jerry )Many businesses would be feeling pressure to invest for the concept of outsourcing logistics, and that would mean that the costs of traditional approaches would be growing and the potential for saving money through efficiency would be rising. (Bowles, Jerry )That can be simply done by sharing truck space. Logistics could be considered as a key competitive factor for the retail industry.( Bowles, Jerry) Organizations would have based their success on superior, IT-driven logistics.( Bowles, Jerry) It has been seen that e-retailers has been vulnerable to logistical failures, and dotcoms has been going bankrupt as they have been weak in this problem.( Bowles, Jerry) The e-grocery shops could be said as pure online shops and there would be shops that would be selling online and that would include the traditional shops and there would be partnership between the traditional retail formats and the online retail formats. There has to be understanding of the term perishable goods and that means goods that are to be stored in the refrigerator and freezer and that can include goods like fresh vegetables and meats. There have been non perishable products that would be covering the other household items in the form of canned soup, canned fruits, vegetables, drinks, laundry detergents, and candy. There has been e-grocery shops that has been offering the perishable and non perishable products and the main aim of these companies would be to replace the consumer trip to grocery store completely and the main advantage would be to limit the product selection to non perishable would be to ease the storage and delivery. The e-grocery would understand that the consumers would be going to buy bread and meat. The consumers would be interested in e-groceries that would be meeting all their demands. There has to be large, automated distribution centers for the e-grocers and that can mean a creation of hybrid model in the form of partnerships. The mega warehouse model could be used several e-grocers and that can mean a start up with a big play field sized structure to keep all the non-perishable groceries, electronics, books, and music. The warehouse could be automated. There would be different temperature zones to keep the fresh foods and there should be proper steps to avoid the contamination. There has to be extra effort for food preparation and there would be computerized distribution centers and there would be extra effort for the unbroken cold chain for fresh, chilled, and frozen foods from source to customer. There would be innovative inventory software that would be meeting all the demands. There has to be computerized system that would be having a network of computers and scanners and that would be coordinating the movements of the racks of products and the conveyor belts. Customers of e-grocers, should be given the facility of home delivery and that can mean a, Time window to receive their delivery would be given. The customers of e-grocery retailing should be allowed to place order at least one day before the scheduled delivery and that can include the cancellation of items. (Punakivi, M. and Saranen, J., 2001) There could be a provision of allowing six deliveries in a week and there should be a separate fleet and that can mean trucks and vans in the strategic advantage. The first and foremost thing is that to understand that E-grocery services has been following the model of supermarkets and that can mean that they are still allowing selection and home delivery of the goods ordered. That means there is nothing wrong that the customer would be thinking that this is self service and the placing an order through internet may be time consuming and this has to be done each time the fresh order is placed. Then the customer would be waiting at the home to get the product and that can there has been e-grocers that would be able to get the reception of the goods. The main aim of the e-grocery would be to make the consumers to be offered new kinds of value-added services and that can mean e-grocer would be able to meet the needs of different customers. The e-grocer would be meeting the replenishment of consumer’s inventory and that would require receiving regular orders and good service development. The basic assumptions are Customers would need all the items they have purchased instantly and the customers would like a wide assortment from which they can choose the product each time purchases are made over the online media and the customers would like to choose fresh goods by themselves. Keeping these assumptions in mind the following things should be done by e-grocery and that can mean focusing more on the customer demands that could be fulfilled effectively and that would meet the bulk of consumers’ purchases that they are doing using online media. The instant needs can be still done by physical retail outlets and beyond those demands other demand could be fulfilled by efficient e-grocery systems. The customer that would be visiting the online shop would be try8ing to repeat the work or process many times and the routine purchases could be used effectively in the online media. The key recommendations There should be increased focus on customer density and building the operating systems to act in local manner. There should be increased focus on building and maintaining trust in e-grocery retailing. There should be increased focus on increasing on the buyer power and make it as strong as traditional marketing. There should be increased focus on taking care of operational efficiency and providing a high service level. There should be increased focus on utilizing reception boxes and that can include a store based Service. There should be increased focus on having a good ordering interface and availability of product information that could be user friendly. There should be increased focus on increasing the range of products that would be offered to High margin non-grocery items and that can include the building of effective logistics system. (Morganosky, M.A. and Cude, B.J., 2000) There has been misconception that e-grocery could be used effectively for making the business global and that can also include sales to large geographic area and the reality would show that the effectiveness of operation would be depending on the local customer density. That means to have a profitable e-grocery business would be to increase the sales per geographical area and the cost of home delivery would be to increase the home delivery that can be used by real grocery shopping data. The home delivery could be compared with garbage collection business and the markets would be taken over by street by street and there should be r an effective system for operating locally and to make the business big would be to copy the concept to new local areas. The customers of an e-grocer would not be willing to take more from their pocket for their groceries than in the local or traditional retail. The customers would be willing to pay something for home delivery but would not be giving more than is needed to cover costs. That means the e-grocery retailing should be offering purchase prices as same as those being offered by the competition. There would be requirement of large capital for e-grocery and the higher purchase prices at start-up volumes would have to be subsidized. The e-grocer would be pressurized to acquire a traditional grocery retailer and expanding the business. The cost of home delivery would be not depending on the density of drops. The other factors that are important would be service model, the way the delivery is received and the picking system .The model of giving delivery the next day would be expensive when compared with the unattended weekly delivery on a defined weekday, as it can reduce home delivery costs to less than a half. (Ring, L.J. and Tigert, D.J., 2001) The key to efficient home delivery would be meeting the unattended reception of goods. This should be efficiently managed by a refrigerated reception box that should be placed at the customer’s location or a delivery box. The delivery box could be an insulated box that could be kept near the door of the customer’s home and that would be enabling the product to be kept cool or frozen. There could be other methods like the shared reception box clusters. The example of this model could be the garbage collection from a block of flats or an office building. There would be allocation of one box for delivery for a certain day. The e-grocery supermarkets should be developing new types of commercials that would help the customer to change the selection when an interesting new product would be introduced on the market for the first time. Conclusion The advantage of using the information technology is that , every customer could be having their grocery tailored exactly to their needs and would be taking into consideration the occasions, personal budget constraints, the dietary preferences, medical treatments and other things that could be thought of like food allergies. The e-grocery retail would be allowing the customer to purchase the products in many different ways by the consumer. E-grocery home delivery could be used to build a new delivery network from suppliers of tangible products to households. That means there could be addition of new products to the selection and that can include or look like getting a new channel for tv.The e-grocer distribution system should be looking at the delivery of pure local products and seasonal products that would not be available in traditional retail stores. The home delivery network could be used effectively for community infrastructure. (Saranen, J. , 2001) References Saranen, J. , 2001, ``the reception box impact on home delivery efficiency in the e-grocery business’’, International Journal of Physical Distribution and Logistics Management, Vol. 31 No. 6, pp. 414-26. Ring, L.J. and Tigert, D.J., 2001, ``Viewpoint: the decline and fall of Internet grocery retailers’’, International Journal of Retail & Distribution Management, Vol. 29 No. 6, pp. 264-71. Holstrom, 2001, ``Physical distribution considerations for electronic grocery shopping’’, forthcoming in the International Journal of Physical Distribution and Logistics Management, online www address: www.tuta.hut.fi/ecomlog/publications Morganosky, M.A. and Cude, B.J., 2000, ``Consumer response to online grocery shopping’’, International Journal of Retail & Distribution Management, Vol. 28 No. 1, pp. 17-26 Punakivi, M. and Saranen, J. ,2001, ``Identifying the success factors in e-grocery home delivery’’,International Journal of Retail & DistributionManagement, Vol. 29 No. 4, pp. 156-63. Lee, L. ,2003, Online grocers: Finally delivering the lettuce, brick-and-mortar chains are finding profits in cyberspace. Business Week, April 28, 3830:67. Kumar, N. ,2001. Online grocers take stock. Business 2.0 (U.K. Edition), March 29, pages 46,52. Maddali, P,2003, Tesco in 2003 case study. ICFAI Knowledge Center, Reference No: 15-03-06-08, http://www.icfai.org/ikc/main/Articles/padmini/tesco.PDF Bowles, Jerry. "eLogistics, Delivering the Promise of the Internet Economy." Forbes. Retrieved September 13, 2009 from the World Wide Web: http://www.forbes.com/specialsections/elogistics/11.htm Kay, Emily. "Online Exchange Helps Trim Shipping Costs." Computerworld, December 2000. Retrieved September 13, 2009 from the World Wide Web: http://www.computerworld.com/cwi/story/0,1199, NAV47_STO55263,00.html Mearian, Lucas. "U.S. Customs Launches $1.3 Billion IT Upgrade." Computerworld, April 2000. Retrieved September 13, 2009 from the World Wide Web: http://www.computerworld.com/cwi/story/0,1199, NAV47_STO60051,00.html Read, Jason. "Network Logistics: Creating Collaboration." Logistics Quarterly, Winter 2000. Retrieved September 13, 2009 from the World Wide Web: http://www.lq.ca/issues/dec00/articles/article13.html Read More