HEB Grocery Company - Assignment Example

An elaborate plan was made and a new director, John Sturm was hired speifically to lead the E-retailing project. Some good investment went into the back ground research and eventual inplimentation of the E-retailing system. Having embraced technology in its operations in the past, this did not look as a far-fetched idea, it was therefore very welcome. The system involved an overhaul of the HEB online presence; the website had to be redone to include more detailed catalog, product description, product user manuals and point of sale or check out features.

Customers were expected to log in into the company’s website, make orders, pay for the orders and eventually have to good delivered at their door steps. The company went on to put up a distribution and delivery system for the products that were ordered online. This was a service that was expected to have runaway success at least on the eyes of the executives at HEB even though profit was a long term issues. It was expcted that the venture would break even in three years and remain into the future.

This optimism caused the team to overlook various anormalies that were quite glaring from the word go. Key among the anormalies was the cost implecations of the venture. A rough estimate of the cost indicated that the company would spend up to $5 to pick a customer’s order in the store, and $10 to deliver it to their home. This translated into 15% more overhead cost. The other issue was the cost of maintaining the E-retail system not to mention the cost of putting up a delivery system. Despite these bottle-necks, the company went ahead with the project and on 8th march, 2000; Mr.

Fully Clingman (The COO) through a memo to all departments announced the restructuring of management to accommodate the new venture. The rest of the members of staff were equally elated at the prospets of the new system of doing business. In the following months the company would engage in pilot implementations even as they gaged the customer response. Mr. Sturm, the director incharge of HEB.com argued strongly in favour of the project saying that the creation of a transactional pharmacy would enable HEB to leverage existing assets.

As well as develop e-commerce expertise, and thus begin to build an online customer base that could be transitioned to online groceries. In retrospects, it’s true that HEB focused more on the company and what they wanted to do in light of what their competitors were doing and consequently lost touch with the customer. One of the strengths that had brought HEB to its current status at the time was its close engagement with the customers. Especially its Community service activities and customer loyalty programs.

These are thing that the customers and the community valued so much yet they were going to have to forfeit them in favor of E-retailing. The shopping expirience of walking into a grocery store and picking what you want according to your preference woud also be compromised. Another very important factor was the kind of goods that people would buy from the grocery store. These were goods that were easily perishable and are usually need fresh; this could not be quaranteed on the E-retailing system due to the transportation factor.

The extra over head cost of picking and delivering a product to a consumer from the E-retail system was quite high. 15% over and above the usual cost meant that only those who were extreamly staved for time and had loads of cash would embrace the system. The final and the most important factor was the expected income returns from the project Vis a vie the time to took to break even. Even though profits