Ch4

According to the text, why did early online grocery efforts like Webvan fail?

They failed due to a lack of product-market fit, as most customers were fine with conventional shopping.

What specific concern did customers have that contributed to the failure of early online grocers?

Customers were unwilling to let others pick their produce.

Term: Product-Market Fit (PMF)

A concept conveying the degree to which a product satisfies market demand, ideally scaling into a large, profitable business.

What specific target market with an 'acute pain' did FreshDirect successfully identify?

Time-strapped New York City shoppers who lacked cars.

FreshDirect's success was partly due to its tech-enabled model, which _ costs.

crushes

What technique does FreshDirect use to generate custom product recommendations for its users?

It uses collaborative filtering.

What strategic advantages does FreshDirect gain from building a massive data asset?

It improves the customer experience and creates switching costs.

Term: Inventory Turns

The number of times inventory is sold or used during a given period.

What is FreshDirect's approximate annual inventory turn rate?

197 times a year.

How does FreshDirect's inventory turn rate of 197 compare to a traditional grocer's?

It is significantly higher than the traditional grocer's rate of 40 times a year.

What are the two main benefits for FreshDirect resulting from its high inventory turns?

It offers fresher goods and collects money from customers quicker.

How does FreshDirect establish close, non-squeezing relationships with its suppliers?

It focuses on eliminating middlemen in the supply chain.

What does FreshDirect provide to its suppliers in exchange for a greater selection and faster payment?

The firm develops specialty products and shares data with them.

What was the critical error made during the move to the larger Bronx facility?

The new system was turned on without sufficient testing.

The Bronx facility move failed because it did not account for operational complexity and lacked a _ rollout.

phased

What was the quantifiable impact on FreshDirect's market share due to the Bronx move failure?

Market share dropped from 66% to less than 46%.

What specific tool did FreshDirect use to gather log data to quickly identify and solve problems?

The firm used a tool called Splunk.

Describe FreshDirect's immediate customer-focused response to fix flawed orders after the Bronx failure.

It immediately dispatched a driver, sometimes via Uber, to correct the order.

What special step did FreshDirect take for new customers' orders to fix its service reputation?

It packaged their orders in special bags.

During the COVID-19 crisis, FreshDirect's web traffic increased by _%.

800

How did FreshDirect leverage the COVID-19 crisis as a business and social opportunity?

It partnered with the government and non-profits to deliver food and employ laid-off workers.

What is described as the primary rival threat to FreshDirect?

Better-funded, growth-seeking rivals and non-traditional entrants.

Name two major non-traditional entrants that pose a threat to FreshDirect.

Amazon (which bought Whole Foods) and Walmart.

Besides large retailers, what other type of food business is considered a rival to FreshDirect?

Meal-kit services.