Online Grocery Retailing: Building the Last Mile to the Customer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Technology & Operations
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Online Grocery Retailing: Building the Last Mile to the Customer
Online grocery retailing, despite its unproven track record, had generated a substantial amount of interest by mid-2000. Although no online grocery retailer had managed to develop a business model that consistently delivered profits and created value for the customer, several companies touted value propositions and fulfillment models that hoped to overcome the challenges facing the industry. Presents five companies with different fulfillment models: Streamline, Webvan, NetGrocer, Tesco Direct, and Le Shop. Challenges readers to think about which online grocer creates the most value for customers and which grocer will likely be able to overcome the challenge of fulfillment, i.e., building the last mile to the customer.
Swot Analysis of "Online Grocery Retailing: Building the Last Mile to the Customer" written by Brian Rogers, Nirmalya Kumar includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Fulfillment Grocery facing as an external strategic factors. Some of the topics covered in Online Grocery Retailing: Building the Last Mile to the Customer case study are - Strategic Management Strategies, Internet, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Online Grocery Retailing: Building the Last Mile to the Customer casestudy better are - – challanges to central banks by blockchain based private currencies, there is backlash against globalization, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, supply chains are disrupted by pandemic , digital marketing is dominated by two big players Facebook and Google, talent flight as more people leaving formal jobs,
competitive advantages are harder to sustain because of technology dispersion, increasing energy prices, etc
Introduction to SWOT Analysis of Online Grocery Retailing: Building the Last Mile to the Customer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Online Grocery Retailing: Building the Last Mile to the Customer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Fulfillment Grocery, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Fulfillment Grocery operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Online Grocery Retailing: Building the Last Mile to the Customer can be done for the following purposes –
1. Strategic planning using facts provided in Online Grocery Retailing: Building the Last Mile to the Customer case study
2. Improving business portfolio management of Fulfillment Grocery
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Fulfillment Grocery
Strengths Online Grocery Retailing: Building the Last Mile to the Customer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Fulfillment Grocery in Online Grocery Retailing: Building the Last Mile to the Customer Harvard Business Review case study are -
Highly skilled collaborators
– Fulfillment Grocery has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Online Grocery Retailing: Building the Last Mile to the Customer HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Fulfillment Grocery has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Fulfillment Grocery to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Fulfillment Grocery has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Sustainable margins compare to other players in Technology & Operations industry
– Online Grocery Retailing: Building the Last Mile to the Customer firm has clearly differentiated products in the market place. This has enabled Fulfillment Grocery to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Fulfillment Grocery to invest into research and development (R&D) and innovation.
Strong track record of project management
– Fulfillment Grocery is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Innovation driven organization
– Fulfillment Grocery is one of the most innovative firm in sector. Manager in Online Grocery Retailing: Building the Last Mile to the Customer Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Online Grocery Retailing: Building the Last Mile to the Customer Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Successful track record of launching new products
– Fulfillment Grocery has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Fulfillment Grocery has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Fulfillment Grocery has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Online Grocery Retailing: Building the Last Mile to the Customer - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Fulfillment Grocery has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Online Grocery Retailing: Building the Last Mile to the Customer Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Organizational Resilience of Fulfillment Grocery
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Fulfillment Grocery does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Technology & Operations field
– Fulfillment Grocery is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Fulfillment Grocery in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Online Grocery Retailing: Building the Last Mile to the Customer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Online Grocery Retailing: Building the Last Mile to the Customer are -
Products dominated business model
– Even though Fulfillment Grocery has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Online Grocery Retailing: Building the Last Mile to the Customer should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Fulfillment Grocery has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Fulfillment Grocery has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As Online Grocery Retailing: Building the Last Mile to the Customer HBR case study mentions - Fulfillment Grocery takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Fulfillment Grocery needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Aligning sales with marketing
– It come across in the case study Online Grocery Retailing: Building the Last Mile to the Customer that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Online Grocery Retailing: Building the Last Mile to the Customer can leverage the sales team experience to cultivate customer relationships as Fulfillment Grocery is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Online Grocery Retailing: Building the Last Mile to the Customer HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Fulfillment Grocery has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Fulfillment Grocery has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Fulfillment Grocery even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Online Grocery Retailing: Building the Last Mile to the Customer, is just above the industry average. Fulfillment Grocery needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Online Grocery Retailing: Building the Last Mile to the Customer, in the dynamic environment Fulfillment Grocery has struggled to respond to the nimble upstart competition. Fulfillment Grocery has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Fulfillment Grocery has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Online Grocery Retailing: Building the Last Mile to the Customer | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Online Grocery Retailing: Building the Last Mile to the Customer are -
Buying journey improvements
– Fulfillment Grocery can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Online Grocery Retailing: Building the Last Mile to the Customer suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Fulfillment Grocery to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Fulfillment Grocery to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Fulfillment Grocery has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Fulfillment Grocery can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Learning at scale
– Online learning technologies has now opened space for Fulfillment Grocery to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Fulfillment Grocery can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Fulfillment Grocery can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Fulfillment Grocery can use these opportunities to build new business models that can help the communities that Fulfillment Grocery operates in. Secondly it can use opportunities from government spending in Technology & Operations sector.
Manufacturing automation
– Fulfillment Grocery can use the latest technology developments to improve its manufacturing and designing process in Technology & Operations segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Fulfillment Grocery has opened avenues for new revenue streams for the organization in the industry. This can help Fulfillment Grocery to build a more holistic ecosystem as suggested in the Online Grocery Retailing: Building the Last Mile to the Customer case study. Fulfillment Grocery can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Using analytics as competitive advantage
– Fulfillment Grocery has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Online Grocery Retailing: Building the Last Mile to the Customer - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Fulfillment Grocery to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Fulfillment Grocery can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Fulfillment Grocery can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Fulfillment Grocery in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats Online Grocery Retailing: Building the Last Mile to the Customer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Online Grocery Retailing: Building the Last Mile to the Customer are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Fulfillment Grocery can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Online Grocery Retailing: Building the Last Mile to the Customer .
Regulatory challenges
– Fulfillment Grocery needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
Increasing wage structure of Fulfillment Grocery
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Fulfillment Grocery.
Stagnating economy with rate increase
– Fulfillment Grocery can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology acceleration in Forth Industrial Revolution
– Fulfillment Grocery has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Fulfillment Grocery needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Fulfillment Grocery needs to understand the core reasons impacting the Technology & Operations industry. This will help it in building a better workplace.
High dependence on third party suppliers
– Fulfillment Grocery high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Fulfillment Grocery with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Fulfillment Grocery business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Fulfillment Grocery needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Fulfillment Grocery can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Fulfillment Grocery will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Fulfillment Grocery can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Online Grocery Retailing: Building the Last Mile to the Customer Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Online Grocery Retailing: Building the Last Mile to the Customer needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Online Grocery Retailing: Building the Last Mile to the Customer is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Online Grocery Retailing: Building the Last Mile to the Customer is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Online Grocery Retailing: Building the Last Mile to the Customer is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Fulfillment Grocery needs to make to build a sustainable competitive advantage.