Fresh Direct Is Fresh Direct

¶ … Fresh Direct

Is Fresh Direct diversified? Explain. If so, which corporate strategy is the company following? Explain in detail.

On one hand, it is possible to say that Fresh Direct, like most grocery stores, is extremely diversified, given that it does not specialize in one type of food, like a pizza parlor or an ice cream store. However, deeper analysis reveals that Fresh Direct is highly specialized. It has no 'real life' locations and is a delivery-only service. Even consumers who might be attracted to its philosophy of emphasizing fresh, rather than processed foods might not need its service. Or they might want to select their own fresh produce, with their own hands. or, on a cost-benefit analysis, they might not want to pay Fresh Direct's delivery prices.

From a risk management viewpoint, a lack of diversification can be dangerous. A downturn in the economy could mean that the first 'luxury' that a family does away with is delivered groceries. If people are working fewer hours because of job cutbacks, they will not necessarily value the time savings of not having to do grocery shopping as much. During hard times people place cost at a higher value than either convenience or health and freshness.

Some moderate diversification offered by the company is manifested in its ability to deliver directly to corporate and sports functions, an option which many supermarkets do not provide for their customers. Fresh Direct prices itself relatively higher than some cheaper delivery options like takeout pizza, but lower than more upscale New York catering chains. Perhaps because of its much-trumpeted emphasis on freshness, Fresh Direct seems to be thriving, although it is defying conventional market wisdom that mid-market corporations that are not on the high or low end of cost or specialization tend to put themselves in financial risk.

Q2. What business level strategy or strategies is Fresh Direct following? How is Fresh Direct positioned in the marketplace? Explain.

Fresh Direct occupies a unique market position. On one hand, it is a 'generic' retailer in the form of a grocery store. Unlike the all-organic Whole Foods, it does not occupy a specific, specialized food-related niche. It offers a diversity of products, but it is mainly its service that is unique, in the form of online grocery delivery. Its products are not differentiated in the marketplace like a specialty grocer, but its delivery options make the company stand out. It cannot offer rock-bottom prices like Wal-Mart, but its pricing is not at the highest echelon of pricing of food or even grocery stores. It exercises cost leadership only in the sense that cooking can be cheaper than ordering a pizza or Chinese food every night online. (Also, some busy New Yorkers might rationalize they can save on subway fare).

However, consumers do not have the ability to 'shop' for bargains by sight, store by store, when they shop online, so they are paying for time savings as well as the goods and services they select. Still, Fresh Direct offers special customization options, like the ability to order meats cut to order, without waiting online in a butcher shop. Even many standard grocery stores do not always offer this option. And as more online general grocery stores crop up, prices will have to come down, due to the ease of comparing prices online.

As well as the new technology of the Internet, the company is striving to use the benefits of technology that enable it to keep food fresh, at an optimal temperature, and to keep close track of inventory, to ensure that customer orders are kept and delivered fresh to the consumer, and consumers have accurate information about what is available online. Technology also enables it to keep inventories low, as the store can keep close track of consumer demand for specific products.

Q3.Assess Fresh Direct's entrepreneurial strategy. Is the company taking advantage of opportunities to launch new products and/or enter new markets? How is it handling new competition?

Fresh Direct operates in a relatively conservative format, using word-of-mouth advertising to save on marketing costs. This is fairly easy for it to do, given its relatively narrow customer outreach in the New York area. It has used celebrity advertisements, however, to garner attention. Having close relationships with suppliers is an essential part of Fresh Direct's strategy. This means that by eliminating the middleman, Fresh Direct can pass on its savings to consumers. Not operating in a physical location enables it to save on overhead operating costs and labor costs. However, it has been highly conservative in its expansion, despite the introduction of some new products, such as customized meat cuts.

Q4. How does Fresh Direct manage knowledge and intellectual assets? Which knowledge management strategy is the company following? Explain.

Fresh Direct's knowledge strategy focuses on social networking and sharing. The online culture of the current market environment means that many people are 'surfing' online casually at work. Through online grocery stores, they can multitask and grocery shop, saving time for other activities. Additionally, they can also share what products they buy with their friends by sending them a link. Fresh Direct, to survive in the competitive online grocery business, must sell even more products than an ordinary grocer to make a profit. By keeping track of what consumers purchase, it can carefully tailor its lean supply chain, marketing, and product offerings, based upon easily-accessible past knowledge about consumer buying habits.

Q5. Should Fresh Direct consider beginning operations abroad? If so, what cross-border strategy should Fresh Direct use? If not, why not? Explain.