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AmazonFresh Rekindling the Online Grocery Market

Solution Id Length Case Author Case Publisher
2697 1980 Words (9 Pages) Rory McDonald, Clayton M. Christensen, Robin Yang, Ty Hollingsworth Harvard Business School : 615013
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It has been almost five years since Amazon Fresh's business idea was put to the pilot test by the company's administration when it was first introduced by Amazon in the year 2007. However, since the start of this online grocery forum, the management has faced many ups and downs, but nobody else in the market has achieved widespread success in this specific field.

The company has tested this retail food service in Seattle, and over the last five years, it has advanced significantly. The operating capabilities and business strategy of the corporation, which have been its strengths in competing with Safeway and Wal-Mart, are highlighted in this example. The company's management must, however, decide on the next course of action. Even with many of its competitors in the market share, AmazonFresh was able to capture a significant number of market shares. The company continues to grow at an ever-growing pace.

Following questions are answered in this case study solution:

  1. What is your assessment of the online grocery market opportunity? What explains prior failures in this market?

  2. Given previous failures, how can Amazon succeed? What makes Amazon think they can succeed this time?

  3. Is AmazonFresh a disruptive innovation? If so why? If not, why not? Be specific! 

  4. What do you see as Jeff Bezos’s biggest challenge(s) moving ahead in the future with AmazonFresh? And, what would you recommend to overcome these challenges?

  5. What managerial lessons are to be learned from this case, if any?

Case Study Questions Answers

1. What is your assessment of the online grocery market opportunity? What explains prior failures in this market?

The company has either of the options available to the management: either to improve the existing business model and adjust its main regions or to grow the retail grocery business into another city. All of the strategies ranging from the location strategy to the supply chain management are just a few of the variables that have been taken into account while analysing the company's potential future steps.

Spoiled Inventory Management

Businesses are eager to solve the serious issue of wastage. There are various ways to comprehend how food and grocery waste affects businesses. A system for managing inventories can fix the issue. It may be possible to customise an existing online grocery ordering and delivery programme to create a new module that addresses the wastage issue. 

Changing Consumer Behavior

As consumer expectations rise, the market is continuously changing. In such a cutthroat climate, a marketing strategy is necessary for success. Important marketing components should be pre-installed in the grocery ordering and delivery software to assist the strategy. The system should, for instance, contain a newsletter management capability so that newsletters may be sent. Similar to this, various marketing skills like managing blogs, creating discount coupon codes, managing affiliates, managing paid advertising, and more are necessary for a grocery store to remain profitable. The availability of mobile apps is one of the extra features that significantly enhance the experience.

Reverse Logistics Management

The delivery of an order to the customer after it is placed would be the perfect scenario for value addition. Finally, the consumer should value the thing once they have received it. But occasionally, a customer places an incorrect purchase, discovers that an item they got is the wrong size or form, or does other things. Making the reverse logistics process profitable is a problem from an operational standpoint, regardless of the causes. Some features like refund management, order cancellation, and many others are used to facilitate reverse logistics management.

Penetration into Small Towns/Communities

Close-knit communities in small towns and tier 2 or 3 cities result in distinct market dynamics. For instance, in a certain neighbourhood, customers tend to patronise the same vendor who also operates a physical store. You must assess the business model for your online grocery store to ensure its success and determine what strategy is most effective there. After thoroughly examining the market and its difficulties, you can decide if a single vendor or multiple vendors is the best business plan. You have the option to either onboard vendors or begin selling your own groceries depending on the business strategy you choose. In the latter scenario, you must develop a vendor onboarding plan and convince suppliers that listing their products will benefit them.

2. Given previous failures, how can Amazon succeed? What makes Amazon think they can succeed this time?

Their Innovation Process

Before a new company, new product, major new feature, new region, or significant change initiative begins, Amazon initiates a series of actions, simultaneously presenting an overall vision and identifying exactly what the ideas and customer experience are. Clarify if there is It helps shape small, iterative projects that can be quickly tested in the market. "Think big" is his seventh leadership credo at Amazon, but the ability to "think small" is the other side of the coin. Yes, you need a wide field of view and a North Star. However, using agile, hypothesis-driven practices, as opposed to large, monolithic investments, typically yields more cost-effective, repeatable, and better solutions.

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