Grocery Getaway.Com Case Study

Problem Statement:

Dominique Van Voorhis has been given seven days to improve the efficiency of delivery operations at Grocery Gateway Inc (GGI). Currently, GGI makes 2.7 stops per hour and their target is 4 stops per hour.

Situation Analysis:

BACKGROUND:

Grocery Gateway was founded in 1997 by Bill Di Nardo and is Canada’s largest direct online grocer. Their client base consists of approximately 125,000 registered customers. Online shoppers can select from 6,500 items from their website which is then delivered to the customer’s location. The company is located in Downsview, Toronto and is servicing an area approximately 3,200 square kilometers. During the peak winter season they fulfill 1500 orders per day, and during the summer season they fulfill approximately 750 orders per day. GGI’s average order is $135. Currently, Grocery gateway offers 90 min. delivery from 6:30 a.m. – 10:30 p.m. with orders delivered directly to the door.

OBJECTIVE:

GGI’s short term goal is to increase stops per hour on area (SPHOA) from 2.7 to 4. In addition, GG is focused on earning a positive cash flow in 2001 on a variable cost basis.

GGI’s long-term goal is to increase the orders per day from 1,500 to 5,000 within three years.

S.W.O.T. ANALYSIS:

Strengths:

• Largest on-line grocer with 125,000 registered customers

• Centrally located in the largest city in Canada - Toronto, On

• New large facility

• Efficiency - short delivery window of 90 min with 10 min call before arrival

• Large choice of products with high quality brands

Weaknesses:

• Business is not generating positive cash flow

• Order payments are processed at the door instead of payment on line which slows down the service

• High cost per hour for delivery (approximately $30/hour)

• 1.5 hours a day are spent in transit to and from delivery centre

• $60 minimum order limits potential market

Opportunities:

• Increasing use of the internet by consumers for day-to-day shopping needs

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