FreshDirect is an online grocery platform that is based in New york. It was founded in 1999 and finally launched in 2011. The concept behind its business model is omitting the middle man, utilizing a userfriendly website and updated technology, high skilled and leading intellectual capital, state of the art production line with a high focus on hygiene in the production environment to produce healthy food, automated fulfillment center that increases the efficiency, keeping and maintaining food fresh with controllable high tech device to control the temperature all over the warehouse for the important procedures and points. This high-quality product must be with the low price products as the grocery customers are very sensitive to the price in the market. Even if FreshDirect does not own any stores that help it to cut many costs regarding the expensive rents but other imposed costs for online grocery shops such as packaging, huge operational and fulfillment cost, and logistics still exist and jeopardize their business model and low margins (Dess et al., 2019). The product complete information such as the stars and rating for the freshness of product, complete description of foods, having the privilege of having thousands of product in their stores, the possibility of comparing the different product in terms of taste, price and the energy are some of the strength and characteristic of this online grocery shop. There are many competitors from brick and mortar stores such as Safeway and wholefood to other online local grocery stores. Amazon fresh also is active in New York City and its suburbs. The main challenges are to compete and have a price war with the brick and mortar stores that own the main market share while covering the cost of operation, warehouse, fulfillment centers, distribution, and logistics. It is very imperative for grocery customers to feel and sense the freshness of products in stores, while it is just a promise and description in online stores by FreshDirect. Last but not least the challenges of keeping the product fresh from the operation side toward the delivery in another online grocery store challenges that must be cared for and managed toward tailor maid operation excellency (Dess et al., 2019).

1. E-Grocery strategies
FreshDirect Case
Study
By:
Omidr Farrokhzad

2. Table Of Content
1. FreshDirect Introduction
2. FreshDirect Mission
3. Current Challenges
4. Porter’s Five Analysis
5. PESTEL Analysis
6. Value Chain Analysis (FreshDirect)
7. SWOT Analysis
8. FreshDirect Generic Strategy
9. FreshDirect Website Analysis
10. Online Grocery trend & Market Share in USA
11. Proposed alternative solutions
12. Conclusion and recommendations
13. References
2

3. Introduction
● Founded in 1999 and launched in 2001, Jason Ackerman
& Joseph Fedele and Joseph Fedele is the cofounder
that had an experience of Fairway Uptown store in new
York city, high quality & low price in 1993
● Online grocery with the promise of maximum next day
delivery
● Motto: Our Food is fresh, our customers are spoiled
● the best food at the best price, exactly the way you want
it, with 100 percent satisfaction guaranteed.
● operating out of its production center in Long Island
City, Queens, Manhattan, Queens, Brooklyn, New
Jersey,…
● In 2012, the company decided to move its facility from
Long Island City, Queens, to a new 800,000-square-foot
property in the Bronx,
3
(Dess et al., 2019)

4. Introduction
● Product includes Vegetable, Fruit, Prepared food,
Cheese, Deli, Bakery, meat, Fish
● 5,000 perishable products, accounting for
approximately 75 percent of its sales, but only about
3,000 goods, which made up the remaining 25
percent
● With a business model similar to computer maker
Dell, FreshDirect deals directly with producers and
makes food to order ("Dun&bradstreet", 2020).
● ANNUAL REVENUE 600$ million (wells, 2017)
● $189 million investment round in 2016 led by J.P.
Morgan Asset Management (Smit, 2018)
4
(Dess et al., 2019)

5. Mission
5
We pioneered the short supply chain so you can experience fresh
food at its finest. Food comes to us straight from the source and is
delivered to your door at peak freshness in just a few days. That's
less handling by middlemen—and it puts more money in the bank
for local farmers, skilled artisans, and responsible fishermen.
(Freshdirect, 2020)

6. Current Challenges
● Customer Perception! (Physical stores) 67% do not
buy grocery online
● Out of stock problem due to the website Crashes &
Glitches
● Just A local hero, resident outside metro area
● Expensive operation and logistic expenses
● Outbound logistic and distribution (thousands $ for
ticket in the city, Increase Traffic, Double park,
Pollution)
● Lawsuit Not being environment friendly (Packages,
Cardboard boxes & traffic because of truck
delivery), bad impact on local small businesses
6

7. Porter’s Five Analysis
High
1
Threat from
existent
competitors
2
Threat of
New
Entrance
Low
3
Supplier’s
bargaining
power
Low
• Ecommerce high
investment
required
• Main market
players already
are online
4
High
• As brick and
mortar shops are in
any neighborhood
and closed to
customers
5
Customer
bargaining
power
High
• Too many
options from
on-line to off-
line
• Too many local
supplier available
for each categories
• Groceries are not so
strategic and rare
resources
Very high
competition
among Amazon
fresh, Walmart,
Costco,…
Exiting cost is
high, online
shopping is a
trend
Threats
from
alternative
products

8. PESTEL Analysis
P
Politics
E
Economy
S
Social
T
Technology
E
Environment
L
Legal
• New York state stability (Majority
Democrats)
• George Floyd death, unrest for racism
• Government support for Ecommerce
• Government requirement for Cyber
Security
• High consumption
• Repetitive grocery buy
• Increasing online buying habit
• Populated area
• CSR
• Environment friendly risk
(Packaging, Delivery pollution and traffic)
• NGOs pressure for local businesses
• Stability of developed
country like US
• High purchasing power
• Inflation & interest rate
• Technology evolution
• Cyber crime
• Automation
• R&D and innovation (AI)
• Grocery is highly FDA
regulated (People health)
• Strict labor law, minimum
wage
• Health and safety
• Consumer protection law
8

9. SUPPORTACTIVITIES
PRIMARY ACTIVITIES
Firm Infrastructure:Infrastructure: technology, websites, warehouse, Logistic
Procurement: Equipping FC and DC, integrated supplier, subcontracting,
Human Resource Management : Near 700 employees, carefully trained and staffed
Technology: Advanced technologies, backend and warehouse and distribution
Inbound Logistics
Centralized
Warehouse
Receiving
Directly from
Grower
Quality Control
Schedule
Returns
Operations
State of art FC
12 temperature
zone
Sorting, Stowing,
Picking
Packaging
Outbound
Handling and
dispatch
Logistics
Different method
of delivery
Invoicing
Marketing &
Sales
Promotions
Market research
Word of mouth
Little marketing
budget
Billboards
Service
After sale
support
Price
comparison
Returns
Value Chain Analysis (FreshDirect)
9

10. SWOTANALYSIS
O
T
S
W
STRENGTHS
1) No need for expensive rent,
centralization,
2) Fresh, good quality with low
price (middlemen omission)
3) Local good brand awareness
from 2001
4) Fresh operation excellency (12
temperature zone, SAP quality
management, central command
center, immaculate, Hazard
analysis, Staffed professionally,
5) Near 6000 SKU, Max next day
delivery, Rating system for
being fresh, online recipe
WEAKNESSES
THREATS
OPPORTUNITIES
1) High delivery rate, Above 40
USD & 6.99-7.99 USD fee
2) Remain private company
3) Low cost and not efficient
marketing (based on PR,
word of mouth, local,…)
4) 50 percent of products is
perishable (75-25)
5) Low margin (1-2 % may
increase as a e-commerce)
1) Online grocery market
share increase from off-line
2) Customer trend toward
Online shopping
3) Focus on organic, Local
and green food
1) Whole food acquired by
amazon in 2017
2) Also Amazon fresh
launched in new York 2014
3) Many local online
competitors such as (your
grocer, peapod
4) Brick and mortar (Safeway
& Tesco, Costco, Walmart,
…) started their online
delivery
5) Consumers extremely price
sensitive
SWOT Analysis
SO Strategies WO Strategies
Focusing on being best local fresh
food online grocery and utilizing the
technology & reinforcing the
marketing
Utilizing JIT system in warehouse,
inventory cost reduction
Customer royalty system
Professional digital marketing tools,
customer behavior prediction,
Database technology
Information control and effective
flow toward in the supply chain
and supplying
ST Strategies WT
Decentralizing the inbound and
outbound Add many small
fulfillment and distribution centers
A strategic alliance with grocery
and food delivery and pick up such
as (Instacart, Doordash,…)
FCs Close to main supplier and
consumers
To be acquired by ecommerce
Giants

11. FreshDirect Generic Strategy
Focus
(New York state
by Overall cost
leadership)
Differentiation
Cost
Leadership
11

12. FreshDirect Website Analysis (Similarweb, 2020)
12

13. Amazon.com & Walmart.com Website Analysis (Similarweb, 2020)
13

14. Online Grocery trend in the USA
14
(Saunders, 2018)
Estimation for year 2022 that near 10
percent of grocery would be purchase
online is 133.8 billion USD

15. Online Grocery trend in USA
15
(Saunders, 2018)
Estimation for year 2022 that near 10
percent of grocery would be purchase
online is 133.8 billion USD

16. Grocery store market share in USA
16(Peterson, 2020)
Total sale
Online Grocery market
(Perez, 2019)

17. Proposed alternative solution (1)
Continue and focus on being the best local fresh food online grocery
and utilizing the technology & reinforcing the marketing
• Professional digital marketing tools such as social media, CRM,
reminding customers of their favourites, customer behaviour
prediction, Database technology
• Customer royalty system
• Utilizing the JIT system in the warehouse, inventory cost reduction
• Information control and effective flow toward the supply chain and
supplying
17

18. Proposed alternative solution (2)
Decentralizing the inbound and outbound
• Add many small fulfillment and distribution centers instead of just
one big fulfillment center around the New York state
• Location and logistic cost optimization
• Close to the main supplier and consumers
• On-time delivery and better customer satisfaction
18

19. Proposed alternative solution (3)
A strategic alliance with grocery and food delivery and pick up such as (Instacart,
Doordash,…)
• The business model in Instacart is based on key resources such as Local store
partnership, Shoppers and customers near the store, and finally utilizing the
technology for optimization and linking these resources (Sagar, 2020)
• Partnering with shoppers near the fulfillment centers (Couriers) and distributing
to the customer
• The Value proposition: on-time and fast delivery for customer, additional and
flexible income for shoppers through (Instacart & Doordash), Increase in sale
and number of customers
19

20. Proposed alternative solution (4)
To be acquired by e-commerce Giants
• As the company is too popular in New York for its grocery delivery, fresh direct has been targeted
for the accusation (wells, 2017)
• Even if FreshDirect has focused on growth rather than cashing out till now but this approach
could change
• Amazon is investing a lot in Fresh food and it has already been in New York state, Fresh Direct
has not enough resources and technology to sustainability compete Amazon
• Amazon acquired whole food in the region in 2017 with the 13.7 Billion USD (Green, 2019).
which stores are next!
20

21. Conclusion and recommendations
Due to the tense competition in the market and considering the analysis that shows
that the online market is dominated by giant players negotiating for being acquired
is highly recommended
• Their competitive advantages is not sustainable
• No chance of remarkable or sustainable success in future competition
• Marketing war in the online grocery between Amazon fresh and Walmart in the
region can benefit this negotiation, Shipt’s was acquired by Target in Dec 2017
• Amazon and Walmart are the potential buyers (Acosta, 2019)
• JM Morgan as their 189 Million USD investment in 2016 analyzing and
monitoring buyer for FreshDirect (Genovese, 2019)
21

22. References
Acosta, G. (2019). FreshDirect Said to Be for Sale. Progressive Grocer.
https://progressivegrocer.com/freshdirect-said-be-sale.
Brandenburger, A. (2019). Are Your Company’s Strengths Really Weaknesses?. Harvard Business
Review. https://hbr.org/2019/08/are-your-companys-strengths-really-weaknesses.
Dess, G. G., Lumpkin, G. T., Eisner, A. B., & McNamara, G. (2019). Strategic Management:
Text and Cases. McGraw-Hill Education.
Dun&bradstreet. (2020). Fresh Direct Holdings, Inc. https://www.dnb.com/business-directory/company-
profiles.fresh_direct_holdings_inc.d38031b709e1fd4dcbe537488c130870.html.
Freshdirect. (2020). About Us. https://www.freshdirect.com/browse.jsp?id=about_overview.
Genovese, D. (2019). JPMorgan eyeing buyers for FreshDirect: Report. Fox Business.
https://www.foxbusiness.com/markets/jp-morgan-eyeing-buyers-for-freshdirect-report.
Green, D. (2019). How Whole Foods went from a hippie natural foods store to Amazon's $13.7 billion
grocery weapon. Business Insider. https://www.businessinsider.com/whole-foods-timeline-
from-start-to-amazon-2017-9.

23. References
Perez, S. (2019). TechCrunch is now a part of Verizon Media. Techcrunch.com. https://techcrunch.com/2019/08/13/walmart-tops-u-s-
online-grocery-market-with-62-more-customers-than-next-nearest-rival/.
Peterson, H. (2020). The grocery wars are intensifying with Walmart and Kroger in the lead and Amazon poised to 'cause disruption'.
Business Insider. https://www.businessinsider.com/walmart-kroger-dominate-us-grocery-amazon-gains-share-2020-1.
Sagar, P. (2020). Instacart Business Model: Insights Into Business & Revenue in 2020. aPurple. https://www.apurple.co/instacart-
business-
model/#:~:text=Instacart%20implements%20sharing%20economy%2Dbased,their%20products%20on%20the%20platform.
Saunders, N. (2018). Online Grocery & Food Shopping Statistics. OneSpace. https://www.onespace.com/blog/2018/08/online-grocery-
food-shopping-statistics/.
Similarweb. (2020). freshdirect.com. https://www.similarweb.com/website/freshdirect.com.
Smith, J. (2020). Inside FreshDirect’s Big Bet to Win the Home-Delivery Fight. WSJ. https://www.wsj.com/articles/inside-the-food-
fight-over-home-delivery-1531906200.
Wells, J. (2020). Big Apple e-grocer FreshDirect is a big target for acquisition. Grocery Dive.
https://www.grocerydive.com/news/grocery--big-apple-e-grocer-freshdirect-is-a-big-target-for-acquisition/534972/.

24. THANKS
Any Questions?