Grocery Gateway: Customer Delivery Operations

Grocery Gateway was founded in 1997, by Bill Ni Nardo. In 2001, Grocery Gateway was Canada’s largest direct online grocer, providing a selection of 6,500 items from the GroceryGateway.com website.

Nature of the Business:

Grocery Gateway offers food products with a delivery service competing in the grocery industry. The service is offered to residents in the Greater Toronto Area (GTA), which is the largest urban area in Canada.

Current Market Strategy:

Grocery Gateways offers a 90-minute delivery window from 6:30am to 10:30 pm.

The service provides a doorstep delivery service for maximum convenience, with the customer in mind. Statement from Claude Germain chief operating officer: “We Focus on low cost, high service logistics execution in one market. Some people focus on technology, others on merchandising, but right from the get go we focused on logistics execution. We wanted to get it right and have the lowest cost capability with the best service we could provide. “(pg.2,Johnson).

Problem Statement:

The present problem is that Dominique Van Voorhis, Vice President of industrial engineering and operation for Grocery Gateway needs to develop recommendations aimed at improving delivery operations at the weekly meeting in seven days.

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Sub-Problems:

* Grocery Gateways has only been able to achieve 2.7 stops per hour. Falling shy of their aimed 4 stops per hour.

Organization Objectives:

With the stated problem in delivery time, Dominque Van Voorhis needs to increase driver stops within the hour. Grocery Gateway also wants to decrease the delivery windows from 90minutes to 30minutes. They want to initiate a 10 minutes of contact time with the customer and a 5 minute drive between customers, taking in consideration of residential speed laws.

SWOT Analysis:

Strengths:

* Customer time saver- The efficient service saves time for the customer. Typically the average GTA resident consumes a lot of time just to get to work for their 9 to 5 job. This will allows most resident s to have time for other activities. * Product Selection- Grocery Gateway offers up to 6,500 products including dry goods, health and beauty products, meat fresh produce, frozen foods, wine and beer. * Convenience delivery times- Currently the delivery service is offered from 6:30am to 10:30pm. The offered times have a 90 minute window and customers can change orders up to 14 hours before the delivery. * Competitive prices- The cost of delivery is only 8 dollars on top of the customers grocery bill. All products offered are priced competitively. * Website- An website to advertise sales and available products. Also can order products through the website.

Weaknesses:

* Costumer Choice- Costumers have little to no say about which item to grab off the shelf. This may be a problem in situations when customers produce selections vary. This can cause delay in delivery and lost of time. * Customer absence- Customers may not be home and can cause large problems in time. * Unpredictable Conditions- Canadian weather can vary causes in delays in highways, roads, ect. Also, accidents can cause delays.

Opportunities:

* Delivery Price: Currently the cost of delivery is only 8 dollars on top of the grocery charge. 8 dollars is a small amount when the average amount of deliveries cost 135 dollars. Grocery Gateway has the ability to raise the delivery charge easily. * Expand Market- Currently Grocery Gate way deal with the Greater Toronto area and surrounding areas around it. The ability to increase the radius of delivery is there.

Threats:

* Competition- There are few direct competition, but many indirect competition. Many individuals may take it upon themselves to go to the grocery store. * Trust- Customers may not trust other judgment in selecting food and may want to do it themselves.

Implications:

Analyzing the situational factors it seems that the time factor is the main weakness that Grocery Gateway could encounter. With this evident they should work on delivery execution.

Competitor Analysis:
Direct:
Mr. Case:

Was developed in 1984, when a university student started to charge friends for picking up groceries for them. Today has become a lot larger and has a well designed website. The operation process of Mr.case is to order groceries before 11:30am and the groceries will be delivered in one business day of a day of choice after one business day. The charge is $3 for the deliveries is $3 for orders over $75 and $6 dollars for orders under $75. MR. case only delivers in the inner sections of the GTA and will put the groceries past your front door to any room in the customers house. They offer their deliveries Monday to Friday between the hours of 9am to 5pm. They accept online payment, by accepting VISA, Mastercard, American Express, cheques or PayPal.

Front Door Organics:

Was developed in 1997, trying to cater to the organic consuming community. They encompass a website that has organic box options. Customers can choose between a basic box that has various organic foods in it or they can choose to customize their own box. They offer 450 organic groceries and deliver between the hours of noon to 10pm. They allocate different days of the week to different areas of Toronto for deliveries. They accept cash, cheque, Visa or Mastercard as payment.

Indirect:

Grocery Stores:

Grocery stores contain all the same products that Grocery Gateway does. This means there is another option for customers to pick up groceries instead of paying the charge for delivery.

Restaurants:

Restaurants offer food and most offer a delivery service for their food. This is mainly a short-term solution for customers, but it can solve their hunger instead of getting groceries.