Peapod's Case Study
Problems/Issues Being Faced • The company was growing more slowly than anticipated • It was faced with mounting losses • The company was reportedly losing money in five of the markets it served • It’s partner-based business model entailed too high a cost structure for the company to achieve profitable growth
Key Success Factors of the Online Grocery Business • Online sales must 100% secure to maintain customer loyalty • Companies must strive for lower cost of products being sold • Ample marketing skills and resources – Favourable brand name - Favourable reputation and image • Competitive and attractive pricing • Companies must maximize the use of website for customer satisfaction • Website must be easy to use and pleasant to look at • Wide product range – an attractive line up of products to choose from, with larger profit margins • Good customer service
SWOT Analysis
Strengths
• Alliances with investors and marketing promoters • Partnerships with supermarkets • It was the largest Internet supermarket, with over 90000 customers spread over 8 markets • Peapod’s order size was about five times the in-store average of supermarkets and convenience stores • Just-in-time inventory system • It offered a variety of products • Online tracking and customer information base • The Web site was easy to navigate and had a variety of highly functional features • Customers could shop for items in several ways • Relationship with customers • Its use of centralized inventory warehouses and just-in-time deliveries from suppliers
Weaknesses
• Order volume had not reached levels that allowed Peapod’s warehouse and order fulfilment operation to realize scale economies • Declining stock prices • Order fulfilment costs were too high of a percentage of revenues • Shortage of capital • Mounting losses • The company was depleting its cash reserves to cover the negative cash flow from
Key Success Factors of the Online Grocery Business • Online sales must 100% secure to maintain customer loyalty • Companies must strive for lower cost of products being sold • Ample marketing skills and resources – Favourable brand name - Favourable reputation and image • Competitive and attractive pricing • Companies must maximize the use of website for customer satisfaction • Website must be easy to use and pleasant to look at • Wide product range – an attractive line up of products to choose from, with larger profit margins • Good customer service
SWOT Analysis
Strengths
• Alliances with investors and marketing promoters • Partnerships with supermarkets • It was the largest Internet supermarket, with over 90000 customers spread over 8 markets • Peapod’s order size was about five times the in-store average of supermarkets and convenience stores • Just-in-time inventory system • It offered a variety of products • Online tracking and customer information base • The Web site was easy to navigate and had a variety of highly functional features • Customers could shop for items in several ways • Relationship with customers • Its use of centralized inventory warehouses and just-in-time deliveries from suppliers
Weaknesses
• Order volume had not reached levels that allowed Peapod’s warehouse and order fulfilment operation to realize scale economies • Declining stock prices • Order fulfilment costs were too high of a percentage of revenues • Shortage of capital • Mounting losses • The company was depleting its cash reserves to cover the negative cash flow from