Fresh Direct Business - Report Example

FRESH DIRECT BUSINESS Fresh Direct Business Introduction Fresh Direct is an established online grocer. It was launched inthe year 2002, founded by Jason Ackerman and Joe Fedele. The company serves major population in the New York City, Philadelphia as well as Jersey City. It also has clientele in the county in Long Island, Connecticut and also upstate New York. It estimates that it owns almost 80% of the New York City grocery delivery market1. With the belief that quality food coupled with fresh ingredients led to a delicious and nutritious meal, Fresh Direct has managed to secure a place in the fresh foods market in the United States. Fresh Direct Produce prides itself on providing its customers the most delicious fruits and vegetables that the world has to offer. Fresh Direct is a leading importer and distributor of more than 400 high-quality produce items from 25 countries around the globe. The firm serves a diversified base of customers including food service distributors, chain stores and food service distributors. They deliver the highest quality of food directly from the farm to the table. This they do to allow the customers to continue with their day to day activities without the stresses of asking themselves where they will get fresh and nutritious farm products. In this way, Fresh Direct actually serves to save its customers’ time and resources. Knowing that it is quite hard to get a variety of fresh farm produce at a single location – it is inconvenient to go looking for products from different locations, Fresh Direct came in to solve these issues2. The firm uses its direct relationship with the farmers and also the artisans to make sure that they get the best quality of the different food products. The firm then uses technology to make sure that they get the food products available to the customers that need them. They actually deliver the food stuffs right at the customers door step. This allows for the delivery of fresh products efficiently to the customers convenience. It is actually the perfection of the grocery shopping experience. The company sources for the highest quality and the freshest food products. The firm believes that the delivery of delicious and nutritious meals and also quality service enables the customer to live more healthy lives. Fresh Direct strives to offer quality food products. These draw a clear and distinct line with its competitors. Also that it is not enough for them to deliver just tasty food stuffs but also they do their best to make sure that they deliver unique and new products in the market. The firm goes ahead to give a guarantee with every order that they deliver every time. Past Success The firm launched their services after they refined their business model over a period of three years. Ackerman seriously focused on the Fresh Direct idea in the year 1999. After much testing and tinkering, they launched the business and made $31 million in the year 2003, by the year 2004 they were making upwards of $100 million. This trend is moving up as the business has been growing and expanding its horizons and customer base over the years3. In other words, the firm fed an omnipresent need in a quite attractive business. The people in New York are very busy, and there is simply no time to go shopping for grocery often. Fresh Direct took advantage of the distances between the affordable stores and maximized on this using its service since it is very convenient. This is because they manage their own warehouses and also distribution system. Thereby they are in the position of minimizing on the losses that the others get in the retail of grocery4. Although they were making it big by the late 2000s, due to their inconsistent services, they were losing many return customers. Initially, the company focused so much on attracting new customers and not on maintaining the ones that they already had. They changed the approach and started focusing more on maintaining their customers by having loyalties for repeat and return customers. The firm overhauled its information technology resources and built an immense database. This was done in a period of two years, and it allowed the company to have control over its deliveries and orders5. Factors Influencing the Business Considering that the scope of products that are being supplied by the firm are so wide, there is need for the firm to get a solution to the issue which was fast getting out of control. There has to be a system that will allow for the identification of the site architecture, product categories, as well as marketing campaigns and product promotions6. With the increase in customer base and product range, the company is growing at a very fast rate. This has been a challenge to the management as it has many ramifications. With the high increase in customer base, the company is in need of a system that will help it manage and retain these customers. As there has been a problem with the company focusing on attracting first time customers and not giving much attention to returning customer, the Net Tracker will help them manage and keep these returning customers. The loss of clients has been impacting negatively on the firm’s performance as it is lowering its revenues. Proposed Solution With these challenges, the firm will need a system that will facilitate in the efficient management of the business and help in the retaining and management of old clients. Customer Click Stream Analysis I propose the implementation of a Net Tracker that will comprehensively analyze the website traffic and also the online behavior. This will allow the business to have customizable and detailed reports on the click stream of the clients. Reports are then generated about the customer and allow for the firm to do follow up on specific clients with customized resources and marketing packages7. How It Will Work The Net Tracker, which stores its data in an Oracle database, will make it easy for the integration of the companies systems8. This includes the integration of the sales, demographic and web data into one database. This approach will allow for a more customized customer relationship management. Results The firm segments its customer database according to the purchase history, the order size, geography etc. These details are used when sending the targeted emails. The targeted emails are used as a sales campaign. For example, an email campaign can be sent to customers who recently bought vegetables from Fresh Direct, promoting their Prime Vegetable offering. There are other campaigns that can be used to target the customers according to their order activity. For example, a customer has not ordered for a number of days X or the frequency by which they order might be like V orders every Y number of days. Other campaigns can be generated such as a valentine campaign or Halloween campaign which will reach all kinds and segments of the customer base. In such a campaign, advice can be offered on the best foods for the parties and the best packages and discounts being offered on these foods9. The system will allow for Fresh Direct to track their campaigns. This will be made with the help of check outs that will be tied with the initial campaign. For example, the customer sent emails by the firm with links to the firm’s website that click and follow the link can be tracked. This goes a long way in the management of the customers as these particular customers need follow up as they are potential long term customers. The ability of the firm to gauge and analyze the customer’s responses to its promotional e-mails will enable it to make decisions on the formatting and content of these e-mails. This information will help shape future promotional and marketing strategies10. The system will also allow for the firm to track the customer’s activity even after they have received the promotional e-mails. The system will record how far they go and whether they made it to the actual purchase. A typical tracking might start from, how many of the customers actually received the e-mails, how many of these customers opened the mails, how many followed through and clicked on the link that leads to the company website and finally records how many followed through with a full checkout. Intelligent Promotions, Cross-Selling and Merchandising Campaigns The system will help the firm be more efficient and intelligent in its merchandising at the website. The system will issue alerts on complementary products to the customer when they add something to their shopping carts. For example, when a customer adds something like steak to their cart, a dialog box appears suggesting that they purchase complimentary products like potatoes, spice rubs, and fresh herbs. A good response is expected from the clients to this aspect as they are likely to react by wanting to buy the complimentary products. The logic behind this is that some customers might have forgotten what else they needed and also the firm will be selling the idea that there are others that can go together with the initially purchased product. These dialog boxes are bound to be increased at the website. Categories and products are recommended at the category and departmental level. This is done through the internal ad banners. For example, fillet might be included in the meat department while Wisconsin cheddar might be included in the cheese department. The system will allow the Fresh Direct to analyze and determine how well these function in directing the customers into making certain purchase decisions. For example, when the fillet banner is on, there are different means through which the customer might get to place an order on fillet, either by going through the site searching for fillet, typing on the search bar and searching and lastly by simply clicking on the banner which takes the client directly to the product. The system will also allow the firm achieve between the banners with prices and those that do not bear prices, which are clicked on more. Usability, Navigation and Architectural Improvements The system will be used to affirm the architectural design built in the checkout area. The system will help the firm understand at what point the clients leave the checkout area. The details realized by the Net Tracker will help the firm understand whether they are losing customer at the checkout area and if they are, at what rate. It will also help the firm realize at what point the clients leave. The area might be redesigned to come up with a different strategy to minimize this. Similarly, the website used to have a link on every page under the shopping cart that said “Click here for delivery info.” Since the link on the Home page for delivery information is being used much more frequently, there should be added a new link for product requests11. Intelligent Product Placement & Development Net Tracker will allow Fresh Direct to analyze local keyword searches in order to shape future product offerings. For example, if customers are looking repeatedly for organic foods, kosher foods, or specific brands of packaged foods, Fresh Direct may develop their product offerings to include those foods. In addition, Net Tracker analysis will help shape and prioritize product placement on the Fresh Direct web site. For example, when Fresh Direct set up each department they made some assumptions. The sixteen categories of cheeses offered by Fresh Direct were placed in the order on the site that Fresh Direct felt reflected their popularity. However, Net Tracker might pinpoint a change that needs to be made in the cheese department. The non-dairy and low-fat category needs to be much higher on the page as it may be the most popular. Clearly the information gathered is of much help12. Customer Retention and Focus Fresh Direct will edit their search directory to recognize more of the keywords that customers use in product searches, based on insight provided by the Net Tracker Local Keyword Summary. For example, if the Net Tracker Local Keyword Summary consistently shows that there is a misspelling for certain products, the firm will add that misspelling to the keywords to help the customers find what they are looking for. To better serve the customers, Net Tracker will also add a feature that shows the next date on which items that were sold out will be available once more. Net Tracker will help the firm realize whether these unavailability messages are popping up often. If they are, this means that there is a need to make more availability checks. These will be between the back-end inventory control system and the front-end web site. Shopping Behavior Insight Fresh Direct uses Net Tracker to monitor all behavior specifically related to check-outs: the most frequent check-out time, the most frequent shopping time, the duration of shopping visits, the average time to complete a purchase, and the day (or dates following campaigns) on which purchases are most frequently completed. In addition, Fresh Direct has used Net Tracker to examine how the increase in the customer use of the website affects their shopping time. Increase Customer Purchases via the Banner Ads Fresh Direct has placed various geocoded advertisements on AOL to target women between the ages of 25 and 54 who live in the New York City area. Net Tracker will be used to track the response rates to the ads. This will be via each of these visitor’s entry point and whether they will make it through the cycle of making an acquisition, thus becoming the firm’s customers. Click through rates depends on three elements: creative, placement and product. The firm has a good product, so if they have a low response, then they should test the creative and placement and also increase the usage of the most successful ads. Effect of Solution on: Firm With the implementation of this system, the firm will be in a better position to manage their customers and retain them. This, the firm will do automatically and also have a great customer database that will be very customer based and personalized. The firm will be I a position to formulate and develop campaigns that will be customer costumed to increase the chances of the customer completing a whole purchase cycle and order for the products and also come back later for more products. Customers The detailed and personalized marketing strategies will be well accepted by the customers as they will appreciate the personalized touch. Expansive Growth Issue There is also the problem of expansive growth that the firm had not planned for that is taking place quite fast. With time, the firm is finding it difficult to deliver the food products to states and locations that are located far from their branches. To solve this issue, I propose that they integrate and make use of the PAN Manager13. This is another proposed solution to the company’s issues. PAN Manager runs revenue generating, customer relations, server, and store-front web logic as well as delivery administration. The system can handle payment processing as well as business intelligence. I propose this system as it can handle the complex mix of processing activities. PAN Manager Benefits The benefits that come with the system are: Lower Total Cost of Ownership Egenera is more cost-effective than other solution evaluated systems. By switching to Linux® for their mission critical applications, Fresh Direct is will also reaping the cost advantages of open source14. Better Customer Experience The improvement in application scalability and user response time will help increase customer conversion. More Efficient Resource Utilization Since majority of Fresh Direct’s orders are placed online, it is very important that the site is up and running all the time. The firm will be able to allocate just one failover server. This will be used for all the applications. It will also dramatically reduce the server count and improve on the overall utilization. Rapid Upgrades The legacy systems, hardware replacements will take approximately two weeks. With PAN Manager’s ability to virtualize network and storage resources and create abstract server definitions, a new server can be installed and configured in minutes. Likewise, software upgrades that used to take five\ hours and require a full system shutdown are now performed in less than 30 minutes on the fly with no customer impact. Significantly, PAN Manager will automatically update production and backup resources, minimize system administration and ensure that systems remain synchronized. Fast Moving Market Place To power the business, the firm relies on rapid communication with the suppliers, customers and business partners. The produce is a perishable product, and the market conditions can change in an instant, so speed is very critical to its success. The market can change in hours or even minutes. Prices are constantly changing, based on market conditions like weather, production, demand, currency exchange, and other factors, so rapid communication is essential for the business. The firm needs to make decisions in seconds when they know that the market is going up or coming down. As Fresh Direct grows, the company finds that its network and phone system can no longer keep up with its fast paced business operations. The voice and data network had been assembled from several different products, and was cumbersome to manage and update. The company’s’ management features are limited, making it difficult to reach a highly mobile workforce15. The firm has a lot of sales and buying staff who are always on the road. Their phone system offers only basic call forwarding, which sometimes slows the communications. The aging phone system also hampers the company’s ability to support growth, which creates a serious strategic planning issue. The firm needs a scalable platform that could help it build the business out over the long term. To give its employees the immediate, direct communications that the business requires, Fresh Direct will need to replace its phone system with the Cisco® Unified Communications System. The Cisco solution will support all of the company’s voice, data, and wireless communications on one secure network. Its intelligent call-handling features make communication fast and simple, and will improve the company’s efficiency and productivity. The Cisco communications system will make it easy to reach employees by dialing one phone extension. If they don’t answer the call at their desk, the system will automatically forward the call to their cell phone, or on to their home phone. This is a big help, because they can give just one phone number to vendors, customers, and internal staff. They don’t have to ask a client to keep track of three or four different numbers. The single-number-reach feature improves the service level for the sales staff. They will be much more accessible and responsive than before. The new Cisco network improves communication not only at the Fresh Direct office, but for employees who are working from home or on the road. One of the solution’s best features is the Cisco Unified Personal Communicator soft phone that is installed on the laptops. With this feature a trade show in Toronto, and we were able to stay in constant touch with our main office, clients, and suppliers the entire time. With the Cisco solution, one can just dial an extension from their laptop and reach anyone in the company or hold a quick meeting. This helps a great deal in terms of reaction time and ability to deal with issues. Warehouse operations are a critical part of the Fresh Direct business. To this effect Cisco Wireless LAN Controllers and Access Points can be added for secure wireless voice and data networking. It can be difficult for customers and staff to hear one another in the coolers. Being a very fast paced environment, the wireless capability will give the firm the communication tools it needs to keep up. The firm can also are consider applying the wireless network to support barcode systems for inventory control. Managing and maintaining the solution will be much simpler, because Cisco Unified Communications provides plug-and-play support for phones and other network devices. The Cisco Unified Communications solution will help the firm save time and money on basic network changes. Solution The firm can install the Cisco MCS 7828-I3 Unified communications Manager Business Edition. This server appliance is preinstalled with Cisco Unified Communications Manager Business Edition 6.0 software16. The solution will deliver powerful phone features that will help employees spend less time tracking down one another, and more time working together. Our solution includes an up-to-date company directory, so anyone with a Cisco IP phone can touch a few buttons to search for employees by name, and reach the person they need to talk to. The staffs don’t have to memorize extensions anymore thanks to the unique database17. The system is very self-explanatory and user-friendly. For example, if I’m on the phone with a colleague, I can press a few buttons and conference in other members of the team on the spur of the moment and our salespeople love the system’s ability to display missed calls. Even if a customer has not left a message, you can see that they have phoned and get back to them right away. Safeguarding sensitive business information is an important priority for Fresh Direct, so the company might add the Cisco ASA 5510 Series Adaptive Security Appliance for firewall protection18. The produce industry is an extremely competitive one, so internal security is a must. The Cisco firewall will give the firm the ability to allow only authorized users to access the network. To keep the solution running at its best, Fresh Direct will need to sign up for the Cisco SMARTnet® Service. This award winning technical support service offers direct, anytime access to Cisco engineers and an extensive range of technical resources. More challenges There is a geographical challenge in that the company is not able to reach its customer within the specified time. This is with regards to the time that the customers have asked that they get the food delivered to them. To deal with this, I propose the introduction of a G-Map plugin that will enable the directors monitor the delivery vans as they do the deliveries. These will also be used to monitor delivery issues like traffic and also help the management realize the orders that are likely to be late. With this information, they then can plan for auxiliary delivery transportation. This reduces the number of late orders plus allows the company to reach more customers. The operations managers can use this tool to pinpoint where there is risk geographically and to prioritize where to prioritize and what to do to counter these risks. This plug-in provides a robust visualization for small businesses dashboards. Through the use of point and use integration, the risks will be minimized as the risks on deliveries will be monitored and countered. Reasons for Specific Choice All the four solutions above have different strengths. Preferably I would advocate for the firm to implement either depending on the results that they would want to get the most. This is so because these solutions are custom to solve certain problems. Ranking of Other Options In ranking these solutions according to the foreseen effects of their implementation, I would rank the PAN Manage as the best software as it will solve several of the company’s issues. The G-map plugin does wonders and will go a long way to help the business in planning how they deliver the food products to the clients with regards to geographical factors and risks. Conclusion Fresh Direct is a fast growing company that is bound to grow the more because of the products that they are selling. They are doing things different from what all the rest of the other online grocers. This can only mean that there are bound to be challenges that the firm will face. These however, can only be taken care of by making sure that there are technology upgrades to the system to cater for any issues that may arise from this growth. Bibliography Fresh Direct, Business website Retrieved April 16, 2014 https://www.freshdirect.com/category.jsp?catId=about_overview_ourpassion&trk=snav Micah Steiger.Fresh Direct’s Success.Stanford University, Technology Entreprenuership, Retrieved April 15, 2014: https://novoed.com/venture1-2014-1/reports/197804 Porter,M. E.andMillar,V. E.(1985)How information gives you a competitive advantage., Harvard Business Review, July ‐ August 63, p. 149‐ 174. Rob, P. and Coronel, C. (2007) Database Systems, Ed. 7. Thomson. Rob, P., Schoenbachler, D D., Gordon, G L., Foley, D.and Spellman, L. (1997) Understanding consumer database marketing, The Journal of Consumer Marketing Santa Barbara, 14 (1), p.5 http://www.cisco.com/en/US/services/ps2827/ps2978/Fresh_Direct_CaseStudy.pdf_br>. Egenera,(2012).E-Commerce, PAN Manager. Software by Egenera to Handle Explosive Growth Cisco Systems (2009). Customer Case Study, Unified Communications System Retrieved on April 16, 2014 http://www.cisco.com/en/US/services/ps2827/ps2978/Fresh_Direct_CaseStudy.pdf_br>. Read More