In this case, Blake Ives, the CEO of Upscale Markets, was at a crossroad of whether start to build an online store to seek further growing profit. Upscale Markets was a seven-store local grocery chain in Dallas, TX. Ives was inspired by the huge success of a virtual store project in subways running by Tesco named Home Plus in Korea. They showed the products visually by using monitor in subways and allowed people purchased items and got delivered by simply using their phone to scan the QR code under the item. Ives gave a call to his friend who was enjoyed online grocery shopping for a few years named Cantera.
Cantera gave Ives many advantages through his experience on Rice Epicurean. Camtera said that he save a lot of time on grocery shopping and finally get rid of this burden. Rice Epicurean had two ways for online customers to get their purchased products. Based on the system provide by MWG, they could prepare the in store pick-up and home delivery. Benefited form the on-line shopping system, many grocery stores gain huge profit and earn lots of market share. MWG could easily implement this whole system within two weeks to forty-five days according to the situation of the specific store.
However, even though online shopping would bring customer increase and purchase increasing pre customer, still, there would be potential risk on implement on-line shopping system. For example, how to fit the tastes of customer of foods to gain customer satisfaction? How to dealing with the additional request of customer whether it is reasonable or not? Moreover, facing on the dot-com meltdown of 2000-2001, many giant online shopping website fell. Ives was starting to reconsider the feasibility of introducing the on-line store for his grocery.
Customer value proposition refers to what is meaningful to the customers. In other words, it is the further description of the real demand of the customers. For the customers who were using Web-based shopping, their value proposition might be different. However, the main value proposition always kept same. They all believed that shopping on-line was able to provide more flexibility and cost-time efficient than shopping to the real store. Those innovations in customer service Ives mentions at the end of the case such like bank clerks, gas jockeys and pay telephones are all aimed at provide more customers convenient.
Web-based shopping provide not only customers convenient in customer service, it completely change the way customer shopping. On-line shopping provide the possibility for customer to break the boundaries of space and time, it means that you can purchase what ever you want without going to the store. Products and services came to you, but not you went to them. This is the most different between them. Scanner data, Loyalty card data, Web Shopping provide bring significant new capabilities to the customer service in the grocery industry.
All of these innovations were crucial components for a modern grocery store. They unified by an information system platform which supported the daily running of the entire store. Scanner data was the fundamental of the whole system. All the products in the store will be digitalized into a data and presented as a code which can be scanned during the transaction. It was the bridge of product between customers and store. Loyalty card data was also play an important role in customer service. It was the information for the store to identify the customers and record how much they purchased form the store.
In other words, It reflect how important this customer to the store. For example, store provides different discounts or outlets for the different level of customers which was grading by the Loyalty card data. Web shopping delivered most impact on customer service. Based on website, customer could make special request such like purchased two pineapple which one was ripe and the other was half ripe simply by add a note online for the picker. Just like what they did in store personally. If I were Ives, I would not implement online grocery shipping in Dallas immediately.
First, I need to analyze the current customer purchase products in each store. Figured out where my customers mostly lived and what the buying power of them. Then, estimate the possible increase of customer consumption based on the other similar store and situation of my store. Calculate the cost of implement and maintain online store and the additional cost such like picker salary and deliver cost. Finally figured out whether the increase consumption of customer by online store will bring benefit or not. If not, project over.
If yet, still I can not begin online store in all stores. A pilot store was necessary to test whether the theory would work in the real word. I would choose the store which had convenient traffic condition to the customers and the customers in database must have the highest purchase power. Different from Rice Epicurean, this pilot store will only support in store pick-up services. The reason was that for the beginner, delivery service might be risk since you did not know what will happen during the transportation and whether customers will satisfy with the product.
In store pick-up services was a smooth way to become an online seller. Customer could provide you feedbacks in store and get the problems solved in store. The future plan will base on how success in the pilot store. Rice Epicurean accumulated a large number of loyal customers in the past years, this was the foundation of their competitive advantage. People have the instinct to refuse change. As your customer got used to your service, it became the part of their life. They might turn to other store only by huge change happened in their life and force them to change.
Rice Epicurean had already gathered great experience in online grocery, based on the current experiences and analyzing the purchase information in the past, there was no reason that Rice Epicurean will fall behind. Those experiences will help them better serve their customers. All these factors will become a positive cycle to achieve the sustainable of its competitive advantage. For the company who provide online services and maintain for the store like MyWebGrocer, their situation was the same as Rice Epicurean, they were hold together to improve and strive for more market share for better profit.
Web based shopping customer should consider more than the in store customers. They have to take the risk such like the describe on the webpage might be different with the real product, after–sales services might be poor due to the internet based fact and unexpected delay for the shipping due to many reason such like weather. Moreover, compare with the traditional customers, web based shopping might increase the amount of purchase and due to the price factor, they might purchase something they don’t really need just because the act on impulse.
Value creation could also possible in mature industry. The act you have to do is to find your role in the transformation and extend your share. Providing the additional value in your product is a better way to gain added value. The service you provided must have the enough power to increasing the customer willingness to pay. The success of Epicurean indicated the importance of figure out the customer value proposition which will show you the actual demand of the customer. Knowing what they need and give what they need is the simple way to gain profit. Leaders should clearly know the demand and the character of their customer before make any movement.