Group 1_Ocado_A Sucessful Online Grocery_Case Study Analysis.docx

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Logistics andOperationsManagementOcado: A Successful Online Grocery:Case Study AnalysisGroup 1Daniela CalderonFrancisco RodriguesGonçalo AguiarHugo OliveiraJosé Miguel MachadoPedro TrigoFebruary 13th2019Logistics and Operations Management| 1
1.As a customer, what do you want from an online grocery store? How do Ocado and Tesco.com perform on these dimensions?As a customer what we want from an online grocery store are:- Same Selection They Find at the Grocery Store - Have the capacity to order Anytime, Anywhere- Save Time When Buying Groceries Online- Need to Trust the People Who Select and Deliver Their Groceries- Better pricesSurveys have found that shoppers are performing fewer of their main shops insupermarkets, instead opting for online or discounters, with the majority placingan order once or twice a month. As a result, physical stores are increasinglybecoming a medium in which to pick up grocery items as part of a top-up shop.Consumer approaches to online grocery shopping differ from conventionalshopping: convenience and speed rank highest in terms of importance whenbuying food online. Increased connectivity has provided further avenues foronline shopping, with more and more consumers completing their shop onsmartphones and tablets, particularly in the case of the former.With more available functions and increased ease of use, smartphones areincreasingly taking on more aspects of the grocery shopping experience.2.Ocado delivers from a central dedicated warehouse straight to the customer, while Tesco uses existing stores to deliver to nearby customers. What are the pros and cons of each model?Ocado ProsLower operation costs- By choosing to centralize warehousing and distribution, the need topay rent or utility expenditures for different warehouses is reduced. In addition to paying more forrent, the need to spend more on new equipment and technologies for each warehouse is alsoeliminated. With these reductions in costs, retailers can now set pricing strategies with moreLogistics and Operations Management| 2
ease due to the more stable nature of its inventory management. This will allow for highermargins or lower prices for customers.Centralizing an operation like warehousing and distribution usually leads to a number of costreductions. You have fewer buildings to own or rent, which means you pay less utility expenses,require fewer employees and don't need as much equipment and computer technology. Thesecost advantages help retailers to set pricing strategies and either achieve high profit margins oroffer low prices to customers.

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