Essays /

15 Fresh Direct Essay

Essay preview

Teaching Notes

Case Uses & Objectives

The FreshDirect case presents a strategy analysis and formulation problem in an entrepreneurial e-business environment. It provides students with a case that contains all the elements necessary to lead them through a course overview in a practical real-world setting. This case can be used to augment discussions of strategic analysis, specifically both internal and external environmental analysis (Chapters 2 & 3 in Dess, Lumpkin & Eisner); and strategic formulation, specifically business level strategy (Chapter 5), and e-business (Chapter 8), with an additional focus on strategic implementation, specifically entrepreneurial development (Chapters 12 & 13).

The case moves students towards two specific questions. First, there is the question of how FreshDirect has used industry analysis to examine their industry’s general environment plus the competitive impact of suppliers, buyers, threats of new entry, substitutes and rivalry. Second, based on this strategic analysis, is an assessment of FreshDirect’s choice of a competitive e-business strategy: 1) differentiation within the grocery industry based on service quality, and 2) cost leadership in their warehouse operations. Overlaying these basic questions is the nature of the entrepreneurial environment and to what degree the FreshDirect owners are capitalizing on their resources, expertise and entrepreneurial ambition.

The case is written in a style that overviews the situation but intentionally avoids guiding students through any analytical framework or specific application question. In so doing, it provides the instructor with the latitude to adjust class discussion and thereby accommodate the abilities of a wide-range of students. Specifically, the instructor can invite students to reason through a situation where uncertainty exists and speculation may be required.

In terms of environmental analysis, this case connects a discussion of external environmental forces and Porter’s five-force model, and how such forces affect the opportunities for growth in an industry (referencing concepts covered in Chapter 2). In terms of internal analysis of the firm, (referencing Chapter 3), the value-chain and resource-based VRIN analysis provides a case for how distribution challenges across the value-chain activities could affect value.

As a business-level strategy case, (referencing concepts covered in Chapter 5), this case is very well suited to discuss the Porter’s generic strategies, the advantages and disadvantages of those strategies and to discuss the merits and demerits of a combination e-business strategy (referencing concepts from Chapter 8).

Specific to the entrepreneurial challenges, the instructor also has the latitude to discuss the prospects and problems that the firm would encounter in future in its growth endeavor. This could involve a discussion on the various avenues of growth, the feasibility of the avenues, possible competitor reaction and how the company could cope with it. This case can be used to demonstrate the difficulty of introducing a new product to an already established market, the challenges of being a new player in a new market, and the challenges of expansion for a specialized product. The instructor is free to choose the concepts to highlight from Chapters 12 and 13.


First launched in July 2001, FreshDirect is a New York City based on-line grocery store with a state of the art production center, top-notch personnel, leading edge manufacturing software, the highest standard of cleanliness, health & safety, and an informative and user-friendly website. System efficiencies include: a cost-effective operational design; no middleman; a central production and distribution location; well designed order and delivery protocols; and a policy of no slotting allowances. These system characteristics enable FreshDirect to maintain a high product quality while keeping product prices low, therefore their promise to grocery shoppers of “higher quality at lower prices.”

The ideal FreshDirect customer is described by Jason Ackerman, one of the founders, as someone who buys their bulk staples from a warehouse like Costco on a monthly basis, and buys everything else from FreshDirect on a weekly basis. The website offers a broad selection of products along with information about the food and how it is sold. Products can be compared on taste, price, usage and nutritional information. Custom cuts a...

Read more


-5 1 10 12 13 15 2 2001 2004 3 4 5 8 abil abl accept access accommod achiev ackerman acknowledg acquir across activ activities/resources ad add addit adequ adjust administr advantag advertis affect affluenc aggress allianc allow along alreadi also altern ambit among analysi analyst analyt analyz answer anticip appeal appear appli applic approach area argu art ask assess assign attent attract audienc augment autonomi avail avenu avoid background barrier base basi basic becom best better big blank board boost bought breadth brick brick-and-mortar broad browser build bulk bundl busi business-level buy buyer cannot capabl capac capit captur care carri case catch center central chain challeng chang chapter characterist charg cheaper choic choos citi class cleanli clear click combin come commit compani compar comparison compet competit competitor con concept concern connect consid consult consum contain continu control convert cope corpor cost cost-effect costco could coupon cours cover craft creat creativ critic crucial cultur current custom cut debat decis dedic deep defin degre deliv deliveri demand demerit demograph demonstr describ design desir despit dess detail develop diagram diet differenti difficult difficulti direct disadvantag discretionari discuss display distribut diverg diversif diversifi dollar draw drive driven driven-hom driver due e e-busi easili econom edg effect effici effort eisner either electron element els employe enabl encount encourag endeavor energi engag enhanc enough enter entrepreneuri entri environ environment especi establish estim etc ethnic evalu everyth examin excel except exist expand expans experi expert expertis explor extern extra face facil facilit factor fairway famili far feasibl fedel feedback fill financi firm first first-tim fit five five-forc focus follow food forc form formul founder framework free fresh freshdirect fresher friend fuel fun futur gain gas general generic geograph get give given go grant great greater grocer groceri group grow grower growth guid hand handl hard harlem health healthi help high higher highest highlight hire home homework howev human icebreak idea ideal identifi imagin imit immigr impact implement implic impuls inbound includ increas individu industri industry-wid industrywid inform inher inimit initi innov insight inspir instead instructor intang intend intent interact interest interfac intermediari intern internet interrelationship introduc invest investor invit involv issu item jason joe juli keep know larg larger latitud launch lead leadership learn let level like limit line list locat logist long look lose lot low lower loyal lumpkin made maintain major make manag manhattan mani manufactur margin mark market may mayb mean meat mechan merit method michael middl middleman might mindset minimum mistak model modern momentum monitor month mortar mous mouth move much n narrow natur near necessari need netgroc network new nich non non-substitut notch note nutrit object obvious octob offer offic on-lin one onlin oper opportun option order organ organiz orient other outbound overcom overlay overview owner owners/partners park peak peapod perceiv percentag perform person personnel perspect physic pick place plan play player plus pocket point polici popul porter posit possibl potenti power practic premium prepar present pressur preval price price-sensit primari prior privat proactiv probabl problem process procur produc product profit promis promot pros prospect protocol provid purchas pursu put qualiti question quick r rang rapport rare reaction read readili real real-world reason reconfigur recoup reduc referenc refund region relationship reput requir resourc resource-bas resource/activity respond respons return rise risk risk-tak rivalri role roll safeti sale sampl satisfact save schedul season second secondari see seek segment select sensit serv servic set sever share shop shopper signific similar simpl sinc situat skill slot slow slowli small sniff sociocultur softwar sold solicit someon sometim special specialist specif specul spend spoilag staf standard stapl start state state-of-the-art statement storag store strateg strategi strong stronger stuck student style substitut suburb succeed success suggest suit supermarket supplier sustain switch swot synopsi system take tangibl target tast teach team team-inspir technolog tell term therebi therefor think thought threat three tight time top top-notch total touch toward tradit traffic train tri true truli two uncertainti uncov uniqu uptown urban usag use user user-friend v valu valuabl value-chain value-cr value/quality various via vision volum vrin want warehous watch waver way wealthi websit week weigh well whether whichev wide wide-rang wider will within word work world would wrap written year yes york yourgroc