AmazonFresh: Rekindling the Online Grocery Market Harvard Case Solution & Analysis


            Amazon Fresh had been launched by Amazon in the year 2007 and almost five years have passed since the management of the company has tested the business model of this online grocer. The management had faced numerous challenges since the inception of this online grocery forum but there has been no one in the market that has been successful in this area on a national scale.

            This grocery retail service had been tested by the company in Seattle and over the past 5 years the company has made significant progress. This case emphasizes over the operating capabilities and the business model of the company which have been the strength of the company to compete with the giant players Safeway and Wal-Mart. However, the next step needs to be decided by the management of the company.

The company has two options that are both to refine the current business model and amend its core areas and the second alternative available to the management of the company is to expand the retail grocery business into another city. A range of factors have been considered to analyze the next move of the company such as the location strategy, process strategy, quality management, inventory management and supply chain management.

Recommendations for Amazon Fresh

First of all, the pros and cons for Amazon Fresh have been analyzed if it stays in Seattle and amends its Business model or launches in another city such as Los Angeles and New York.

Pros & Cons of Staying in Seattle

            The company had many advantages by launching Amazon Fresh in Seattle. It was possible for the company to partner with the local merchants to sell the products of the company and the purchases were motivated by the affluent customers of the company as they were able to source the food locally. Furthermore, the company had established operations such as distribution centers, suppliers, delivery, routing and scheduling. Over the course of the five years, the company had achieved great profitability and the business model of the company had been successfully tested with impressive results.

However, the negatives associated with this option are that the company would not be able to grow as the margins are relatively low. The threat of the competitors such as Safeway and Wal-Mart is also increasing in the area. Furthermore, the company has been also facing the same fay delivery deadline recently. Therefore, the long term survival might not be possible if the company does not works on its business model if it plans to stay in Seattle.

Pros & Cons of Expanding to Second City

            There are many advantages for the company to expand to a second city. By doing this, the management of the company would be able to design different market specific aspects which the company could transfer to the new market in which it enters. The company would be able to use the second market in order to test the experimentation that has been performed by the company in Seattle. In this way, the management of the company would be able to analyze the impact upon the business. The market share of the company would also expand; when it expands into another city and the brand awareness would also enhance.

However, the negatives associated with this option are that the company will have to build up its operations from the scratch and it is going to take around 1 year for the company. The company will also have to lease a grocery warehouse near the city center. Finally, the establishment of the operations in a completely different city would require a large capital investment. The options available to Amazon Fresh are New York and Los Angeles, which are traffic congested and much large cities.

AmazonFresh Rekindling the Online Grocery Market Case Solution

Recommended Option

            The management of the company is recommended to enter another or even third city such as New York or Los Angeles to establish its operations. Currently, the margins of the company and its market share are low in Seattle and the company has been able to achieve just a 5% of the total household market in Seattle. Therefore, in order to grow and broaden the size and market share of the company, it needs to enter another city and test the business model there. This is going to lead to increased sales for the company. Thus, Amazon Fresh needs to expand its business in another city based on the following operational strategies as described below.............

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