Relayfoods.Com
9 Pages Posted: 1 Jun 2017
Abstract
In less than two years, the founders' innovative model for addressing last-mile challenges in an online grocery retailing operation was working. Although still consuming cash, the three-month-old pilot expansion to another city was experiencing three-digit monthly sales growth. To date, the company had followed a philosophy of low-cost experimentation, as it explored terrain that had been inhospitable to its predecessors. But now Relay needed to make some changes in its operations strategy.
Excerpt
UVA-OM-1431
Rev. Feb. 27, 2014
RelayFoods.com
Zach Buckner, founder and CEO of RelayFoods.com, Inc. (Relay), hung up the phone after a brief conversation with his lead investor. Although he and Arnie Katz, president and COO, had come within weeks of running out of cash, they had managed at last to secure equity financing that would, at current projections, fund the company through the end of 2011. Now in the fall of 2010, Buckner's innovative model for addressing last-mile challenges in online grocery retailing was working. After less than two years, the Charlottesville, Virginia, pilot was generating annual revenues in excess of $ 1 million. More critical projections indicated that Relay would be cash-flow positive before the end of 2011. Although still consuming cash, the three-month-old pilot expansion to Richmond was experiencing three-digit monthly sales growth. With a market that was seven times larger, the Richmond expansion could soon outperform the Charlottesville pilot.
The Relay business model, built around partnerships with local retailers, farmers, and employers, supported the growing “localvore” movement and minimized the need for capital to support its inventory and distribution facilities. But this hub-and-spoke model also demanded coordination of significant logistical complexity. The company now offered more than 15,000 stock-keeping units from approximately 90 supplier/partners and an evolving set of more than 25 pick-up locations across the two cities. The model worked, but Relay's management team was not convinced that it was the most optimal one. To date, the company had followed a philosophy of low-cost experimentation, as it explored terrain that had been inhospitable to its predecessors. It appeared that now was the time to make some changes in the company's operations strategy.
History
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Keywords: market expansion, sales growth, operations strategy
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