Relayfoods.Com

9 Pages Posted: 1 Jun 2017

See all articles by Timothy M. Laseter

Timothy M. Laseter

University of Virginia - Darden School of Business; Emory University - Goizueta Business School; University of Navarra, IESE Business School; London Business School; New York University (NYU) - Leonard N. Stern School of Business

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

Suggested Citation

Laseter, Timothy M., Relayfoods.Com. Darden Case No. UVA-OM-1431, Available at SSRN: https://ssrn.com/abstract=2974953 or http://dx.doi.org/10.2139/ssrn.2974953

Timothy M. Laseter (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/laseter.htm

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

University of Navarra, IESE Business School ( email )

Avenida Pearson 21
Barcelona, 08034
Spain

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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