Freshdirect: Expansion Strategy

14 Pages Posted: 21 Oct 2008

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

Debashish Chatterjee

affiliation not provided to SSRN

Abstract

FreshDirect, a home-delivery business, wants to use the additional capacity in its meat-processing facility to expand into national competition. The description of the beef supply chain in this case will help students analyze the best way for FreshDirect to take on Omaha Steaks as well as how to best serve restaurants.

Excerpt

UVA-OM-1115

FreshDirect: Expansion Strategy

FreshDirect: Expansion Strategy

Jason Ackerman, president and CEO of FreshDirect, tossed the copy of the New York Times article on the table and complained:

I appreciate the free publicity, but yet another reporter just doesn't get it. There is no reason to compare us to Webvan or other dot-com grocers that closed down in 2001. We're not a “Last Mile” delivery business; we are a specialty producer selling directly to consumers. It's all about higher quality food at lower prices.

In 2003, FreshDirect had a customer base of 120,000, with 2,500 more signing up each week, a retention rate of more than 64%, and an average order size of $ 100. The company, with its 300,000-square-foot state-of-the-art processing facility, was located just outside Manhattan and had generated an operating profit a year ahead of schedule. FreshDirect had 30% to 40% gross margins that were higher than the industry average and was targeting revenues of $ 2 billion by 2007. Ackerman was confronting the key issue of capacity utilization when he started exploring new channels such as mail-order and institutional markets.

. . .

Keywords: eCommerce, retail, operations strategy, supply chain management, expansion

Suggested Citation

Laseter, Timothy M. and Chatterjee, Debashish, Freshdirect: Expansion Strategy. Darden Case No. UVA-OM-1115, Available at SSRN: https://ssrn.com/abstract=911462 or http://dx.doi.org/10.2139/ssrn.911462

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 )

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Barcelona, 08034
Spain

London Business School ( email )

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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

Debashish Chatterjee

affiliation not provided to SSRN

No Address Available

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