The Seven-Step Model for E-Grocery Fulfilment

Abstract

Online grocery shopping is a specialised subset of online shopping with difficulties all of its own. Most of these occur, not at the front end of customer ordering, but during the last mile: the home delivery process. A study of third party fulfilment in Australia has demonstrated the existence of an optimal seven-step model for linking the lowest possible delivery costs to a given customer density. Developed from a national case example, our model shows that as volume of deliveries increases, cost characteristics and activities fall within seven clearly bounded stages as business volumes increase. Where competition is centred around this component of grocery sales, e-grocers wishing to compete using a cost leadership strategy are likely to reduce their prices (to customers) to such levels. However, a survey of Australian e-Grocers indicates that some may be immune to this pressure, and therefore continue to pocket very significant profits derived from e-fulfilment.