Currently, 95 percent of the customers are households, with the remainderbeing local restaurants. Approximately 20 percent of their customerbase generates 80 percent of the profit.
Theorganicgrocer.com has a financialsystem—a computer application that Marcus modified to meet its needs.A separate computer package generates advertising material and mail-outs.This tends to be done by Maria when time permits. However, there is littlemarket information to support strategic operations planning.
Much of Mariaand Marcus’s aspiration is based on the success of their current operationsand the hope that the trend continues. Whilst there are several competitorssupplying online vegetables, they do not offer organic products and theyhave limited products. They are, however, some 20 percent cheaper than Theorganicgrocer.com.As business has grown, there have been complaints of damaged products,and growth in customers has caused the average on-time deliveries(plus or minus 20 minutes) to fall from 95 percent to 75 percent. All this,Maria and Marcus argue, is more reason for expanding the business.Marcus enjoys the technical aspects of the online business, and spendsmuch of his time modifying and improving the Web site.
When necessary,he helps to consolidate customers’ orders. “I think my time is better spenton Web site development,” Marcus says; “It’s critical for the business if itgoes down or it isn’t showing current product information, then sales arejeopardized.” Presently, Maria takes responsibility for placing orders to theirthirty suppliers. Maria and the delivery drivers pack customer orders into salvagedcardboard boxes that are of various sizes and often damaged. “But atleast they are free!” she laughs.QUESTIONS 1. What are the comparative operational differences of a conventional”bricks and mortar” grocery to an online operation? What are the comparativevalue chains for each system? 2.
What are the key processes in the online operation? 3. Where are the possible operational problem areas of their online business,now and in the future? 4. What operational improvements need to be taken now to improvecompetitiveness?