Holy Angel University

School of Business and Accountancy

Case Analysis No. 2 FreshDirect: Is it really fresh?

Submitted to:

Ms. Maria Lina T. Ramoneda

Submitted by:

Angeles, Christian Rafael S.

Cuenco, Jan Carlo G.

David, Patricia Dorotea M.

Manalang, Christopher Hans N.

Nuyda, Piolo Bryant D.

Rivera, Aira C.

Viray, Joyce Grace S.

Yumul, Sheena Patricia J.

Group 2 - BM 431

September 27, 2022

 I. Point of View

FreshDirect was an online grocery store that was established in 2001. Joseph Fedele and
Jason Ackerman co-founded the company. The company was launched as an alternative to the
existing traditional grocery store model. Since its founding, the business has provided more than
3000 products, including prepared foods, meat, fruits, vegetables, and bakery items. The
company's operations are centered on a business model that guarantees that through its own
supply chain system, orders placed on a given day should be delivered at the latest the following
day.

Only 2% of the entire grocery market, which includes the traditional grocery industry as
well, is accounted for by the online grocery sector. The company operates in New York City,
Brooklyn, Manhattan, Queens, Riverdale, Connecticut, and New Jersey, among other places. The
fact that FreshDirect does not rely on suppliers or middlemen to buy various products is the
aspect of its business model that sets it apart from its rivals. In fact, their business buys grocery
items directly from farmers, guaranteeing both low prices and high-quality products that stay
fresh.

This business model allowed the company to sell groceries at a lower price than other
online grocery stores in the country. In its most basic form, FreshDirect is a business that lets
customers order food online for delivery the following day. The company's motto is "Our food is
fresh, and our customers are spoiled." In order to build lasting relationships with its customers,
the company has offered superior products from the beginning. To further inform customers
about the caliber of the goods delivered the day before, FreshDirect also added a rating system to
the website. Customers' confidence in FreshDirect increased after the rating system was
implemented. However, the business has recently had to contend with fierce competition from
rivals, rising fuel prices, and pressure from environmental organizations. It also appears to have a
lot of potential in the online grocery market that FreshDirect should look into in the future.

II. Statement of the Problem

The issues statement is frequently used by businesses to enable management to carry out
the improvement process or find the gaps that are harming the company's overall performance or
profitability. Additionally, the problem statement enables management to focus on the actual
issue that is harming any particular area of the business rather than just the symptoms of the
problem a firm is experiencing. In order to prevent miscommunication between shareholders and
stakeholders, it is crucial to maintain the FreshDirect Is It Really Fresh issue statement. The
elements, operations, and overall influence on the organization's various areas, such as
profitability, sales, or brand equity, are stated in the clear problem statement. The issue
statement's secondary goal is to define the external environment and both the short- and long-
term effects it has on the company as a whole. Additionally, it outlines how these evolving
elements may affect users and other stakeholders.

III. Objectives

Short-term Objectives
● To figure out different ways to keep the quality of the food or the product fresh in
order to attract more customers and retain the loyalty of the consumers.
● To conduct research into strategies for increasing sales in order to address
employee complaints.
● To do a review of their operating expenses in order to determine what the best
solution is to reduce them while continuously offering good quality products.

Long-term Objectives:
● To improve customer service by addressing their concerns with regard to the
products.
● To provide and consider possible alternatives for customers to obtain their
product
● To advocate packaging products in an eco-friendly way that safeguards the
environment.

IV. Areas of Consideration using SWOT Analysis and PESTLE Model

SWOT Analysis

Strengths
● They have a heavy brand reputation
● Flexible time work
● Online grocery stores provide the benefit and convenience of in-home
shopping

Weaknesses
● Bound to revealing shortcomings
● Need to improve the market trends
● They don't have consistent CEO

Opportunities
● Diversity of the products
● Focusing on Online Markets
● A rise in purchasing power parity will result in better lifestyles
 Threats
● Fluctuations in the stock market
● Increase the Tax Rate
● Innovation of the competitors

PESTEL Model

Political
● Significantly influenced by the European Union and other countries
political and legal environment
● Government encourages retailers to provide mixed employment
opportunities
● Retail trade has a large impact on employment and human factors

Economical
● Highly dependent on the US Market
● Decline of the Market, negative impact on the company

Social
● Current Trends
● Demographic Changes
● Awareness of health problems and attitudes towards food

Technological
● Innovation
● Efficient Consumer Response

Environment
● Socially Responsible
● Reduce waste
● Reduce resource consumption

Legal
● Prohibition of many practices
● Requiring payments to suppliers
● Price agreed change without notice

V. Alternative Courses of Action

 1. Maintain their commitment to being the premier online market for fresh
food in their region, and address investing more time in leveraging
technology and advertising their company.

a. Advantages
● Implementing a system of centralized control and effective
information flow is one technique to increase supply chain
efficiency.
● By establishing the right technological system in the warehouse,
they would be able to cut inventory expenses dramatically.

b. Disadvantages
● The costs associated with putting the option into action may be
expensive and need to be analyzed in advance of the process of
putting it into action in order to forestall the occurrence of any
disaster in the foreseeable future or while the process is being
carried out.
● Having technological systems may be prone to data and fraud
security threats.

2. Only products and services that can be delivered to customers' residences or

businesses may be offered by FreshDirect where they could still choose what
they wanted from the menu and how it would be delivered fresh or could just
microwave it to steam it right away.

a. Advantages
● The range of choices provided will rely on consumer preferences.
● Regardless of the consumer's preferred consumption time, the food
will remain fresh and entice customers regardless of when they like
to consume it.
a. Disadvantages
● As FreshDirect runs the risk of contaminating their food's
freshness, consumers are less inclined to consume food when they
arrive at a location specifically to eat it.
● It is possible for consumers to find another food company that suits
their needs. They may lose their appetite as a consequence of not
being able to eat the food they prefer.

VII. Recommendation
 Strong FreshDirect Is It Really Fresh recommendations must address important issues
like how the organization will implement the alternatives, what advantages it will experience if it
adopts the when alternatives, and what potential costs the organization may have to bear in order
to adopt the alternatives successfully. It is crucial to include the historical findings under the
recommendation in order to improve the acceptability of the offered solution. That includes
historical research findings is an excellent suggestion. This is crucial because it enables the
reader and other interested parties to comprehend the facts that have been established and the
outcomes that such recommendations have produced in the past. This increases acceptance and
enables the determination of the plan that may be required to be adopted in order to prevent
delays and resistance in the organization when implementing the change.

VIII. Summary

Jason Ackerman and Joseph Fedele started FreshDirect in 1999, and it was first made
available to customers in 2001. Joseph Fedele is a cofounder who, in 1993, visited the high-
quality and reasonably priced Fairway Uptown shop in New York City. Operating from its Long
Island City, Manhattan, Queens, Brooklyn, and New Jersey production facility. The online
grocery that guarantees the fastest next-day delivery. the best meal at the best price prepared
according to your specifications, and with 100% satisfaction guaranteed. "Our Food is Fresh,
Our Customers Are Spoilt," is the company motto. However, the customer is unable to select
their own products, it always depends on FreshDirect. The merchandise includes cheeses, deli,
bakery, meat, fish, vegetables, fruits, and prepared foods. In 2012, the business made the
decision to relocate from Long Island City, Queens, to a huge 800,000-square-foot site in the
Bronx. At the time, the company sold 5,000 perishable items, or roughly 75% of its total sales,
and only 3,000 other items, or the other 25%. J.P. led a $189 million financing round in 2016.
Morgan Asset Management (Smit, 2018), with a $600 million yearly revenue.

It is strongly advised that you negotiate for being acquired given the fierce competition in
the market and the analysis that demonstrates that the online market is dominated by major
players. In order to produce value, FreshDirect will prepare and provide foods (which is the main
business of the company). The "made-to-order" business concept is the foundation for the
process of giving clients high-quality food. This implies that the goods given to a certain
customer were bought with their needs in mind. The FreshDirect Preferred Building Program is
an initiative where FreshDirect partners with a Brooklyn, New York-based residential sales and
marketing firm to install refrigerator and freezer units in common areas specifically designated to
receive and hold deliveries from FreshDirect when customers are not at home. FreshDirect's
service has grown to be so popular that many apartments in NYC are redesigning with common
refrigerators in order to receive delivery from FreshDirect when customers are not at home.
(Fresh Direct 2006) . FreshDirect should agree on a friendly competition with its competitors and
make a joint venture/partnership to gain more perks and advantages like faster routes for
logistics, as well efficiency, and as an environmentally friendly approach to improving its service
quality in terms of its logistic operation to ensure quality freshness of a product. In doing this,
FreshDirect will save a lot of money in the long run and as well as reach more customers through
its positive customer reviews online. Their feedback will absolutely be a win-win situation in the
environment and to society or to the public which is the customers.
 Appendix: Bibliography

GCSE Equas. (2022). Technological influence on business activity.

https://www.bbc.co.uk/bitesize/guides/z4bjjhv/revision/6

Harvard Case Study. (2019). Freshdirect is it really fresh harvard case study solution &
online case analysis. https://caserighted.com/freshdirect-is-it-really-fresh/

MBA Skool Team. (2014, April 5). Freshdirect swot analysis, competitors & usp. mba
skool. https://www.mbaskool.com/brandguide/lifestyle-and-retail/9510-freshdirect.html

Vioet, C. (2022, September 22). Fresh Direct case bus497a. https://www.studocu.com/en-

us/document/california-state-university-northridge/capstone-strategic-management/fresh-direct-
case-bus497a/2013427