Technovation 25 (2005) 1071–1077

www.elsevier.com/locate/technovation

The wired mother

Margaret L. Sheng*
Department of Management and Economics, Hamline University, 1536 Hewitt Ave., St Paul, MN 55104, USA

Abstract
Simple Simon Inc., a promising online grocer, believes the Twin Cities is the especially ripe for home delivery service, with the highest
proportion of working women in the nation, thereby targeting at those time-starved consumers who would rather shop for groceries from their
home PCs and have them delivered to their doors. Surveys also consistently told us that two-thirds of grocery shoppers dislike the task and
70 – 80% of groceries we buy every week are the same. With the innovative, sophisticated customer relationship management program, the
items customers buy every week are stored at SimonDelivers.com. The company also offers the right web site, superior service, and just-in-
time delivery to establish solid customer relationship, thus gaining the competitive advantage. Differentiation through niching, the company
creates a new meaning of saving time and providing convenience for the working mothers by connecting them to a world of information
technology.
q 2004 Elsevier Ltd. All rights reserved.
Keywords: Entrepreneurship; Online grocery shopping; Customer relationship management

1. Introduction us that two-thirds of grocery shoppers dislike the task and

It is well past nightfall and a tired mother is heading in
from the workplace, ready for dinner but still not done for
the day. The refrigerator is empty. There is grocery
shopping that needs tending to.
You are a working mother and you are out in the office all
day. It is 7 o’clock at night and you have to buy groceries
but the traffic is heavy and it is snowing, raining outside.
You can now come in through the local SimonDelivers.com
site, clicking the grocery items at any time and any place.
Simple Simon Inc. believes the Twin Cities in Minnesota
is the especially ripe for home delivery service, with the
highest proportion of working women in the nation, thus
targeting at those time-starved consumers who would rather
shop for groceries from their home PCs and have them
delivered to their doors instead of driving to the local
supermarkets and waiting in long checkout lines. Grocery
shopping may be pleasant if you have a lot of time.
Consumers are tired of navigating the grocery cart through
the aisles every week, trying to plan meals wisely, and
weary of lugging bags in and out of the car, as well as the
errors of transaction occurring over and over. If you were a
working mother and the screaming kids are around, the
shopping experience gets worse. Surveys consistently told
* Tel.: þ1-651-488-6020.
E-mail address: lsheng01@gw.hamline.edu (M.L. Sheng).
0166-4972/$ - see front matter q 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.technovation.2004.02.009
70 – 80% of groceries we buy every week are the same. We
pick up the same items every week, the same cereals, the
same bread. Therefore, “our objective is to simplify the life
of busy people and try to provide them with 3 or 4 h of time
saving per week without compromising quality and also
save them money on weekly groceries. The position we
want to take is to offer a convenient solution for grocery
shopping, but customers do not need to pay for that
convenience, and you also get better quality,” according to
the founder of Simple Simon Inc.
Online grocery service provides an attractive alternative
to customers. Your eyes can quickly scan dozens of
products and scroll a long list of items over the Internet.
The same items that you buy every week are stored in the
computer. The company uses the innovative, sophisticated
customer relationship management program to build solid
customer relationships. Also, when clicked, they will
automatically come to you, and you do not need to
remember. You can save time in processing, purchasing,
payment and traveling and avoid personal hassles, as well as
gain time flexibility in purchasing. You also can save money
by controlling the weekly grocery budget. The shopping cart
shows the total amount you are spending and reminds you of
impulse purchases.
This study investigates how Simple Simon Inc. intelli-
gently saves time and provides convenience for working
mothers. Case study is chosen as a research methodology.
1072 M.L. Sheng / Technovation 25 (2005) 1071–1077
Evidence comes from several sources: in-depth interviews,
personal observations, site visit, document reviews as well
as a number of follow-up calls and e-mails. This study will
be a classical strategy formulation process, through a top-
down approach, focusing first on the environment to review
the business and technology trends in industry, and then on
competitors. The critical successful factors and the values a
firm can derive to its customers are investigated. Finally, my
observations are proposed to the company.
2. Company background
Simple Simon Inc., a grocery home delivery service,
allows shoppers to place orders by phone, fax, or via the
Internet (http://www.simondelivers.com). With a dramati-
cally growth, the service is available in Minneapolis and
St Paul (Twin Cities) in Minnesota.
Motivated by consumers’ hunger for convenience and
the potential of the Internet, SimonDelivers.com was
founded in 1997 and began regular deliveries in April,
1999. They also can compile a personal list throughout the
week on the site and even choose the shade of green they
want their bananas to be. Once shoppers have registered
with the service, they can get next-day delivery, Tuesday
through Saturday, on orders placed by 11 p.m. the previous
day. Each night, the company compiles the orders and sends
out requests to its suppliers, who deliver the merchandise to
Simple Simon’s 104,000-square-foot, temperature-con-
trolled warehouse the next morning. At the warehouse, the
orders are bagged and loaded on the company’s 41 vans for
delivery to customers. A fee of $2.95 is charged on orders
under $80; there is no fee on orders over that amount.
The founder of Simple Simon Inc. talked about the target
customers:
The demographics of customers are targeted on 24 – 54
year-old families with $34,000 – 100,000 household
income per year. It is a very broad range. In fact, the
target is more ‘life stage’ rather than ‘income.’ Everyone
in that stage with kids or pets or both has a very busy life.
Time-pressed and dual-wage families will pay a
premium to recover the time they now spend at the
grocery store.
3. Business and technology trends in online grocery
services
Since the emergence of home grocery shopping in the
early 1990s, food retailers have experimented with various
business models as they work to achieve profitability. An
example is Peapod.com, the most well-known pioneer of
online grocery shopping. The company initially built its
home grocery shopping business by partnering with local
brick-and-mortar stores that supplied the grocery items for
delivery, while Peapod.com supplied the PC-based order-
entry technology and delivery service to consumers. This
model ultimately proved to be time-consuming and
expensive since traditional grocery stores are not physically
organized for efficient order assembly. Currently online
grocers are modifying their reliance on partnerships with
local supermarket chains and transforming their service
model into a warehouse-direct approach.
The warehouse-direct approach has recently emerged as
a cost-effective solution for implementing home grocery
shopping. This approach is based on four key variables:
order entry methods, in-stock inventory levels, delivery
options, price levels, and a focus on increasing customer
retention and order frequency in order to attain a critical
mass of online grocery shoppers.
Order entry is a major part of the consumer’s home
shopping experience. Speed, ease of use, and flexibility are
required to make the ordering process attractive to online
customers. Most retailers currently offer web-based order
entry systems, but with the gaining popularity of infor-
mation alliances, such as 3Com’s PalmPilot, new scan-
enabled personal digital assistants have come to represent
the next step in improving customer convenience.
In-stock inventory levels, variety of selection, and
freshness of perishables are crucial elements in the
consumer direct warehousing process. To meet consumer
expectations for round-the-clock item availability, 100%
order accuracy, and pristine perishables, most retailers keep
only 5000– 15,000 SKUs on hand in order to balance
efficiently consumer needs with logistical and waste
considerations.
Delivery is one of the most expensive components for
online grocery shopping services, and retailers have found
several ways to underwrite or amortize this cost. Simply
passing costs along to customers can be problematic since
past experience indicates that consumers expect free
delivery service. Therefore, food retailers who wish to
achieve broad market penetration now perceive free
delivery as a requirement. The minimum order value,
typically from $60 to $70, is far lower than the average
online basket value of approximately $115, permitting most
shoppers to qualify for the free service. Other online grocers
charge a monthly subscription fee. This latter option
encourages high order-frequency, but may limit the number
of subscribing customers.
To increase gross margin per drop and to leverage the
capability of the delivery vans, some home shopping
services, such as Streamline.com offers video rental, dry
cleaning, and package pick-up. Another method of increas-
ing the gross margin per drop and amortizing the delivery
costs is by offering delivery to the workplace, thereby
serving multiple customers with one stop.
Delivery methods have also evolved to take into account
scheduling factors. Various online grocers now offer options
for attended and unattended grocery delivery, as well as
 M.L. Sheng / Technovation 25 (2005) 1071–1077
the arrival of groceries on either a fixed or a customer-
driven schedule. A fixed delivery schedule is the most
efficient and cost-effective for retailers but can be incon-
venient for the consumer. Unattended delivery is convenient
for busy consumers, as well as flexible and efficient for the
retailer, but it requires the installation of a refrigerator or
insulated tote in the home or garage.
4. Competitors
Currently, Simple Simon is the only firm to provide
online grocery service in Minnesota. But there are more than
four big competitors who could come to town. The most
established nearby player is Peapod.com based in the
Chicago area. Streamline.com is from the east coast.
HomeGrocer.com is on the west coast. And NetGrocer.
com serves the entire United States population but only
delivers non-perishable groceries. Other competitors come
from local.
4.1. Peapod.com
Founded in 1989, Peapod.com delivers groceries in eight
markets, currently not including the Twin Cities, and serves
about 100,000 customers. Peapod.com has two fees: a
monthly membership fee ($4.95/month) and a shopping and
delivery fee ($4.95 þ 5% of the total grocery bill). The
company offers essentially 80% of the same items you
would get in your grocery store. This includes dried goods,
produce, meat, dairy, health and beauty aids, stamps, and
paper goods (including some office supplies).
4.2. Streamline.com
Founded in 1993, its first customers were in the Boston
area; it expanded into New Jersey. Streamline.com provides
not only groceries, but also many other products and
services, such as dry cleaning, film processing, postage
stamps, fresh flowers, shoe repair, video rental, and bottled
water.
You won’t be home on your delivery day. Streamline
provides a refrigerator, called a Streamline Box, for the
customer’s garage, as well as a keypad entry system for
the garage door, as security. The ice cream stays frozen and
the milk stays cold until someone comes home from work. If
you leave film, your pictures will come back the next week.
If you want to order a video, it will arrive the following
week. If you want a package taken to UPS, Streamline.com
will do that, too.
The typical household is headed by one or two working
professionals who are 30 –50 years old, have at least one
child and an income of $75,000 –100,000, and ‘are really
busy.’ Each household pays $30 a month to be on
Streamline.com’s members.
1073
4.3. HomeGrocer.com
Since 1997, HomeGrocer.com has served Seattle, Port-
land, and southern California regions. Customers can place
an order until 11 p.m. and select a 90-min window for next-
day delivery. HomeGrocer.com offers free delivery for all
first orders and those of $75 or more. There is no
membership fee, nor do HomeGrocer.com delivery pro-
fessionals accept tips. Currently, the delivery personnel will
not leave an order unless someone is present to sign for it.
4.4. NetGrocer.com
NetGrocer.com is currently the potential major compe-
titor since it delivers only non-perishable food. It called
itself the ‘king of dry-goods grocery delivery’ and is the first
online grocery shopping service to cover cities, towns and
rural areas nationwide without charging membership fees
and remains the only online grocer that can service the
entire United States population. The delivery fee is 7– 10%
of the total sale.
4.5. Others
Locally, St Paul-based Kowalski’s has built an online
catalog of more than 5000 items and began selling through
the Internet in May 1999. The Kowalski test will not include
home delivery; customers will pick up their orders at the
White Bear Lake store, at least initially. The decision to go
with a customer pick-up system rather than delivery was a
reflection of the company’s desire to ‘walk before it runs.’
Wholesale and retail powerhouse, Supervalu Inc., continues
to consider online sales and is testing now, but has no
immediate plan for implementation on a general basis.
Although most online grocery systems stress the
convenience of home shopping and delivery for busy
dual-income families, one local service targets a different
audience: the homebound disabled and elderly. Store to
Door, based in St Paul, is a local non-profit that has operated
quietly for 15 years and currently fills 10,000 orders a year
for more than 500 clients. The average senior client is 82
years old. The company accepts orders over the phone and
then uses volunteers to do the shopping. Both volunteers and
staff deliver the food. Clients pay for the groceries, along
with a 20% delivery fee.
5. Data collection
The principle of data collection is to use multiple sources
of evidence. Any finding or conclusion in a case study is
likely to be much more convincing and accurate if it is based
on several different sources of information, following a
corroboratory mode (Yin, 1994). Evidence in this study
comes from several sources: semi-structured interview,
personal observations, site visits, and internal and external
1074 M.L. Sheng / Technovation 25 (2005) 1071–1077
document reviews. Semi-structured interviews and site
visits were the primary vehicle for investigation. Docu-
ments, secondary data collection at both the industry-level
and firm-level, were also applied to support and comp-
lement the primary approach. The convergence of results
between multiple data collection sources enhances confi-
dence that the results are valid, and weaknesses in one
method are compensated by the strengths of another.
Before conducting interviews in the company, the
approval of the Use of Human Subjects in Research was
issued by the Institutional Review Board (IRB) at the
University of Minnesota. This research was placed in the
lowest risk category. Although being exempted from full
committee review, the exemption does not waive the need
for consent of study subjects.
Semi-structured interviews were carried out in the fall of
2000 and spring of 2001 with six participants, including
CEO, COO, and four managers either from marketing or
information systems. The names of participants remain
anonymous. The theoretical propositions were used to guide
the case study efforts. The interview questions were based
on those propositions and were structured to reveal each
firm’s electronic commerce activities. More than one person
in the firm was interviewed to cross-check for any
inconsistencies in interview responses and to strengthen
the data reliability. Most of the participants had been
involved in Internet commerce almost from the time their
companies started doing business on the web. They
possessed significant management responsibilities; had
extensive familiarity with the firm’s e-commerce history,
operation culture, and strategic thinking; and had diverse
expertise with regard to technology and business.
The initial interview lasted an average of 1– 1 1/2 h. This
face-to-face interview was conducted individually at the
company or the location of the interviewee’s choosing.
Follow-up interviews were conducted either by telephone or
e-mail for clarification. All interviews were taped, with the
respondent’s permission. Tapes certainly provide a more
accurate rendition of an interview than any other method.
Also, the tape recorder is a substitute for listening closely
throughout the course of an interview (Yin, 1994, p. 86).
Although on-site interviews can reduce the researcher’s
distance from the phenomena and provide insights, inter-
views are subject to problems of bias, poor recall, and poor
or inaccurate articulation (Yin, 1994). A reasonable
approach is to corroborate interview data with information
from other sources. Site visits is the second source of
collecting the original data. It was undertaken in an attempt
to bring about greater understanding of the background and
process of electronic commerce. In this study, site visits
included frequent web site visits and plant tours. The
interviewees sat with the investigator to browse the
company’s web sites, explaining the history and philosophy
of designing each web site, as well as explaining the
features, functions, and challenges. The investigator also
toured the plant and warehouse. Observations were recorded
as soon as possible after the tour in order to capture both
immediate reactions and insights.
Documents were helpful in verifying the correct spelling,
names, or events of the organization that might have been
mentioned in an interview. A review of the specialized
industry magazines and conferences was also used. Several
other sources were reviewed to safeguard the reliability and
validity of the secondary data. Company internal news-
letters, products catalogs, and annual reports were requested
for the purpose of cross-reference. Public news announce-
ments and industry-level data were also gathered to
complement the firm-level case data.
5.1. Validation
After in-depth personal interviews, the transcripts were
sent to every interviewee to check for accuracy. Transcripts
were modified based on the responses received. The case
study draft was also sent to every interviewee for validation.
Responses were received and few changes suggested were
made.
Persons have comprehensive knowledge about the
organization’s operations are called key informants. This
study also relied on such key informants to verify the
information and resources. In this study, the key informants
hold the positions at upper middle or senior levels in their
organizations. Two persons from the company were
selected as key informants. This is considering the practical
difficulty in getting the time, from every interviewee.
Meanwhile, interviews were conducted mindful of the
following points between interviewer and respondents: (1)
the interviewer and respondents will collaborate to produce
information useful to the research project; (2) the inter-
viewer will monitor the quality of material; (3) the
interviewer will respect the respondents’ opinions; (4) the
interviewer will ensure that the respondents will not be
damaged or disadvantaged because of participating in the
interview.
6. Critical successful factors
Through the Internet, SimonDelivers.com creates values
to its customers in terms of providing the right web site,
superior customer service, and just-in-time delivery to build
solid customer relationship, thus gaining in competitive
advantages and making itself successful.
6.1. The right web site
There are not product promotions at SimonDelivers.com.
As participants described the website design:
The concept of designing SimonDelivers.com is to save
time for customers and do a better job of meal planning,
rather than just selling groceries. We do sell our products
 M.L. Sheng / Technovation 25 (2005) 1071–1077
in different ways. But our web site is not designed for that
purpose. They are related but have different objectives.
So, we present the products alphabetically. We did not
put related products together like a catalog structure. For
example, you put chips next to beer. Consumers who
want to buy beer might buy chips, too. Yes, this might
sell more chips. But if I do not want to buy chips, where
is my beer? In the physical store, you just walk around,
very inefficiently. Our environment is to let people find
groceries as quickly as possible. The structure makes it
easier to find what you want. Alphabetically is the easy
way to find the groceries. If every time you send them
many items they did not ask for, it affects how fast they
can go.
We are not yet able to use our web site for many
marketing purposes. Basically, it is an order site, not a
marketing site. We promote products in other ways, for
example, to link them to other sites. We link Bruegger’s
Bagels, Great Harvest Bread Co., and Borders. We do not
advertise ourselves on any other sites, either. We do not
spend money on advertising. That is because we are
geographically focused. We lose money on any custo-
mers outside of our geographic area. People come to our
site because they have heard about us. We did not get
customers from our web site.
6.2. Superior customer service
The participants talked about their superior customer
services:
To help our customers plan meals, we provide the recipe.
For example, for Thanksgiving dinner, you can click for
10 persons or 20 persons; all necessary ingredients will
show up, including the total bill. But in the physical
store, you have to go to several different shelves. In this
virtual store, you buy the meal. But in the physical store,
you buy ingredients.
In order to serve the working women, we offer both
attended and unattended delivery. Attended deliveries
(recommended for your first order) arrive within a
scheduled 2-h window (e.g. 2– 4 p.m.) Monday to Friday.
We also offer unattended delivery, so you do not have to
wait at home for your groceries. The same coolers and
totes that keep the food safe in our vans are designed to
keep the food safe in your garage, at your front door, or
on your back door step—wherever you designate. There
is a refundable tote deposit of $20.
6.3. Just-in-time delivery
There are two ways that Simple Simon is enabled
to provide just-in-time delivery by partnering with local
1075
brick-and-mortar stores and a distribution center direct
approach. As participants described:
One has to have a partnership with local specialty
retailers that provide fresh products. We use Edina-based
Nash Finch Inc., as our grocery wholesaler, but we also
have a roster of more than two dozen suppliers, including
Minneapolis-based Turtle Bread Co., which provides
breads, meats, fruits, and vegetables. Another way is to
use a purchase distribution center that supplies a variety
of products from a central source. You cannot sell
groceries in cyberspace unless you have a lot of good
new-fashioned distribution centers—with various tem-
perature zones, sophisticated computers, high ceilings,
and wide truck bays. Partnering with local retailers and
purchasing from a distribution center make just-in-time
delivery workable.
Internet commerce also facilitates the process. One
participant described:
Most people make a list of groceries at night before going
to bed and shop on the way home. Now, you give us that
shopping list before you go to bed, and you have your
groceries when you get home from work. Because you
gave us that list before 11 o’clock at night, we can be
prepared for you. We use the time when you sleep. The
meat is fresh and cut just hours before delivering to your
house. Today the Internet allows you to order anytime
and add more value for you. The Internet also helps us to
control inventory. Customers can know the items
available right away and do not need to wait several days.
He further explained:
Your first order arrives the following day within a
scheduled 2-h window. At that time your delivery
associate will explain our route system, and let you
know which days we are scheduled to be in your
neighborhood (usually two or three times per week). We
can help you arrange for weekly or biweekly delivery of
your groceries.
6.4. Solid customer relationships
The participants described how they build customer
relationships at SimonDelivers.com:
Trust is the first step in building customer relationships.
It is very important that you trust the person who comes
to the door with your groceries, so we will assign to you a
dedicated delivery associate. All our delivery associates
are professional employees of Simple Simon. They are
certified handlers and are fully insured and bonded. If
you sign up, every time you get the same delivery
1076 M.L. Sheng / Technovation 25 (2005) 1071–1077
associate. The idea is that customers get to know their
delivery person. Then they have an incentive for
providing good service.
We build technical and personal relationships. Our route
drivers send the message to customers about today’s
specials, remind them to order, and solve their problems,
such as milk leaks, broken eggs, and so on. Frozen and
refrigerated products are delivered in insulated coolers
that will keep your food safe—including ice cream—for
up to 12 h. Dry groceries are delivered in handled paper
bags, placed in plastic totes with secured lids.
Another participant described how to use Internet
commerce to build the customer relationships:
The personal store is the other way to build personal
relationships. We track customers’ order histories and let
them place orders quickly. You just click on the personal
store, and your purchase history will automatically come
up. You do not need to remember and write down a
purchase list. Every time you interact with us, we have
more and more information about you. The first time, we
get demographics, and then we have your purchase
history. We can predict what you will buy. If you have
pets, we will know that. On the other hand, if you do not
have pets, you will not see pet food. To build long-term
relationships, we know you like green bananas not
yellow bananas. We know your preferences. The
Internet allows us to meet your needs.
Rather than making a quick splash, Simple Simon takes a
long-haul view of the marketplace and carefully study its
products and customers, as well as establishing the
relationships with its customers. Groceries are goods with
the characteristic of being purchased on a weekly and twice
weekly basis. Customer loyalty programs and reward
programs will be important to lock in customers to their
product portfolios over time and engender repeat visits. A
frequent-shopper program will allow customers to earn
points for on-line purchases of groceries and other items,
which they can use for other on-line purchases. However,
keeping promises is the best way to maintain a long-term
customer relationship. Simple Simon has to deliver what it
has promised to its customers. For example, do not let
customers have trouble in redeeming the points they have
earned in the loyalty and reward programs.
6.5. Gains in competitive advantages
The company gains in competitive advantages by
establishing the corporate and brand image in terms of
offering convenience, good quality and price. According to
the company:
The conversion rate of browser to buyer is very high.
People who come to us are interested in us and in buying.
Almost everyone visits our site and becomes a customer
because of convenience. We also provide a very good
food quality. Produce is directly from the growers, stored
at optimal temperatures, and handled only a minimal
number of times before reaching the customer. The meat
and seafood are cut only on the morning of your delivery.
Customers know we run out of inventory very soon. The
inventory rate is 21 days compared to an average of 45
days in the retail store.
In addition to quality, consumers are very price-sensitive.
“Customers tell us they save money, up to 10– 15% every
week. People will try us for convenience, but they’ll stay
because of the quality and they will tell friends because of
the price. We have to deliver on what you promise the
customers. Otherwise, the customer has a bad experience
and won’t use you again. Bad quality and picking up the
wrong items are not good for business in the long term.
The company also creates a significant barrier of entry.
As one participant described:
It is very difficult for customers to switch to other
services because we build every customer’s personal list.
Once you build this, customers are comfortable with our
service, unless for some reason we cannot serve them
effectively. Customers have no reasons to switch. We
build the entry barriers for potential competitors by
penetrating markets. Once you penetrate the neighbor-
hood and you have delivery efficiency, your delivery
costs become very small, and the route systems cannot be
copied by competitors. Anybody who wants to break in
has to build the same efficiency in order to price as
competitively as you.
7. Discussions and conclusion
7.1. Look-and-feel goods with variable quality market
strategy
For groceries, quality is not only difficult to commu-
nicate, but it also varies by products. Also, every individual
has different definitions about good quality. Therefore,
inexpensive price and good reputation are the two strategies
to use in selling look-and-feel goods with variable quality at
Simple Simon. Inexpensive prices will allow customers to
mitigate risk. If the consumer does not perceive the products
to be of high quality, the loss is relatively low, and he or she
can take future business elsewhere. Thus, inexpensive prices
give consumers the incentive to experiment and give Simple
Simon the opportunity to build reputation. Simple Simon
should combine web-search technologies with delivery
logistics to deliver precise items viewed on the web.
However, web-color is a technical issue to be overcome.
Imation’s Verifi and E-Color’s True Internet Color are
 M.L. Sheng / Technovation 25 (2005) 1071–1077
designed to show true-to-life images on the sites. They
attempt to assure a WYSIWYG (what you see is what you
get) shopping experience and Simple Simon should use one
of these approaches. Most important, consistent quality is
the key to building a reputation. Fruits must be always fresh.
Bread cannot be squashed. Ice cream cannot be melted. And
the delivery person must always be clean, well groomed and
polite.
Simple Simon can open its warehouse and allow its
customers to have a real site visit. Customers can experience
the various temperature zones in the warehouse and see that
the meat is stored in the coolest area. By witnessing the
entire process—from picking to packing to delivering—
Simple Simon’s customers can be assured that it maintains
quality. Providing access to the warehouse is like a
showroom to display merchandise to give an idea of what
good quality means.
7.2. Pricing strategy
It is a misconception to think that, when people purchase
online, they do not care about the price and intend to spend
the money to exchange time and buy convenience.
Customers are mindful of cost. We see many US Americans
spending time going through the newspaper to collect
coupons, looking for sale items and finding the best value.
We also see shoppers bid on grocery items over Priceline.
com. Priceline.com allows its customers to name their own
price, thus attracting a lot of traffic. PricewaterhouseCoo-
pers also found that price is an important consideration for
online grocery shopping.
Time-based pricing is the strategy to use in segmenting
the market between best quality and secondary quality.
Bakeries implemented this strategy a long time ago. The
store sells its bread with a cheaper price just before
midnight. Simple Simon can give discounts for some
products before they perish. This strategy enables Simple
Simon to reduce inventory and bring traffic to its web site. In
offering this two-tiered pricing option, time preferences can
be incorporated into the pricing system to the advantage of
both consumers and vendors.
Simple Simon should study the effects of technology on
what people buy and on how they shop. A similar example,
a Swedish grocery store, discovered that, by electronically
adjusting prices according to the time of day, reducing
prices in the evening, it was able to increase evening sales
by 40% and double store traffic.
7.3. E-commerce brand
In addition to establishing the product brand with a good
quality and price, Simple Simon’s e-commerce brand covers
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more broad areas. SimonDelivers.com’s brand intends to
build on saving customer’s time and providing convenience
to them. As a matter of fact, these two value propositions
mean a lot. Saving customers’ time means minimizing time
spent on ordering, purchasing, paying, searching, and
gathering information. Providing convenience means time
flexibility in purchasing, reliable delivery, quality after-
sales service, and a variety of products from which to
choose. Ease of use is the most important factor. (Why
should customers have to learn to use new technology, if
someone can do the work for them?) All of the above will
allow Simple Simon to establish its e-commerce brand.
Simple Simon should keep designing its web site to be
simple, fast, easy to use, and providing the breadth as well as
depth of product assortments. My observation is that those
who prefer online shopping generally have a clear idea of
what they are looking for. Most of the time, they will make
fewer impulse purchases and do very limited browsing on
the web. However, an enhanced searching function is very
important. Simple Simon can offer excellent customer
service by providing a high-speed and single gateway access
to its web site. Delivery is the biggest problem, especially
when Simple Simon wants to become big and launch itself
in many areas. Reliable and free delivery is desired. Speed is
an essential competitive advantage. Simple Simon should
recognize the value of customers’ time. The cable industry,
for instance, has promised to give $20 if its representative
shows up late. Those who come to SimonDelivers.com may
be dual-income families who hunger for saving time. Think
of the impact on a company has to pay for a delay and let
customers wait. Groceries must be delivered when
promised.
References
Yin, R.K., 1994. Case Study Research: Design and Methods, second ed.,
Sage, Thousand Oaks, CA.
Margaret L. Sheng obtained her PhD from the University of
Minnesota at Twin Cities and she is currently an assistant professor
at Hamline University in Minnesota. Before joining Hamline, she was
an assistant professor at the Department of International Business of
National Chi Nan University in Taiwan. She had several years of
industry experience in major multinational corporations, specializing in
international marketing with the applications of information technol-
ogy. Besides maintaining her ongoing research interests in international
business, her current work also involves in e-commerce, and high-
technology marketing.