Questions
1. What mistakes did GG make?
2. Is the concept of grocery e-tailing, as attempted by GG, a sound one? Explain. Hint: You may contrast grocery e-tailing with whatAmazon.com does and how it operates.
In introducing a new product, the fear of competitors catching up and not knowing exactly what the customers want may result in making the wrong capacity decisions.
Such was the case for Grocery Gateway (GG), the grocery e-tailer in Toronto, In the height of the Internet craze of the late 1990s, GG managed to attract $30 million to start its business. Whereas a small grocery' delivery business cot]Id just use a few trucks and shop at the local grocery stores, a larger outfit, having given guarantees of availability' and quality to its thousands of customers, needs a warehouse with inventories. In 2000, GG managed to find investors to inject another $33 million into its business, thus enabling it to build a larger (75,000 ft2) warehouse with more inventory. Groceries were purchased from Longo Brothers wholesale and retail chain. GG would deliver a customer’s order in a three-hour window specified by the customer at the cost of $6 per delivery.