case 3 E-Food and the Online Grocery Competition When everybody's busy, something's got to give. The online grocery industry (that is, grocery shopping online and home delivery of purchased items) has developed slowly over the past 20 years to address today's consumer demands of convenience and time savings. Perhaps the best known provider in the industry is Peapod.com, an operation that began outside Chicago. Since its founding in 1989, i t has expanded to 18 U.S. markets, making over 10 miUion deliveries to over 270,000 customers. Other national competitors have entered the market, but only a few have had any staying power. One of these is netgrocer .com which delivers groceries and an assortment of other merchandise as well across the country using FedEx. I n addition to larger multi-market online grocers, there have been many local providers. Online grocery services typically provide virtual stores through which the electronic visitor navigates, as i f pushing a shopping cart in a traditional grocer. The user clicks on items to purchase, which are placed in the user's cart. W h e n complete, the user is "checked out," specifying a delivery date and time. Users pay delivery costs proportionate to each shopping bil. The software allows the user to store his or her preferences in a personal shopping Hst that can be altered, adding or deleting items as necessary with each e-visit. Across the various providers, the software also usually allows easy consiuner comparison. For example, the SKUs in a particular category may be sorted by brand ame, by price, by valu (price per ounce, for example), by what is on "feature" (sale and point-of-purchase promotions), by various dietetic goals (such as "healthy," "low fat"), and so on. T h e user may write in "notes," to specify in more detall, for example, "Please pick up green (unripe) bananas, not yellow ones," or " I f Fancy Feast is out of beef, please get turkey instead," which 516 case 3 instruct the professional shopper as to the user's particular preferences. Categories of items that can be purchased are continually expanding, from foods to drugstore items and other merchandise. Online grocery providers tend to conduct the online business very well, i f customer satisfaction, repeat \\asit:s. and word-of-mouth advertising are any indicators. That is, the software provided, the merchandise selected. tht delivery reliabiUty, and so on, are valued by the customer. with few complaints. Most users are women, emplovec fuU-time, and married, with well-above-average houschold incomes. Ashley Sims is an M.B.A. student, taking her las term of classes, and thinking about starting up a local onhne grocer. She's certain that by learning from the templates of the current providers in other markets, she. too, can run the logistics of the business. However. she hopes that, given her contacts with computar expertsshe can crate a compettive advantage in the soft^vant setup, i f she imderstands the consumers' mindset as xhcy travel through the e-grocery stores. She wants to kno just what a user is thinking from the first cHck onto xhe Web site to the last "Done Shopping" click off the siie This knowledge would allow her to offer better ad\\ice her software developers in terms of what features woufaciltate the visitors' navigation through the grocer. store. Data like these would help improve the sj-stem and it would also lend great insight to the consumera decisin processes. Questions 1. What is the decisin probiem? 2. What is (are) the research problem(s)? 3. Prepare a research proposal to submit to an onii'^ grocer on behalf of your research team