Review the attached company and industry overview for "Company A. You are evaluating an opportunity to make an equity investment in Company A. Identify 3 to 4 investment merits and 3 to 4 investment risks associated with the opportunity (explain each in ~1 to 3 sentences). While there may be more merits or risks, highlight the ones you believe are most important. This may be formatted in bullet points. In addition, identify a few questions that you'd like to ask the Company A management team to assist in your diligence.

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- Company A is an online grocer that delivers freshly-prepared meals, prepackaged groceries, and other home goods to residents and businesses. The Company's selection includes a variety of kosher and organic foods as well as ready-bake meals - The Company is headquartered in Long Island City, NY where it services customers in the greater New York City area, Northern New Jersey, and Philadelphia - In 2013 , the Company serviced more than 100,000 active customers every 30 days, averaging 8,850 orders per day with an average order size of $131.35 - Company A's Operating Model: - Shorten time from farm to table - Company A sources from many local suppliers without the need for an intermediate distribution center - Maintain control over cold chain - Company A's refrigerated areas of its warehouse have much better controls than the varying environment of a distribution center and grocery store (e.g. strawberries can be kept near freezing temperatures, increasing shelf life and freshness) - Eliminate product waste and rework - by knowing what individual customers want, Company A can source appropriate inventory and prepare value-add foods daily - Control labor expenses - by maintaining a variable labor force driven through customized order tracking technology, Company A can control labor costs better than brick-and-mortar stores - Company A generated 36.6\% of revenue from the sale of perishables (produce, dairy, and frozen), 35.4% of revenue from dry goods, 25.1% of revenue from the sale of manufactured/value added foods (meat, seafood, prepared foods, etc.) and 2.8% of revenue from alcohol and other products - From 2009A-2013E, Management grew sales and EBITDA by CAGRs of 16.1% and 29.6%, respectively Commany Ginec Drofit Marain Rolativa tn Induetry Customer Ratinas Relative to Industrv Company A Product Mix Industry at a glance - Online grocery Industry is in the growth stage of its lifecycle with 2014-2018 industry Anticipated Compound Annual Sales Growth Rate vs. Inflation: 2012-2017 (Grocery and Consumabies) - External competition from brick-and-mortar grocery remains a threat - Consumers visit a store to purchase items needed right away, buy perishable items not available online, bypass delivery fees, and take advantage of loyalty programs. - Competitive pricing and product selection remain key for online grocers to compete - Online operators tend to locate in densely populated areas, which is not necessarily the case for brick-and-mortar retailers - Number of industry participants is expected to increase at an average rate of 4.8% per year to 2,196 through 2018, however, as the number of industry players increases, competition intensifies and barriers to entry become greater - Food prices are expected to increase 3% annually, but these increases have traditionally been passed along to consumers Growth drivers - Increased internet and mobile usage - Per capita disposable income increases - Unemployment rate expected to decline to 5.6% by 2018 (leads to decreasing leisure time) - Agricultural price index (when agro price index climbs, retail prices and industry revenue increase as well) - Company A is an online grocer that delivers freshly-prepared meals, prepackaged groceries, and other home goods to residents and businesses. The Company's selection includes a variety of kosher and organic foods as well as ready-bake meals - The Company is headquartered in Long Island City, NY where it services customers in the greater New York City area, Northern New Jersey, and Philadelphia - In 2013 , the Company serviced more than 100,000 active customers every 30 days, averaging 8,850 orders per day with an average order size of $131.35 - Company A's Operating Model: - Shorten time from farm to table - Company A sources from many local suppliers without the need for an intermediate distribution center - Maintain control over cold chain - Company A's refrigerated areas of its warehouse have much better controls than the varying environment of a distribution center and grocery store (e.g. strawberries can be kept near freezing temperatures, increasing shelf life and freshness) - Eliminate product waste and rework - by knowing what individual customers want, Company A can source appropriate inventory and prepare value-add foods daily - Control labor expenses - by maintaining a variable labor force driven through customized order tracking technology, Company A can control labor costs better than brick-and-mortar stores - Company A generated 36.6\% of revenue from the sale of perishables (produce, dairy, and frozen), 35.4% of revenue from dry goods, 25.1% of revenue from the sale of manufactured/value added foods (meat, seafood, prepared foods, etc.) and 2.8% of revenue from alcohol and other products - From 2009A-2013E, Management grew sales and EBITDA by CAGRs of 16.1% and 29.6%, respectively Commany Ginec Drofit Marain Rolativa tn Induetry Customer Ratinas Relative to Industrv Company A Product Mix Industry at a glance - Online grocery Industry is in the growth stage of its lifecycle with 2014-2018 industry Anticipated Compound Annual Sales Growth Rate vs. Inflation: 2012-2017 (Grocery and Consumabies) - External competition from brick-and-mortar grocery remains a threat - Consumers visit a store to purchase items needed right away, buy perishable items not available online, bypass delivery fees, and take advantage of loyalty programs. - Competitive pricing and product selection remain key for online grocers to compete - Online operators tend to locate in densely populated areas, which is not necessarily the case for brick-and-mortar retailers - Number of industry participants is expected to increase at an average rate of 4.8% per year to 2,196 through 2018, however, as the number of industry players increases, competition intensifies and barriers to entry become greater - Food prices are expected to increase 3% annually, but these increases have traditionally been passed along to consumers Growth drivers - Increased internet and mobile usage - Per capita disposable income increases - Unemployment rate expected to decline to 5.6% by 2018 (leads to decreasing leisure time) - Agricultural price index (when agro price index climbs, retail prices and industry revenue increase as well)