It is the Information knowledge that initiates novelty which then paves the way to success for any business (BusinessVibes, 2015). FreshDirect emphasizes the importance of information expertise and business intelligence in the world of today and how the efficient adoption of these components fueled the success of a once flailing startup, FreshDirect into the success story it is today. Having started off in 1999, the company was fast going towards bankruptcy due to its small internal control procedures and inability to tie down customers. However, the CEO turnover in 2008 transformed the fortunes of FreshDirect as he focused on improving its control processes via the implementation of information on a wide scale basis and stressed the importance of a loyal customer base. It was the inclusion of the SAP as an ERP for the company that helped the company get hold of unlimited data that could then be used to generate a report which was useful for the managers. Through a proper ERP system in place, the company got hold of data that was well synchronized and provided with all the relevant information.
Before the CEO turnover, the company had major issues which needed resolving. For one, they were using the strategy of cost leadership rather than product differentiation, which was simply not working. Nothing was going according to plan; deliveries were late, internal processes were weak, logistics were undefined, and customer relationship management was poor. Ultimately, the company was spending more than it was earning. The change of CEO in 2008 was a turning point for FreshDirect as Braddock undertook the efficient implementation of information technology in revolutionizing the company’s internal processes, supply chain and build a loyal customer base. It was through changed policies that the company got hold of the problem areas, before the automation it was hard to spot the glitches, through the implementation of an ERP every order was easily tracked with each detail mentioned specifically.
Braddock’s revolution at FreshDirect started with a half of all promotional offers and focusing on customer loyalty through service. He then went on to implement a tracking system which enabled the smooth functioning of the logistics chain. The website was customized to enhance the online customer experience, targeting their needs and wants and improving customer loyalty. Under the stewardship of Braddock, the company implemented SAP (an enterprise resource planning tool) used by retail giants such as Unilever which created a link between the business’s processes, departments and enabled a smooth day to day functioning of the company. The final piece in the jigsaw saw Braddock implementing a supply chain process that saw the company deal directly with manufacturers and producers rather than having to deal with distributors and other competition (Laudon & Laudon, 2014).
The biggest impact of SAP was on employees, specifically those that were involved in operations. Because of the immediate availability of information, the operators were able to handle the customers efficiently and provide them with relevant information regarding the product and delivery. Some questions that could be asked is why he was adamant to stop all promotions and completely ignore new customers. Also, the fact that FreshDirect does not offer both a physical retail presence and online retail presence compared to some of its principal competitors might prove to be a stumbling block towards their long term objectives. Another major problem the company faces is changing the mindset of the people who prefer to shop their groceries in a physical domain rather than do it online. To target a larger customer base, I believe they should focus on promotions and emphasize on their USP of convenience and quality.
It ‘s hard to argue with the revolution brought about by Braddock since his appointment in 2008 which lead to FreshDirect being profitable for the first time since they started off in 1999. His mantra of customer relationship building achieved significantly through the implementation of a state of the art IT infrastructure bore its fruits with 65% of their customer base being repeat customers contributing to 80% of their sales revenue. However, a different course of action would have been to implement the system and still focus on the promotional offers and new customer acquisition. It is through these actions that a brand image is built and sustained. It is not only the excellent service but the voicing of that service which makes it more prominent in the market.
In the future, FreshDirect, depending on their profitability and success could work on a long term objective of developing a physical retail presence to compete with major competitors who have a dual presence such as Aldi, Costco, and Walmart.
BusinessVibes . (2015). The Importance of Information Technology In Business Today. Business 2 Community .
Laudon, K. C., & Laudon, J. P. (2014). Enhancing Decision Making. In Management Information Systems 14e.