Webvan Case Analysis

575 Words3 Pages
40000 ­ Operations Management Assignment 7 Webvan 1. What are some of the advantages/disadvantages of traditional grocery stores vs. web grocery stores. What functions/costs must one absorb vs. the other? What operational functions and/or complexities must one perform vs. the other? Advantages of traditional grocery stores over web grocery stores: ● The logistics of fast delivery are hard to optimize. It’s hard enough to deliver goods to the home in one day or less but it’s much harder when those goods are perishable. ● Many people would not be comfortable with someone else picking out their produce to make for a big business. Traditional grocery stores allow the customer to choose their own produce. ● Some people enjoy picking out groceries for themselves. ● That means that any business getting into delivering groceries must put quality at the top of its priority list. ● The margins in the grocery business are very thin, which means that economies of scale are needed before profits can be realized. Also, delivery routes will have to be optimized for the same reason. Disadvantages of traditional grocery stores over web grocery stores: ● Brick and mortar stores tend to have higher set up costs and fixed costs than web grocery stores since items can be stacked more tightly in much larger distribution centers in web grocery stores ● Web grocery stores can have a much larger selection than traditional grocery stores. They can be made a one­stop shop for grocery shoppers. ● Traditional grocery stores cannot indulge in JIT produce offering. They have to ensure that a satisfactory quantity is available and in display at all times for potential customers who visit their stores. Web stores have a better opportunity to provide JIT delivery
Open Document