strategic and economic analysis of e-grocery system in tesco and sainsbury

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Strategic and Economic Analysis of E-Grocery System in Tesco and Sainsbury


Online shopping and home delivery systems become most famous in recent decades. Online grocers have been testing various business models with altering results. This research study is carried out in two main grocers of the UK (Tesco and Sainsbury). This research study conducted Case study and historical data, and meta-analysis to identify current strategies and business models of e-grocery which contributed to their success. Both companies’ management styles, expansions strategy, market selections strategy, order-processing and picking methods, home delivery methods, website design and different strategies for customer relationship management are explored and evidenced the successful factors. The findings reveal that online grocery knowledge and experience in grocery business play a significant role in E-grocery success. Using slow and steady expansion with careful investment helps online grocers to stay in game. The In-store picking method is more profitable and suitable for e-grocery business. Understanding customers, wants and needs will provide tremendous opportunity for business expansion.

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This chapter provides general background, problem statement, purpose of study, research objectives, major research questions and structure of dissertation.

1.2. General background:-

From many decades many groceries and also many manufacturing companies are providing delivery services to customers. Home delivery of household goods is not a recent concept in grocery retailing sector. However, until 1990s e-grocery was not potentially recognisable business channel, when grocers introduced internet based online ordering facility it revolutionised whole grocery industry (Papiernik, 2000).

Nowadays, not only pure-play industries offer e-grocery services but also many more supermarkets offering e-grocery service. E-grocery’s continuous and fast growth is capturing market share from traditional retailers. Many of grocers have tried online unit and some of them are successful and some of them have failed in the history of grocery retail sector. For example, online grocery business is judged to show sales figure. The estimation shows that, about 0.3% to 0.7% of total sales in UK and 0.2% of sales in USA. (Kumar, 2001). The e-grocery market value is estimated at €450 to €1,000 million and $900 million in United States.

1.3. Problem statement:-

On one hand, many customers are interested to do online shopping for their household goods, but yet they are not interest to abandon shopping in-store in traditional way. Most of the people still believed that, online shopping is too expensive. On the other hand, many more industries also have made their effort to build online stores by providing this extra service to the customers. Organisations are continuously striving hard to build different strategic approaches for fulfilment of orders in profitable way. However,

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