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Chapter 3. Ownership Issues

Chapter 3. Ownership Issues

E-centric Structures + Content = Success

It is clear from examining the history of e-commerce strategy that many organizations have had excellent conceptual strategies that have derailed in their execution. One area where this has happened is online grocery delivery. Many organizations have attempted to go online in this space. After all, the demographics look wonderful—baby boomers with a taste for luxury are online but, due to their lifestyle, do not have the time to shop for groceries. Fine in theory, difficult in execution. The business models that have been applied to this problem are numerous and nearly all fraught with problems. Information Neighborhood, a start-up out of Tampa, Florida, initially had a strong relationship with Publix, the seventh-largest supermarket in volume in the United States. However, Information Neighborhood failed to recognize that the demographic profile of its target community lacked the Internet user base required to establish a profitable business. Not giving up, however, it moved its operation to New Jersey where the local supermarket chain with which it partnered failed to provide adequate marketing support, and Information Neighborhood folded.[1] Others such as NetGrocer at the outset did not appreciate the razor-thin margins of the food industry; it carried too large an overhead and was eventually forced to restructure its operations and make severe job cuts. Other business models had problems in the execution. For example, customers had to pay a delivery fee; online grocers were unable to service the complete list of requirements for the customer, in the sizes they required; there was a lack of secure refrigerated storage for deliveries; deliveries to apartment buildings were problematic.

[1] Dale Buss, "Damaged Goods," Business 2.0, April 1999.

The existing business models that worked for home delivery of other products such as bottled mineral water simply did not work for the online grocery business. The problem is not in conceptualizing a Net-based grocer's business. The problem is in the execution. In considering the failure to execute effectively, it becomes clear that the problem lies in bringing to bear Web-based experience on each of the value chain activities (see Table 3.1).

Table 3.1. Value Chain Activities
Primary Value Chain ActivitiesSecondary Value Chain Activities
Inbound logisticsInfrastructure
Manufacturing or productionResearch and development
Outbound logisticsProcurement
SalesHuman resource management



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