Ocado Essay

2775 Words Sep 3rd, 2012 12 Pages
1. As a customer, what do you want from an online grocery store? How does consumers’ behaviour differ when shopping for groceries on-line vs. off-line? What are the implications of these differences on the operations of an on-line vs. off-line store? 2. Ocado delivers from a central warehouse straight to the customer, while Tesco uses its existing stores to deliver to nearby customers. What are the pros and cons of each model? Which is a better business model to serve the UK market? Why?

Consumers demonstrate different behaviors when shopping online and offline. These differences affect not only the strategy but also how that strategy is finally implemented from an operationally. Because the experiences considered online and offline
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Online, it is up to the provider. Thus, they must be sure to properly manage their stock, being sure to mind expiration dates and salvage values. Operationally from an online retailer there is a lot more responsibility in choosing and matching the product selected online by the customer with the product delivered.

Cost:

Second only to convenience, is cost in decision making for the consumer. Since all the locations and prices are just a click away, customers can take advantage of price comparison and choose accordingly. This means, that the online retailers need to be particularly savvy relative to competitors, not only on pricing their products but also on delivery costs. They must be quite sure to charge not more for delivery than other online sites go, whilst at the same time making a profit after all the transportation fees. Again, although stores are in a sort of competition with others, they have the luxury of location and being able to charge more based on their convenience. Transportation efficiency becomes one of the cornerstones of the operation for the online retailer.

When considering cost, it is important to note that the shopping habits of an online consumer are different from those of a customer in a store. The online consumer is less likely to waste money on impulse buying. Thus, the online retailer needs to somehow convince the consumer to subconsciously add a bit more to the “cart” when possible. Physical stores take

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