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Fresh Direct PESTEL, SWOT and Porter's Five

Paper Type: Free Essay Subject: Marketing
Wordcount: 3440 words Published: 16th Jan 2018

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Direct food is an online order taker for the delivery of fresh goods to their customers. They promise to provide delivery to their customers at very next day. They are operating in more than 48 states in U.S.A. in New York, they came with the saying “the new way to shop for food.” as they are providing online business, they do not have to pay for the rent for the land. the quality is obtained by SAP software. They are highly dealing on cleanliness, healthy and safety. they are meeting the highly customer quality demands.

The key for the success of Fresh Direct is the system efficiency. each department of the food, bring ingredients e.g. milk, beef, chicken from the shorter distance. they also sold restaurant worthy foods. its processing facility at Manhattan customer is its cost effective operational design. the delivery goes via refrigerated truck.

The minimum order should be of $50. it has $60 Million start up cost. they are hoping to turn on the daily profit. Fairway is the partner of the Fresh Direct. it is working on the basis of low price. then they have collaborated with Donaldson Lukfin & Jenrette. They are focusing on mergers and acquisitions. there is a constant change in management. they are changing after small periods.

They are hoping to capture 5% of the grocery market of New York. the company is working on the basis of low cost marketing strategy. they are working on the strategy of eliminating middlemen. they believe that customers would accept a limited package brand.

Fresh Direct food’s website provides a number of fresh foods as well as abundance of information. people in the city preferred to shop from here, as they do not have to carry the grocery with them. they ccan have all the items at their homes just after one click.



1- Political Factors

Fresh Direct’s performance is heavily influenced by political and legislative conditions in those countries, including the European Union (EU). For labor law, the government encourages retailers to offer a combination of employment opportunities for flexible jobs, lower wages and local basis a highly skilled, better paid and central. Fresh Direct believes that retail trade has a large impact on employment and the factors of people, being an inherently local industry and labor intensive.

2- Economical Factors

The international business continues to grow, the company remains highly dependent on the U.S.A market. Therefore, Fresh Direct would be seriously affected by a slowdown in the market for U.S.A

3- Social Factors

Current trends indicate that U.S customers have moved to the “single” and “bulk” purchases, which is due to social changes. Demographic changes such as aging factor, the increase of women employees and a decrease in preparing meals at home means that U.S.A retailers focuses on value-added products & services. Consumers are increasingly aware of health problems, and attitudes toward food are constantly changing.

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4- Technological Feature

The influenced that plays a major role towards development of many products from Fresh Direct. New technologies benefit both customers and company increases customer satisfaction as the assets are available, services can be more personalized and more convenient. The commercial launch of the Efficient Consumer Response, the initiative provided that change as this company is dealing with online services, it is necessary for the company to focus on latest technology.

5- Environmental Factors

main theme of society threatens food retailers has been the to act socially responsible. the government for sustainable to reduce waste, reduce resource consumption and minimize

6- Legislative Factors

Code of Practice should set out the prohibition of many current practices, such as requiring payments to suppliers and prices agreed retroactively change without notice.


1- Threat of New Entrants

it has a strong barrier to new firms to enter the grocery market. For example, it becomes quite, since the. Differentiation achieved by Fresh Direct and Ads in their aggressive tactics seen in operation in product development, promotional activities and a better distribution.

2- Bargaining Power of Suppliers

This strength represents the authority of the contractor that can be prejudiced by the major superstore manacles and the dread of bringing up the rear business to large supermarkets. Providers are vulnerable by the upward capability of huge merchant to starting place their foodstuffs from out of the country at subordinate prices. The affiliation with vendors may have similar effects on limiting strategic freedom to influence the company and their margins. The forces of bloodthirsty contention have condensed earnings margins for superstore cuffs and suppliers.

3- Bargaining Power of Customers

Porter’s theory that the products that become standard or undifferentiated, the lower the cost of change, and therefore, more power to the buyers pays Porter, M. (1980). On low prices, better choices, the constant stream of promotions in stores allows brands like Fresh Direct to manage and retain their customer base.

4- Threat of Substitutes

General replacement can decrease the command for meticulous manufactured goods, as there is a danger of clientele toggle to substitute. In the food industry this can be seen as a product-by-product or the replacement of the require and was additional destabilized by new-fangled tendency such as how diminutive convenience store chains are up-and-coming in the manufacturing. In this case, Fresh Direct, Ads and Sainsbury’s are annoying to get your hands on obtainable small-scale procedure and the opening of local towns and city centers.

5- Bargaining Power of Competitors

The food environment has knowledgeable momentous enlargement in the dimension and market ascendancy of the principal players, with better stores, increasing retail concentration and the use of a wide range of formats, now are the salient features of the sector. As declare higher than, the obtain power of the provisions engineering to put on the market is concentrated in the hands of a comparatively diminutive number of put up for sale bargain hunter. This highly competitive market has encouraged a rapid level of development, leading to a situation in which the U.S.A retail grocery had to be innovative to maintain and increase its market share.


It is essential to take into account the internal operational efficiency Fresh Direct in how to identify critical success factors of the company in the sector of food retailing.

1 – Brand and Reputation

Fresh Direct is a trademark and also serves as the central strategic advantage. manufactured goods expansion and overhaul development of the companionship have been re-engineered in order to smooth the progress of improved running of product living sequence and supplementary competent accomplishment of the full assortment of products to customers. Fresh Direct innovative ways to get better the purchaser shopping knowledge, as well as its labors to broaden your horizons the economics and indemnity have also capitalized on the physically powerful brand reputation.

2 – IT Integration

Fresh Direct’s operations have become necessities, not luxuries. Inventory control systems, keep all records of stocks and deliveries and analyze commerce communication are the salvation of the companionship. TI has grown beyond its traditional role in supporting and have acquired a central role in formulating business strategy. Extranet system used by the company, allowing Fresh Direct to use the Internet to create information flows proprietary and custom between the company and its business partners.

3 – Supplier Management

Fresh Direct, like many other supermarket companies, the sources of their products from foreign manufacturers are more competitive in price and volumes. As a most important merchant advertising miscellaneous manufactured goods range. As a result, it is the strategy of the company and the main focal point of the company have unique relationships with suppliers.




your Grocer is a first competitor of Fresh Direct. it was developed on the strategy of bulk-buying. it offers a limit advantage that you can only purchase in the form of bulk. delivery is done in different time slots according to the location of the customers.


peapod is a strong competitor of Fresh Direct.in many metropolian areas, Peapod provides online delivery and shopping services. it was founded in 1989 by two brothers Andrew and Thomas Parkinson. it has grown to be one of leading America’s Internet grocers. Peapod somewhat owns subsidiary of international food provider Royal Ahold, and also works in collaboration with Ahold USA supermarket companies which includes Stop & Shop and Giant Food.

in 2007, it started to provide online shopping to its customers. it had a central distribution model in every market.


it was founded in 1996, and it says it is the first super market which provides non perishable goods to its customers. it is very difficult to find non perishable goods in the market. it serves in 48 states of the U.S.A markets. its customers are busy families and urban dwellers. it works 24 hours a day. and directly provide goods at their homes.

Other Challenges

the most new threat is that Amazon.com has also entered in the field of dry goods delivery. it has threatened all other online super retails. however, it would also be difficult for the Amazon to compete in this giant market. as they might have problem of grocery delivery failure.


The company’s main objective is to recognize that competition between companies is as much a race for the competition as it is for the marketplace situation and souk authority. Consequently, the purpose for the organization of Fresh Direct is to focus on competencies that really affect competitive advantage.

Competition leads to levels of performance of an activity or process that is much better than their competitors. Benchmarking can help to understand the presentation principles and what comprise high-quality or appalling presentation. On the other hand, Fresh Direct will be crucial to look at the type level.

Through a long period of operations, Fresh Direct’s core competencies have to be fixed. Fresh Direct has to adapt to the rapidly changing new circumstances and opportunities, so that their basic skills determination encompass to adapt and change. The example was when the company launched its loyalty card and went to the bench.


1 – Strengths

It is working in 48 states of U.S.A. This has led to its brand and financial strength to become strengths in themselves. This has led to many more shops under construction in the country and abroad, leading to geographical force. The introduction of Fresh Direct Express and Fresh Direct metro led to show strength in flexibility. they have a heavy brand reputation.

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2- Weaknesses

SWOT analysis of Fresh Direct is bound to reveal some shortcomings. One example of many, is the amount of fossil fuel used in its transportation network. With rising oil prices, Fresh Direct has to keep a close watch on transport costs. Another weakness comes from the dependence on market Fresh Direct supermarkets in the U.S.A. Therefore, it is increasing its foreign media and the sale of other assets. it has not a consistent C.E.O. which may be danger for the company success.

3- Opportunities

Major new opportunities for Fresh Direct, like all businesses, is in the online arena, and a SWOT analysis of Fresh Direct should focus on this field. Fresh Direct has already had much success online, having become the Amazon threat into an opportunity by selling books at less prices. Fresh Direct, the biggest problem in search of opportunity is possible to decide exactly which ones to followthey can also operate in other countries, as well as Asian ountries. another opportunity may be diversity of the product.

4- Threats

Possible threats to Fresh Direct include fluctuations in the stock market and tax increases. Most companies are concerned about taxes, and have a goal of reducing the tax burden. But probably the biggest threat is the innovation of supermarkets, including YourGrocer, NetGrocer and Peapod etc. there may be an increase in the number of customers.


Generic strategies are characterized by the response of an individual retail industry structure. For a retail giant such as Fresh Direct, to obtain a sustainable competitive advantage must go after moreover one of three general strategies, urbanized by Porter.

This strategy is based on Fresh Direct’s costs so well that they can have a significant competitive advantage.

If Fresh Direct uses another strategy of differentiation, products with unique features that customers value. Fresh Direct will be able to build brand loyalty of their offers, and therefore, lack of elasticity of prices by buyers.

The last strategy approach may be a cost leadership or differentiation strategy address a narrow market, centered. To perform a cost leadership strategy focuses Fresh Direct to create internal efficiencies that will help them to resist external pressures. Therefore, it seems reasonable to think that Fresh Direct have frequent interactions with governmental and regulatory and environmental supplier. According to this framework, Fresh Direct can also choose to limit their products to the market in general, therefore remain a focus strategy or niche. Fresh Direct is following a move toward of cost management or demarcation, what’s more in a specific marketplace or specific products. The danger of some against the association is annoying to do each and every one three and become what is known as caught in the middle. In the case of Fresh Direct is not suitable, since it has a clear commerce approach with a clearly defined market segment.

Product Development: Diversification

Changes in the business environment can create a demand for new products and services to the detriment of the benefit. An scoff matrix also suggests that if you expand new foodstuffs for existing markets, then a manufactured goods expansion approach has to be well thought-out by the stage of management a production. In mounting and diversifying the product mix of Fresh Direct, is also crucial to the internal development when developing new products. The nature and quantity of diversification should also be well thought-out in family member to the explanation of company approach and portfolio diversity. Following the changing needs of Fresh Direct customers can bring in new-fangled manufactured goods appearance. This may necessitate supplementary concentration to R & D, consequential in supplementary expenditure.

The put on the market manufacturing is understanding overcapacity and ground-breaking products and services is the greatest competitive advantage. Therefore, innovation has to be the main driver of product development for Fresh Direct. For example, Fresh Direct can build up a collection of dissimilar store arrangement in the U.S.A, each intended to make available a dissimilar shopping knowledge. While most of Eastern Europe and outlets in the Far East are hypermarkets, Fresh Direct can also develop different types of stores in these markets. This value added by the uniqueness Fresh Direct eventually lead to a price premium. The organization of technical modernism is all the time more involved in tactical conclusion manufacture. Fresh Direct has to take advantage of its strengths and diminish its inside weak spot in order to achieve a sustained competitive advantage.


Frameworks and tools for structuring the strategy are key to evaluating the commerce circumstances. The risk and worth trade-offs are completed unambiguous, resulting in tangible proposals to add value and reduce risk. Explicit action plans, including the need to plan to be developed by Fresh Direct as the strategic alternative.

Generic strategies discussed above, Fresh Direct is likely to employ two strategic options are also likely to be primary targets of the market to focus on market development through partnerships and diversification through the development of new products.

Marketplace approach development, combined expansion and strategic alliances

When toward the inside new marketplace such as China and Japan can hand out as a key driver of revenue growth and company expansion strategy. Fresh Direct interests in Japan is likely to grow in time, as markets in Asia are showing increased consumer spending and a greater tendency to retail. This new-fangled market are also demographically far above the ground occasion markets.

In the case of Fresh Direct, one of the strategic options suggested in international partnerships with local retailers in the Asian markets. Be well thought-out as a method of expansion and can be taught to take advantage of existing possessions and competition. By entering into joint ventures or alliances, in order to achieve greater economies of scale and market presence, Fresh Direct will be based on local knowledge and extensive experience of running the family, while adding together its own succession supply, item for consumption progress and operation skills to make available better accumulate shopping understanding to clients. On the other hand, prearranged the mammoth impending weighing machine and complication of these markets, may experience that Fresh Direct is the most important delivery service is not necessarily an advantage. The success of the partnership fall under three most important accomplishment criteria: sustainability, satisfactoriness and probability. Sustainability refers to whether a approach speak to the circumstances underneath which the companionship is in commission. This is the judgment of this expansion approach of market development. Suitability is connected to the expected benefits of the strategy, the level of risk and the possible reaction of stakeholders. Roads will be well thought-out if Fresh Direct has the possessions and cleverness to execute the approach.


The success of Fresh Direct shows how service delivery and effective brand can come to go beyond the splash of a emblem on a announcement. It had promoted commanding individuality by making their perception into a disease retiling and the spending on civilization outs from side to side various channels: educational support, supporting argument, and the customer experience and product additional room.

In a altering commerce surroundings, with the weight of high-end participant Fresh Direct have to assume new-fangled approach for development or diversification of to be had ones in order to continue its principal market position in a marketplace of retail by now in place. The companionship must regularly adapt to speedily changing circumstances. strategy formulation, therefore, be regarded as a continuous learning process, which includes learning about the objectives, the consequence of promising proceedings towards these goals and how to put into practice and put into effect these actions. The excellence of a put together strategy and momentum of its implementation thus directly dependent on the quality of cognitive and behavioral learning processes Fresh Direct.

In large organizations like Fresh Direct strategy must be analyzed and applied at various levels within the hierarchy. These dissimilar levels of approach should be connected and reciprocally compassionate. Fresh Direct’s approach at the corporate level defines the business in which Fresh Direct will struggle, in a way that focus possessions to exchange the antagonism at a dissimilar bloodthirsty benefit.


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