Question 2: Problem 5-29 (Pg.211)
Eric Andrews has been investigating the possibility of starting a service that will partner
with grocery stores to provide a delivery service for their customers. The idea is that after
purchasing their groceries, customers could go to a kiosk in the store, pay a small fee, and
have their groceries delivered to their homes within 60 minutes. Which of the five forces in
Porter’s five forces model do you anticipate will most strongly affect Eric’s potential
business and why?
In my opinion, the forces that will most strongly affect Eric’s potential business is the rivalry
among the existing firms. The business model of Eric’s potential business actually has already
been implemented widely in not just the US but also in Malaysia. In the US, we have some big
player already dominating the market share such as
●Amazon Fresh
●Walmart+ /Walmart Grocery
●InstaCart
●FreshDirect
●Amazon Prime Now
In Malaysia as well, we have
●GrabMart
●PandaMart
●Tesco Online
●Jaya Grocer
●Happy Fresh
Not just that, the existing firms offer a more attractive alternative than Eric’s. The selling point of
Eric’s grocery delivery service is the short delivery duration within 60 minutes. However, unlike
other alternatives which the purchasing process could be easily completed on their respective
e-commerce platform while Eric’s services require the customers to go to a kiosk in a physical
store. The customer then will need to return home within an hour to answer for the delivery if no
one else is home. This does not offer a more convenient grocery shopping experience. Some
existing companies offer exclusive promotions on the products only when the customers
purchase the groceries on the online platform. They do not even go to the physical stores and
online purchasing could get lower prices than physical shopping. Also, they could arrange the
delivery time as soon as possible or a few hours later when they are available.
Besides, the competition among these companies has already developed into a promotion-price
war that will greatly impact new players such as Eric’s company. They could not afford to lower
the profit margin at the beginning of their business as expenses and costs for initial startup and
marketing/publicity are required. So, even if they only charge the customer a small fee, it is
unlikely the fee could be much lower than its competitors. Some companies are even able to
