Problem/ Solution Statement
There is competition among Freshippo, unattended convenience stores and unattended shelves and the Amazon Go, the technology-driven new retailers in the new retail industry. The retailers had appeared in Chinese and U.S markets where they could do their businesses. An innovative initiative like ‘Daily Fresh’ and Hexioama assist Freshippo to be the influential player with strong bargaining power that exists in the value chain in the new retail industry.
Situational Analysis
Freshippo started a grocery store in china in 2016, and by 2018, it had opened 46 stores in the 13 cities in the country. The customers were only doing the shopping between supermarkets and e- eCommerce platforms. When the Freshippo grocery started, customers had varied choices, where the customers could do grocery shopping and get freshly cooked food in the store (Sorescu, 2017). The customers had chances to book for the food to be delivered at their homes through scanning codes in Freshippo app if they didn’t want to eat at the store. The Freshippo app could also allow customers to place orders online and make payments.
The Freshippo business model innovation uses mobile internet, cloud computing and artificial intelligence, which plays an essential role in the business. Mobile internet made Freshippo interact more with customers, product location, and stores anytime online or offline. Cloud computing assisted Freshippo to make a business operation system within Ali cloud. Artificial intelligence and big data made Freshippo come up with sets of unified standards for online and offline retailing systems such as membership, product prices, accounting procedures, marketing channels, and inventory.
Freshippo started its business by selling fresh produce, in-store catering and online retail. Customers are supposed to shop online through a downloaded Freshippo app linked to Alipay and get the service within 30 minutes, which is within a three-kilometre radius. Freshippo had Alibaba’s extensive data analysis, leading to a top-level design that could identify the key performance indicators according to the business model. Online transactions become more than offline transactions; each store generated more than 5000 orders online per day (Sorescu, 2017). The Freshippo app gave services without aid from other online traffic, and stores offered 30-minute service under logistics cost.
Freshippo employed white-collar workers to operate Alipay to reach its targeted customers through the Freshippo app. Many customers get attracted by the cleanliness of Freshippo stores and seafood. Customers consumed goods in large quantities and spread the news about the Freshippo business, which led to F2 (Fast and Fresh) convenience stores, Hexiaoma stores, and Freshippo cloud supermarket. The F2 started when the Freshippo noticed pain points at lunch and breakfast offices of the workers, time wastage in the queues, food hygiene concerns and F2 provided lunch, breakfast and afternoon tea for workers.
Problem Analysis/Basis Recommendation
The problems Freshippo business faced in the previous development are well addressed through data and innovation in technology. Freshippo created the company with various data-driven core capabilities such as personalized marketing, data-driven site selection, supply chain management and online traffic. According to Alipay data profiles, Freshippo selected a location accessible to most of its customers. The online traffic helped the customers shop online using Freshippo app that enables the customers to make payments in offline stores, scan products barcodes online and place an order for delivery at homes. The customers could also scan products in the store and pay through the app, reducing waiting time in the queue.
The Freshippo used the app in marketing to different customers according the data profile in the Alipay based on the needs and interests of customers. It had a supply chain management which included procurement – warehousing and logistics to distribution well managed with technologies. The supply chain management systems was in Alibaba cloud platforms purposely for digital management over marketing, chain supply, goods, transactions and store operations. The Freshippo used the app in marketing to different customers according to the Alipay data profile based on customers’ needs and interests (Sorescu, 2017). It had a supply chain management which included procurement – warehousing and logistics to distribution well managed with technologies. The supply chain management systems were in Alibaba cloud platforms purposely for digital control over marketing, supply, goods, transactions and store operations.
Recommendation
Freshippo business made procurement plans and product selections for every store and allocated the stock based on the data collected from Alibaba and its customers. The Freshippo selection capability improved continuously as the business continued providing goods and services to customers. After the company opened the stores, it tracked the sales to establish the products needed mainly through customers in the market. The company decided on the quantity and frequency in which the products flow based on the customer’s preferences and interests. Freshippo studied the products’ purchase frequency and ordering ability through its app for better services to the customers.
Freshippo sold produce from private farms and third parties to its customers. It buys the produce direct from domestic or overseas production or gets them from their local farms. The company had sound systems such as Wi-Fi cameras, GPs, temperature sensors to monitor and keep the products fresh (Sorescu, 2017). The Fresippo practices the following operations: warehouse management, operations in-store, fulfilment of the orders, logistics, and distribution to ensure better services to customers. They help the company deliver quality services and goods to customers at the required time.
There is an inspection of products, products standardization, and live seafood farming in the warehouse. The ‘Daily Fresh’ goods are received directly from the farms or in bulk by trucks from the suppliers in the store warehouse. Freshippo uses electronic shelf labels and products barcodes in unifying prices and managing inventory systems. In-store there is receiving of goods, shelving, order picking, packaging and distribution. Freshippo has system control that picks and makes sure the orders get delivered to the customers at the expected time. It uses the required systems and follows the set logistics in distributing the products to the customers.
Action Steps
The Freshippo business leverages better-emerging technologies to become competitive in the 5G era. The company will realize many data sources with the 5G era, and many business opportunities will develop. The company think of reinforcement to its online and offline channels. The intense media will help Freshippo increase bargaining and pricing power within the value chain (Sorescu, 2017). The integration of online and offline channels leads to market expansion and brings more bargaining power to suppliers.
The Freshippo will control large markets by building more private labels based on the data sources and applying the emerging technologies. The strategy helps Freshippo increases the pricing power by looking at the attributes of the products. Cloud computing allows Freshippo to access infrastructure and software required through mobile internet to attain services in the business. The new technologies lead the company to have data collection, data security, data analysis results display and storage for better motoring of the activities taking place in the business.
Reference
Sorescu, A. (2017). Data-driven business model innovation. Journal of product innovation Management, 34(5), 691-696. Web.