Yummy delivers groceries Case

Solution
QUESTION-1

Provide a summary of the Yummy 77’s business strategy. What does it aim to provide to the
customers? How does it differentiate itself from the competition, including both traditional
grocery stores and others operating in the quick delivery space?
Yummy77 was founded with the aim to help office workers prepare warm, delicious meals for their
families at a touch of their fingers. The goal of the founder is to provide convenience, freshness, and
value for average people. Furthermore, their business model is to deliver the products within one hour.
They differentiate themselves by doing fresh groceries, nonstandard items, or agricultural items because
none of their competitors are doing this. They focus on doing standard merchandising, like cell phones
and televisions, with mass quantities at factory standard quality. Furthermore, they focus on the imported
foods and premium food from the United States or Peru, Zespri Kiwi from New Zealand and avocados
from Mexico high-end fruit which these customers.
They also avoid the brokers, forwarders, and other intermediaries that inflate the price of this products at
other retailers. Looking at the lower prices, customers then bought much more, and also attracted
growing middle-class people.
Furthermore, online ordering and delivery of the products highly affected the traditional grocery stores
throughout the China. The reason for this is because the customers are moving towards online shopping
rather than buying online. Furthermore, international grocers are also facing serious challenges. The
French grosser opened eleven supermarkets in 2014, but closed its eight supermarkets.
QUESTION-2

Explain and evaluate the initial operations strategy (May 2013-june 14) in its aim to support the
business strategy. What were the strengths and weakness of the strategy?
Yummy 77 buy directly from the suppliers to reduce the cost and give competitive prices to its customers
focus on the premium items.
The delivery is a three step process, however it is dependent on a single central warehouse. This results
in some complaints from the Chinese customers. They want to buy live fish and shrimp as seeing the
creatures still alive confirms their health and freshness. A ten-kilometer journey from the delivery station
to a customers’ location might be too long for seafood to survive in a bag.
Furthermore, the company’s initial service provides 24 hours delivery for orders placed by 4 pm. The
deliveries were scheduled four-hour windows from 9 to 6 each day and for deliveries in Shanghai, Yummy
77 also offered late hours option 6pm to 9pm for an additional fee of 5 Yuan. Currently, the company
charges small delivery charge of 10 Yuan, though orders of 99 Yuan waived the delivery fees.
QUESTION-3

In summer 2014 the operations changes. Why did it change and how did the subsequent strategy
(from June 2014) aim to support the business strategy? What are the strength and weakness of
the revised strategy?
Due to many complaints from the customers, Yummy77 expanded to major cities of the China as well as
it made a contract out to Shunfeng, a shipping, and logistic company. This all will result in quick delivery
to the customers.
Furthermore, the revised business model includeing customers online orders would be fulfilled from
inventory in the nearest store, then delivered by the scooter by a yummy77 staff person. This will result in
reducing the delivery distance as well as the customers would have to wait for items to arrive.
Furthermore, in order to increase the sales of the company, they realized that the logistic infrastructure
could serve not just consumers, but also businesses and restaurants. From June 2015, the company
began to pursue commercial sales.
The company knows that its major customers are aged 20 to 40, and they are familiar with the internet,
therefore in order toto further encourage online orders, Yummy77 offered rewards points for the ordering
online, yielding discounts on future purchases, which resulted in increasing the sales of the company and
ultimately, the profitability.

QUESTION-4
Many companies have tried and failed at online grocery ordering and delivery. Is there grounds to
think Yummy 77 will fare more favorable? Why? What in the market or environment in Shanghai
may lead to a better outcome?
Many companies tried to enter the online grocery but failed to survive, the reason behind the failure is that
the companies failed to fulfill the customers’ desires. The customers wanted that the items should be
fresh and delivery should be quick together with competitive market prices.
This news was a good news for Yummy77, because if the competitors would be out of the market then
Yummy77 will gain large market share. Ultimately, large market share will increase the profitability of the
company………………………
Problems identified

1. Focusing on various products

2. Import of costly fruits

3. More cost of logistics services

4. No tracking system

5. No estimation regarding time

6. Highly focused on office people

7. Long distance delivery

8. Improper management when order exceed 100 day

9. No attractive offer.

Problem 1

Focusing on various products: Yummy77 focusing on 2000+ products which is good but at the same time
the distribution of those product are very difficult and burdensome for them and they could managed it
properly. On other hand competitor providing same services but product are limited so they can focus
on highly demanded products.

Solution 1
The yummy 77 has there centralized warehouse in shangahai and the crowd handling from that single
ware house would very difficult . so in order to reach last mile customer very rapid they to crete small
ware houses in the vicinity to the centralized warehouse .also the traffic issue is very much high so they
can use more scooter in that area to make their reach efficient. And they can also split popular reason
into two small delivery station
Problem 2
Import of costly fruits: For vip nd special people intrest yummy77 import the different fruit from foreign
country which are very expensive like cherrie impoted from the United states or peru, Zespri Kiwi
from new Zealand and avocados from Mexico on which yummy77 earned very low profit and
they do it just because thet want to catch high class people.

Solution 2
The reason behind the import of the cheery and other fruits to catch high class people and the
rate of upper middle classs are increased day by day in china . so they focus on long term profit
vision although they are facing problems at start because they earn low profit their.

Problem 3
More cost of logistics service: for Highly perishable food in which care shoude be more thaken by
company for that they have to depend on Shunfen(SF) compay for logistic and then chaeged very high
price for services like $12 for 2 pound of steak which is out of budget for yumy77. Apart from that
yummy initially charged general delivery charge is $5, in shangai they deliverd food between 6 to 9 pm
and chareded 1$ extra for delivery, For small ordered they charged $1.62 and depend on order it goes
upto $16 max. As compare to competitor this charges little high.
Solutions 3
Despite of a widely- publicized $20 million investment from the Amazon the yummy 77 cannot enter
into a price war with the competitor because they a back up and well funded by the company like
alibaba and tencent . so in order to compete with its competitor yummy77 it start opening retails’ with
approximately in 3000 sq ft . and there they can stock most frequently purchase items .typically about
2500 item (SKUs ) per store. And there after they can charge little marginal prices near by their
competitor in that location

Problem 4
No tracking system: There is no trackin or any other facilities provide by yummy77 to rack the order by
customer. Due to that some time they deliverd the order at place but there is nobody to receive thet
order. Customer do not know when will they get order or at what time they get will get order.
No estimation regrading time: without tracking system customer can not knoe about the specific time
at which they will get delivery. They should be price in the point of time because every customer has
different work and free time slots.
Solution

Problem 5
Highly focused on one group: This company start for delivering vegetables, fruits and other foods to 9 to
5 working people or office people. Which is niche segment and all the competitors are targeting it. It’s
better for company to target other segment also to cover the marget and eran more revenue because
targeting only one segment does work for long means there is less changes for long term survivment.

Solution

Problem 6
Delivery area is more: Yummy has one central ware house, 30 delivery station and each cover 10 km
diameter area. For perishable food like meat, fish and some very fresh veggis this distance is very more
and sometime one van cound not delivery all the products withing one hour. Scooter deliveries are fast
but they can carry very stock with them.
Managing problems: Many time in store or delivery station they have 100+ order in specific are which is
far more than regular number of order at same time few people of staff could not manage the all the
thing and some time it is chaos for them so. Company should delevop new system to handle such
situaltion.
Solution

As they have the centralized warehouse system. so they further reinvented their model and make tie up
with small vendor who are experts in several category of product and they will also give heavy discount
to yummy77 because they take in bulk and routine wise . so in order to manage the scarcity of
employee and minimize the chaos they delivery through local vendors also . and this system helps them
to reach the customer in timely manner
Problem 7
Lack of innovation in delivery system: They are providing delivery in traditional anner. As there are n no
of competitors in market n all provide of same kind of delivery . it is very hard for yummy 77 to do
something new in market to attract the customers. Every one in market provide some unic kind of
servies so it’s pressure of yummy77 to give some imprssive facilities in logistics services.
Solution
Most of the customer of yummy77 are of age between 22 to 40 and all of them are aware of e-
commerce and computer . They must to focuses on ecommerce and using the technology in their
delivery system like GPRS which make their system efficient and timely in manner . and by making thse
changes they can new customer market for their product

Problem 8
Reach to Untaaped region: they only covoerd Shangai and near city of it but for business point of view if
any company want to more revenue they shoud expand their business to other area due to insufficient
of funds they are unable to expand thiers business in short time.
Solution
They is a untapped market in other area of china and yummy77 wants to captured that un tapped
region by opening 125 store there by $150 million investment. and the volume of placing order is
continuously growing and this could be the beneficial approach keep in mind of long term approach by
opening at least 75 store nearby shanghai by summer 2016