Technology of the Week: Ordering your food online: Jumbo pick-up points and HelloFresh
In the 20th century, during the internet bubble, there was a lot of doubt about the role of the internet. People had the idea that brick and mortar locations would become less and less important. Nowadays people buy their groceries online which makes it much faster. An important question to ask ourselves should be, if this new formula for the food market could be successful?
In the Netherlands, the electronic food market is quite innovative. This blogpost focuses on the business models of two innovative firms; Jumbo e-commerce (Pick Up points) and Hello Fresh. Jumbo pick-up points are chosen instead of AH online ordering, due to the successful profit formula Jumbo uses and their market leadership with pick-up points.
Jumbo Pick-up Points
Jumbo, founded in 1921, is a supermarket chain operating in the Netherlands with over 500 stores and is currently the second largest supermarket chain in the Netherlands with a 20.6% market share as of 2014. Since 2014, Jumbo started operating online with several options within its innovative model. First of all, people can choose to pick it up at ‘Walk-in Pick Up point’ in local stores, avoiding queues. Secondly, Jumbo introduced the drive-through at several stores. Lastly, Jumbo created ‘Solo Pick Up point’ for customers who travel a lot by car. Jumbo uses their success formula for every physical and now digital store(s):
Best service + Biggest assortment x lowest prices = Jumbo.
HelloFresh was founded in 2011 in Germany by two guys looking to stir up the way people purchase and prepare their meals. Their idea involves people visiting the HelloFresh website where they can order healthy and simple meals of their choice from numerous different recipes. Currently, HelloFresh serves 4 million meals per month, spread over 7 countries. The revenue model that HelloFresh employs is a relatively simple one that is subscription based.
The first similarity between the two business models is defined by their incentive; both make it more convenient for the customer to buy their groceries. Secondly the market opportunities, HelloFresh and Jumbo operate both in the electronic food market, which is expected to grow to a 5% share of the total food market by 2015 and 20% by 2020. Jumbo is currently the market leader in pick-up points which gives them an advantage. On the other hand, HelloFresh boosted themselves with aggressive marketing tactics, which gave them a positive brand name.
Both Jumbo and HelloFresh operate in the e-grocery market, but via different business models. Although Jumbo was not the first to enter this market, they have established themselves well by being market leader in pick-up points. HelloFresh, is also an innovative concept, but easy to copy. They will have fierce competition, and will need to overcome this by having a sound strategy. It will be interesting to see how these companies will operate in the future and what innovations they will make.
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Daan van Amelsvoort – 370068
Daan van der Vleuten – 437197
Stefan Bouts – 440300
Rick Vrouwenvelder – 419282
Bram van der Doelen – 374642