Case Study Report
FreshDirect is a grocery shopping and delivery service operating out of their headquarters in Long Island City, Queens. They offer delivery services to over 300 zip codes in Manhattan, Brooklyn, New Jersey, and many parts of Connecticut. FreshDirect also has a pickup service at its Long Island location. The company was launched by Joseph Fedele and Jason Ackerman in 2001. Their goal was to have the best delivery grocery service and promised their customers “higher quality at lower prices”, which is a high standard to achieve in such a competitive market. Fedele and Ackerman first had the idea of starting a large chain of conventional fresh-food stores, but they realized maintaining the degree of quality they desired would be difficult with a large business at first. They decided to have a business that incorporated online shopping with distribution from a central location. Fedele and Ackerman wanted to start slow, use off-the-shelf software and an automated delivery system, and pay attention to details such as forming relationships with key suppliers and micromanaging quality control. FreshDirect got much of its $100 million investment from private sources, with small contributions coming from the State of New York. By locating FreshDirect’s distribution center within the state border and promising to create at least 300 jobs, FreshDirect was eligible for a $500,000 training grant from the Empire State Development Jobs Now Program (Dess, 2012, p. C125).
FreshDirect started out relatively slow and had hoped to capture about 5% of the market in their operating area. They wanted to start citywide in 2002 but to maintain the desired quality service and product quality, they chose to slowly expand instead of immediately going full force in an area that would cause them to forefeet some quality service. To advertise their business,...