There are pros and cons for both startups and existing stores starting ecommerce grocery websites. An existing physical chain such as Countdown may be easier to move online in terms of customers and brand. A significant pro for Countdown is that the brand is well established and trusted by a large customer base. Countdown is also trusted by many different companies, which it already distributes products for. Having these connections is a big pro for Countdown as they will be able to use the same brands online.
This will be reassuring for their loyal customers as they can make the transition of shopping in-store to online easily knowing they will find the same brands. This could also be a limitation as they may have issues managing so many brands and products when they haven’t been able to transition slowly to online. Countdown has the problem of too many manufacturers want to put their items on the shelves but there is not enough room in-store. Going virtual will help solve this distribution issue for Countdown as there is unlimited space online. There is only the matter of expanding warehouse space. Another pro for Countdown is that they will have a much bigger budget than a startup company, which means they will be able to invest in bigger store rooms, better website and delivery services. A limitation for startup companies is that they will not start off with a big budget and may struggle finding the capital to keep up with existing stores.
They will have to find a lot of companies they can partner with to raise funds. When building a business from scratch, a startup company will have to grow their connections with many different brands. A disadvantage is that it could be very difficult for a new entrepreneurial venture as major branded-goods manufacturers may be wary of distributing their goods through an unknown company. A pro is that small, local brands and other startups may be easier to get on board.
This could benefit the startup virtual store as it could give their company a point of difference from Countdown and New World. Looking at the current market environment, there are many trends affecting consumer behaviour that a new startup company could use to their advantage. Countdown is already appealing to the biggest market which consists of price conscious consumers.
Millennials are less concerned for price and instead prefer to purchase items with value or are a novelty. A startup will either fail or succeed depending on which market it targets. A startup would have to segment the market and target a specific group of consumers, where they could offer high-quality, organic products at a price which customers will be willing and able to afford but also at a price where the products are seen as top quality. Selling exclusive or organic products would give them a distinct competitive advantage over larger companies.A pro for existing companies such as Countdown, will have a presence in both of the market environments. This multichannel marketing strategy allows Countdown to sell products to a large number of consumers that use both the marketplace and marketspace. Consumers will have the choice of which method of shopping they prefer.
The limitation for this is that Countdown has to maintain both physical and virtual stores which divides their resources between the two. Purely online shopping companies on the other hand can benefit from storing their products in direct warehouses. Their resources are concentrated on just growing their virtual store and brand. Also another pro is that a startup company wouldn’t have to instantly offer a wide range of brands, they could start off with a small range and then increase as their business grows. Starting off with a small group of users could be an advantage as they would be able to take more risks in coming up with new innovations. At the same time, this is a disadvantage because the company is at a greater risk of not succeeding if their innovations and ideas do not pay off. Countdown would have a much stronger aversion to risk as they have more things they must consider such as more workers and their public image.
This is a con for an existing company moving online because they are not able to take big risks and try out innovations.Overall both startup companies and existing companies will have their own pros and cons when starting virtual stores. Countdown is limited in that they will have to maintain an online store as well as their physical store. This doesn’t allow Countdown much room for innovation. Countdown will always have loyal customers and by opening up another marketing channel, they are able to expand their customer base.
A startup company will be at a greater risk of not succeeding. By focussing on market orientation a startup company can see the consumers’ wants and needs through extensive market research. Understanding consumers’ wants and needs will help them target the right segment of the market.
Using this information they can create customer value which will cause consumers to pick them over other stores in the marketspace. To succeed they must find a point of difference from existing stores to gain competitive advantage.