Harvard Case - OZBLU: Last Mile Opportunity Scan for Fresh Produce
"OZBLU: Last Mile Opportunity Scan for Fresh Produce" Harvard business case study is written by Sheri Lambert. It deals with the challenges in the field of International Business. The case study is 17 page(s) long and it was first published on : May 9, 2023
At Fern Fort University, we recommend that OZBLU pursue a multi-pronged strategy to capture the last-mile opportunity for fresh produce in Australia. This strategy involves a combination of organic growth, strategic partnerships, and targeted acquisitions to expand its reach, enhance its value proposition, and solidify its position as a leading player in the Australian fresh produce market.
2. Background
OZBLU is a successful Australian fresh produce distributor facing a critical juncture. The company has a strong reputation for quality and service, but its current distribution model is challenged by rising transportation costs, increasing consumer demand for convenience, and the emergence of new competitors. The case study focuses on OZBLU's need to develop a strategy to address the 'last mile' challenge ' the final leg of the supply chain that delivers fresh produce directly to consumers.
The main protagonists of the case study are:
- Peter O'Connell: CEO of OZBLU, tasked with developing a strategy to address the last-mile challenge.
- The OZBLU Management Team: Responsible for developing and implementing the chosen strategy.
- Australian Consumers: The target market for OZBLU's fresh produce, increasingly demanding convenience and quality.
3. Analysis of the Case Study
This case study can be analyzed through the lens of Porter's Five Forces framework to understand the competitive landscape and identify key opportunities and threats:
1. Threat of New Entrants: The entry of new players, particularly online retailers and delivery services, is increasing competition in the fresh produce market. This poses a threat to OZBLU's market share.
2. Bargaining Power of Suppliers: OZBLU's suppliers, mainly farmers and growers, have moderate bargaining power. However, increasing demand for fresh produce and potential supply chain disruptions could impact their bargaining power.
3. Bargaining Power of Buyers: Australian consumers have increasing bargaining power due to the availability of various options for fresh produce, including online retailers and supermarkets.
4. Threat of Substitute Products: Consumers can choose substitute products like frozen produce or processed foods, which poses a threat to the fresh produce market.
5. Competitive Rivalry: The fresh produce market is characterized by intense competition from established players, new entrants, and online retailers. This rivalry is further intensified by the increasing demand for convenience and quality.
Key Opportunities:
- Growing demand for fresh produce: Australians are increasingly conscious of healthy eating and are demanding high-quality fresh produce.
- E-commerce and online delivery: The rise of online grocery shopping and delivery services presents a significant opportunity to reach new customers and expand market share.
- Focus on convenience and value-added services: Consumers are looking for convenient delivery options and value-added services like pre-cut produce or meal kits.
- Sustainability and ethical sourcing: Consumers are increasingly interested in sustainable practices and ethical sourcing of fresh produce.
Key Challenges:
- Rising transportation costs: The last mile of delivery is often the most expensive part of the supply chain, impacting profitability.
- Competition from online retailers: New entrants are leveraging technology and logistics to offer competitive prices and convenient delivery options.
- Maintaining quality: Ensuring the freshness and quality of produce during the last mile is crucial for customer satisfaction.
- Managing logistics complexity: Expanding into new markets and delivery channels requires efficient logistics management.
4. Recommendations
OZBLU should adopt a multi-pronged strategy to address the last-mile opportunity:
1. Organic Growth:
- Invest in technology and logistics: OZBLU should invest in technology platforms for online ordering, inventory management, and route optimization. This will improve efficiency and reduce delivery costs.
- Develop a robust delivery network: OZBLU should expand its delivery network to cover major urban centers and regional areas, leveraging partnerships with local delivery providers or establishing its own fleet.
- Offer value-added services: OZBLU should explore offering value-added services like pre-cut produce, meal kits, and subscription boxes to cater to consumer preferences and increase revenue streams.
2. Strategic Partnerships:
- Collaborate with online retailers: OZBLU should partner with established online retailers and grocery delivery platforms to reach a wider customer base and leverage their existing infrastructure.
- Form strategic alliances with logistics providers: OZBLU should partner with logistics providers specializing in last-mile delivery, leveraging their expertise and infrastructure to optimize delivery efficiency and reduce costs.
- Engage with local communities: OZBLU should collaborate with local farmers markets and community groups to build brand awareness and offer convenient access to fresh produce.
3. Targeted Acquisitions:
- Acquire smaller regional distributors: OZBLU should consider acquiring smaller regional distributors to expand its geographic reach and gain access to local customer bases.
- Invest in promising startups: OZBLU should explore investing in or acquiring innovative startups specializing in last-mile delivery solutions, such as drone delivery or robotic delivery systems.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: OZBLU's core competency lies in sourcing and distributing high-quality fresh produce. The recommended strategy leverages these competencies while expanding into new markets and delivery channels.
- External customers and internal clients: The recommendations address the needs of both external customers (consumers) and internal clients (farmers and growers) by providing convenient access to fresh produce and ensuring a reliable supply chain.
- Competitors: The recommendations aim to differentiate OZBLU from competitors by offering a unique combination of quality, convenience, and value-added services.
- Attractiveness: The recommendations are expected to generate positive returns on investment through increased market share, revenue growth, and cost optimization.
6. Conclusion
By implementing a multi-pronged strategy that combines organic growth, strategic partnerships, and targeted acquisitions, OZBLU can effectively capture the last-mile opportunity for fresh produce in Australia. This strategy will enable the company to expand its reach, enhance its value proposition, and solidify its position as a leading player in the competitive Australian fresh produce market.
7. Discussion
Alternatives:
- Focusing solely on organic growth: This approach may be slow and require significant investment in technology and logistics, potentially exposing OZBLU to competition from faster-moving players.
- Merging with a larger competitor: While this could provide immediate access to resources and market share, it may compromise OZBLU's brand identity and independence.
Risks and Key Assumptions:
- Technological advancements: The success of the strategy relies on continuous innovation and adaptation to emerging technologies in the logistics and delivery sector.
- Consumer acceptance: The strategy assumes that consumers will embrace online ordering and delivery services for fresh produce.
- Competition: The strategy assumes that OZBLU can effectively compete with established players and new entrants in the evolving fresh produce market.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and resource allocations for each element of the strategy.
- Conduct market research: OZBLU should conduct thorough market research to understand consumer preferences, competitor offerings, and potential partnerships.
- Pilot test new services: OZBLU should pilot test new delivery services and value-added offerings to gather feedback and refine the strategy.
- Build a strong team: OZBLU should recruit and develop a team with expertise in e-commerce, logistics, and customer service to support the implementation of the strategy.
By taking these steps, OZBLU can successfully navigate the last-mile challenge and secure its position as a leading player in the Australian fresh produce market.
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Case Description
Based in South Africa, United Exports was a leading producer of blueberry varieties. In April 2022, the company faced an issue of competitive positioning and entry in a crowded US market. The chief executive officer of United Exports, Americas, was preparing for a strategic planning meeting where the goal was to develop actions to grow the company and expand distribution in the United States. United Exports' OZblu brand had simultaneously attempted to create year-round blueberry supplies and to shorten its supply chains by selling Florida-grown blueberries in the United States. The CEO knew he had to rethink supply chains in a post-pandemic world and in light of shifting consumer buyer behaviour realities. He had to find a way to best enter the US fruit produce e-commerce market while aligning with United Exports' values and selling proposition. The CEO needed to examine and carefully consider e-commerce models, including subscription, rapid delivery, and the online grocery landscape.
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