Project Concept Note: Development Of Delivery Service For Supermarkets And Pharmacies By Uber

Project Rationale

This project involves development and implementation of a new service by Uber as an attempt to expand its portfolio. The new service would include deliveries of groceries, health supplements, and medicines from supermarkets, pharmacies and health shops in the UK.

Customers today look for convenience and thus, are increasingly adopting online model of making purchases for grocery and pharmacy items. Many customers in UK demand for same day deliveries within a few hours from online markets. Grocery being of perishable nature, faster delivery is of great importance if the products have to be delivered fresh.

Moreover, with internet connections and ecommerce models available even in remote areas, customers are even present in these locations and order to serve them, organizations need to have facilities to cover the last mile deliveries. However, if these deliveries have to be taken care of then it would make it very expensive for the company to keep own vehicles for the work. Thus, many retailers choose to hire third partly logistics service provider to take care of the deliveries till last miles.

Uber has a huge number of vehicles in its fleet that are used for passenger transport. With its entry into the delivery business, these vehicles could be used for making deliveries from super stores to the customer locations that would provide an opportunity to gain more revenues from Uber. The facilities can be offered even to pharmacies and health stores to take care of their last mile deliveries. With this service, supermarkets, pharmacies and health stores would be able to offer online sales to their customers and make deliveries on time using the fleet of Uber (Glympse, 2017).

The mission of the project is to establish a business mode for delivery of goods from supermarkets, pharmacies, and health stores to customers as a service provided by Uber. The goals of this project are:

• Establish a network of fleets to provide transport services for the stores
• Get more stores to use the delivery services in order to increase the revenues from the business for Uber
• Provide last mile delivery services to online customers for grocery, medicines, and health products(Ladd, 2018)

PESTLE Analysis

Political: UK has left EU and this decision of Brexit has affected the nations in various ways such as increased uncertainty in profit margins, threats to terrorism growing for stress located in UK, increase taxes from government on the goods sold, and revision of consumer protection rights.

Economic: The  exchange rates of pound compared to other currencies are fluctuating which affects the bargaining power of stores with the suppliers. Spending patterns of consumers have also been changing such that some goods are increasingly preferred while others consumption is going down. Establishing and operating a manufacturing unit has become costlier and thus, suppliers of products that stores would be accommodating have increased. This reduces the margins of the stores. With reduction in margins, investing in logistics through third party delivery services could become difficult for a few stores that do not have huge sales.

Social: UK is a highly diverse region in terms of culture and thus, consumers present a large different in segments. People working in UK do not want to work with minimum wages and look for good salaries which can affect the hiring. Moreover, consumers have to be understood by doing research on them so that diversities can be explained and channelize upon to build appropriate strategies for inclusion. To be able to do that stores need to be staffed decently and this makes retail more of a people driven business.

Contextual Analysis

Technology: In-store buying is still the more preferred option than the ecommerce purchases which could present a barrier for the delivery service providers who are most benefited by the online ordering systems. However, large retailers have ecommerce stores catering to increasing population in the age group of 40 to 60 that are becoming more savvy towards one buying. They also use smart phone applications to make purchases. Use of technology would need the third-party service provider to have a sound system for integration so that the two businesses can be aligned well.

Legal: The minimum wage rate in UK has increased in past few years and trading needs contractual flexibility. Thus, when hiring people for taking care of the business of delivery, the legal restrictions and compliances are needed to be taken care of by Uber. They would need to take care of the minimum  wage terms for their drivers and people hired for takin care of delivery logistics like loading and unloading. There are also other legal compliances and rules for grocery and food items that Uber needs to adhere to while operating in UK such as Food Hygiene Regulation Act 2006 and Hazard Critical Control Point (HACCP). Considering these, Uber cannot use their regular vehicles without any modifications for food safety for food delivery.

Environmental: Shoppers are becoming more conscious towards environment and thus, ethical sourcing is always preferred. T flourish in such a market, Uber would need to have ethical sourcing policies and strategies build for following CSR (CIPD, 2017).

Bargaining power of suppliers: Uber already owns the vehicles that can be used for the delivery of grocery, pharmacy, and health products. More supplies of vehicles can be obtained from the people who are the car owners an Uber works on the model of hiring cars from individuals. To get more vehicles in the network, the company need to offer them promise of earning. With the new model, the potential of vehicles making more sales can be increased and thus, it would become easier to bargain with them. Uber is already a popular platform such that people would have to associate with them. Thus, the bargaining power of suppliers in this business is low (Rey, 2018).

Bargaining power of buyers: The buyers are the stores that would be taking services of Uber. For them to take services from Uber, they need to be satisfied with the services and would have demands to fulfil. Only when Uber is able to cater to their demands would they consume the services. If buyers are not happy with Uber offers or services then the purchase of services would not happen. Also, with every deal, the stores would be negotiating the terms of delivery, prices, and other terms. Thus, it can be said that the buyers of the Uber services have high bargaining power (UKEssays, 2018).

Threats of New entrants: Getting entry into this business does not take any significant investment but only availability of vehicles to take care of deliveries. Although, catering to large stores would need large number of vehicles that may not be easy to acquire for new companies, but they can always make an entry into the business by targeting the smaller stores with lower rate offered to penetrate the market. However, Uber being a trusted brand with large number of vehicles already with it, the new entrants would not be able to compete in many things directly with Uber. Thus, the threats from the new entrants is moderate (Crook, 2018).

Porter’s Five Forces

Threats of substitutes: The substitutes of delivery vehicles are the own store vehicles and courier services that are easily available. Stores can also hire people making deliveries on their own or smaller vehicles to their customers. There can be several different options for stores to consider before they can think of taking logistics services from Uber. However, other substitutes may not offer some of the benefits that Uber can such as last mile connectivity and higher coverage. Thus, it can be said that the level of threats from substitutes is moderate.

Competitive Rivalry: There are several players in the field that compete directly with Uber in the space such as We Deliver and Home run. However, the industry is relatively new and stores are only in the process of adopting the business model such that Uber will still have importunities to take significant market share even in the presence of others in competition. Thus, it can be said that the competitive rivalry is low in the market of grocery delivery (Burt & Sparks, 2003).

Project Outline

The objectives of this project are –

• Assess the need for a network of fleets and accordingly allot the vehicles in the business
• Negotiate with stores to get them into the business so that Uber can provide them delivery services.
• Establish network and processes to take care of the last mile delivery services to customers for grocery, medicines, and health products in UK(Statt, 2018)

For this the project would need to execute the following activities:

• Identify the stores in each category to be targeted for business
• Identify the requirements for number of vehicles needed for taking care of deliveries
• Make modifications in vehicles needed to stock the health, medicine, and grocery products
• Establish contracts with different stores for making deliveries of their products for their customers
• Implement a system and the technology to integrate the supply chain processes with the retailers or stores so that Uber delivery team can have instant insights on orders and can deliver fast services(Thimou, 2018)
• Hire drivers and provide them sufficient training to take care of the deliveries of the items

The project can be executed along the given timeline assuming that the project would begin by 7^th Nov 2018:

There are many leading grocery chains such as Amazon, Walmart, Kroger, and Whole Foods that have thousands of stores in UK and they serve over 500 locations every year for deliveries. If Uber can take even a part of these deliveries to be made through their fleets, it would give a huge opportunity to Uber across UK to bring more revenues. Stores operating on traditional delivery models such as pharmacies and health stores do not even have their own delivery vans and even if they have, it would not be feasible for them to cover the last mile deliveries and thus, they would have to be limited in their business to nearby locations. However, with the last miles delivery service from Uber, these stores can be offered online order deliveries and last mile delivery options to expand their customer base. The project would be beneficial both to the stores and to Uber and thus, would bring in significant revenues for the company (FATbit Chef, 2018).

Feasibility of the project can be assessed based on the risks, strategic issues, and gaps company has in skills, technologies, and information needed for the business. The project can face the following risks in case the project is executed:

• The company may need to make significant investment on vehicles to make them ready for the needed deliveries that may not be anticipated and thus, can cause issues later. This problem can be avoided by careful consideration of all the needs of thee delivery vehicle and procuring new vehicles in case the existing vehicles cannot be made ready for certain products
• The company can face accidents on road leading to loss of goods in transit. This risk can be transferred to another party by taking insurance of the vehicles and the products being delivered by the company

There can also appear some strategic issues such as:

• The project stakeholders may not be satisfied with the planned project in which case the company can face resistance. This risk can be avoided by a careful consideration of stakeholder needs by involving them at start so that their needs are understood. Major stakeholders for the current project would be the store owners and managers who should be approached to understand their demands and preferences
• The company can face a lack of resources needed to execute the project. This situation can be taking care of by proper estimation of need for resources and providing training to them to take care of business processes. Experienced drivers may be hired so that they have sufficient experience to take care of deliveries

The drivers of the company may not have sufficient skills to take care of product deliveries and thus, are required to be trained. Alternatively, the company can hire experienced drivers from the delivery industry to ensure they have the right skills.

The company already has sufficient tracking technologies but would need to make the necessary modifications to integrate their processes with the stores on board. The company already have sufficient resources and assets to be able to do that.

Conclusions

This project proposed development of the delivery services for Uber where the company would be providing services to pharmacies, health stores and super marketed to make deliveries of their products to their customers. It was found that the company has sufficient resources and capabilities to be able to establish the business and gain revenues for growth.

References

Burt, S. & Sparks, L., 2003. Competitive Analysis of the Retail Sector in the UK, s.l.: University of Stirling.CIPD, 2017. PESTLE example for retail industry as at July 2017, s.l.: CIPD.

Crook, J., 2018. Walmart to end its grocery delivery partnerships with Uber and Lyft. [Online]Available at: https://techcrunch.com/2018/05/08/walmart-ends-grocery-delivery-deal-with-uber-and-lyft/
[Accessed 2 November 2018].

FATbit Chef, 2018. Setting up Online Grocery Business in 2018? Here Is What You Need to Know. [Online]Available at: https://www.fatbit.com/fab/setting-online-grocery-business-2018-need-know/
[Accessed 2 November 2018].

Glympse, 2017. The Curbside Pickup and Grocery eCommerce Renaissance, s.l.: Glympse.

Ladd, B., 2018. Uber Wants To Deliver Groceries, But There Is A Much Bigger Opportunity. [Online]Available at: https://www.forbes.com/sites/brittainladd/2018/10/15/uber-wants-to-deliver-groceries-but-there-is-a-much-bigger-opportunity/#35ba4c5f5c1d[Accessed 2 November 2018].

Rey, J. D., 2018. Why Walmart is partnering with everyone except Instacart for its grocery delivery service. [Online]Available at: https://www.recode.net/2018/4/24/17275286/walmart-grocery-delivery-instacart-doordash-postmates-deliv-uber[Accessed 2 November 2018].

Statt, N., 2018. Walmart’s new Spark Delivery service is an Uber-like platform for groceries. [Online]Available at: https://www.theverge.com/2018/9/6/17828028/walmart-partners-bringg-logistics-platform-grocery-delivery[Accessed 2 November 2018].

Thimou, T., 2018. Here’s how to get groceries delivered right to your door from Walmart. [Online]Available at: https://clark.com/shopping-retail/walmart-uber-lyft-grocerydelivery/[Accessed 2 November 2018].

UKEssays, 2018. Business Analysis The Uk Grocery Industry Marketing. [Online]Available at: https://www.ukessays.com/essays/marketing/business-analysis-the-uk-grocery-industry-marketing-essay.php?vref=1[Accessed 2 November 2018].

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order