Expansion plan for Fresh Growers - Facing current challenges and the way forward

Assignment Taken

Identify & Resolve, all business-related issues according to your department.

Case Understanding

Case understanding - Current issues impacting scalability and efficiency at Fresh Growers → Supply Chain The current supply chain is based on a post harvesting distribution model where the entire produce is harvested in one go and the company only engages in distribution. This leads to high lead time and wastage since the harvesting is not demand-based. Limited supply channels - The company relies on a mini fleet to service the city; this causes an increase in the time required for distribution. This is one of the top priorities to resolve, as a delay in distribution of organically sourced food increases risk of spoilage in transit and increases waste. Lack of a returns processing mechanism amplifies waste in the process. → Scaling While the company could manage good growth numbers in the lockdown, the customer base has contracted to pre-lockdown levels, indicating low customer retention and impacting revenue growth. Several factors influence this, as discussed below under separate heads. Capital issues: As a self-funded organization the company depends entirely on strong revenue growth for upscaling which is unreliable without significant boost in market capitalization. → Business Development Expand from current B2C mode into B2B markets including restaurants and hotels. → Marketing Existing local vendors and daily-need ordering services have an established customer market. This hurts customer discoverability, as the convenience factor of relying on existing channels of produce delivery outcompetes Fresh Growers product in the absence of any significant niche factor in the eyes of the consumer. Product differentiation: There is not enough awareness about the advantages of organically sourced, farm to table produce among the consumers. This is evident based on the decline in sales post covid, as the customers currently look towards Fresh Growers as a convenient source of farm produce, but not necessarily the health quotient. Low ROI of current marketing techniques: While the company is engaging in traditional marketing techniques by using pamphlets, household awareness campaigns and social marketing, existing customer engagement is low and is not tracked effectively. → Stakeholder relations As the existing suppliers (farmers) follow established farming practices they are unwilling to adopt the newer methodology the company is trying to introduce. These differences lead to lowered efficiency in implementing the vision of the business. There is no established feedback loop with the customer. Currently, if the product fails to meet customer expectations, the company loses the customer’s business. There is no returns process or grievance redressal. This hampers not only the growth of the brand, but also affects market cap and customer retention.

BCS Solution Summary

A 3 stage plan to achieve the company’s objectives in the next 2 years, covering an overhaul of the product definition, entry into B2B space, an aggressive marketing approach focusing on customer engagement and retention, reduction in waste and focus on data driven analytics to fix deficiencies in supply chain and customer feedback loop.

Solution

Any solution to the existing business must have the central mission in focus. 

Mission statement of the company
→ Pioneer the true farm-to-table concept in India by delivering fresh fruits and vegetables directly from the farm to the consumer, eliminating any middlemen. 
→ Deliver the food sourced in this way to the consumer quicker than existing providers to ensure freshness is maintained.
→ Promote a more sustainable model of agriculture by using organic practices over traditional methods and adulteration.

Broad Strategy for development and scaling

→ Value proposition - Position the company as a provider of locally sourced, fresh farm products delivered direct to home in the quickest possible time frame.
The USP of the company is focused around delivering fresh unadulterated farm produce that reaches the table quicker than any other provider. However this is not clear in the current market position as the advantages over traditional grocery stores and daily food providers are not well defined and marketed to the customers. Fresh Growers should take advantage of the rising health awareness among the population and offer a value proposition to the customers as a way of differentiating its product.

→ Promote the idea of healthy eating and organic farming to promote healthier habits within the society.
The market for healthy eating is growing especially in the wake of the recent pandemic. Especially in metropolitan cities among the office going populace that cannot always arrange fresh and healthy food, mostly relying on fast food. This presents a clear opportunity for Fresh Growers to provide an easy solution in the form of locally sourced farm produce. 

→ Increase the efficacy of the supply chain and reduce lead time. This should be achieved by incentivizing farmers to switch to demand based harvesting and use organic methods of farming produce. By further expanding the distribution fleet the delivery times can be reduced. Further, Fresh Growers can reduce waste by adding a channel for returns processing and using AI enabled IT solutions for efficient warehouse processing and order tracking.

→ Expand the business to 3 major cities within 2 years with revenue growth and expand into B2B markets.
Household consumers are a good base to build the customer market, however there is a rising tide of healthy eating restaurants in big cities like Pune, Mumbai and Hyderabad. These cities house a good population of health conscious, responsible consumers. By marketing to restaurants in addition to household consumers, Fresh Growers can reach a much larger consumer base and cross promotion with these restaurants will enable the company to sustain a high revenue growth rate.

 

 

Recommended plan of action

Stage One (Quarters 1-2)
Improving the existing business business model and getting back on the growth track.

→ Redefining product by segregating offerings into multiple categories of standardized packaging as identified by marketing analysis and adding multi-tiered subscription model.
→ Addressing gaps in the supply chain by changing the compensation model for farmers, expanding the delivery fleet by adding 2 more vehicles
→ App development: A separate sub department to be carved out of the IT department for app development to increase customer engagement and compete with existing players in the market.
→ Developing a feedback mechanism from customers and a channel for reselling returned products at subsidized rates to wholesale food distributors (after QA testing).
→ Gathering data to identify leads to further expand the customer base, developing a data driven approach to market research through surveys and app engagement.

Stage Two (Quarters 3-6) 
Furthering Business Development 

→ Using the collected data to establish a robust QA system based on customer’s needs. 
Cross promotion with restaurants and hotels. Movement into BB marketplace to exponentially grow the market capitalization.
→ Using customer engagement data from app to identify and plug gaps in the product. 
→ Create a specialized Operations team to further develop the operations based on analytics data and implement lean distribution processes.
→ Further expand the delivery fleet by adding 4 vehicles for B2B distribution.

Stage Three (Quarters 7 and 8) 
Expansion and scaling

→ Begin to expand into new metropolitan cities with targeted marketing using existing analytics data. 
→ Aggressive marketing through promotional events, restaurant promotions.
→ Use the economy of scale to control cost and leverage the sustainable growth model for scalability.
→ Move into pan-India model of distribution.

Projected effects on the business post restructuring

→ Efficiency in supply chain, greater control over factors of production
→ Scaling backed by rapidly expanding into a niche market and capital infusion
→ Improved customer retention to maintain revenue growth
→ Expansion into existing metro cities with untapped market potential, backed by business analytics to identify customers based on demographic factors.
→ Sustainable farming methods ensure future proofing of the business model.

 

Conclusion

With a focused approach on eliminating redundancies in supply chain, repositioning the product in the market and taking advantage of the business environment in the industry, Fresh Growers can become a market leader in the farm to table concept in the next 2 years.

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