{"id":22394,"date":"2017-11-15T13:10:52","date_gmt":"2017-11-15T18:10:52","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/good-eggs-fresh-local-food-delivery-enabled-by-software\/"},"modified":"2017-11-15T13:10:52","modified_gmt":"2017-11-15T18:10:52","slug":"another-grocery-delivery-app","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/another-grocery-delivery-app\/","title":{"rendered":"Another Grocery Delivery App?"},"content":{"rendered":"

There’s an app to get groceries delivered from Whole Foods, another one for delivering meal kits to your door, and dozens to get meals from your nearby restaurants. But what if you care most about fresh ingredients and supporting your local growers and producers? With the mission to “help grow and sustain food systems, worldwide,” Good Eggs was founded in San Francisco in 2011. [1]<\/p>\n

\"\"<\/a>
[2]<\/figcaption><\/figure>\n

Supply Chain as a Service<\/h2>\n

Spiro explains that farmers receive email notifications by midnight of what orders they’ll need to fill by morning. By 9 a.m., most deliveries have hit the Good Eggs headquarters, and are promptly filed into a series of plastic bins that in turn await delivery in either refrigerated or open-air sections of the warehouse. [3]<\/em><\/p><\/blockquote>\n

At its core, Good Eggs is a software-enabled delivery company for local food; by handling the logistics and supply chain, they allow consumers to conveniently receive food from local producers and boost sales for local producers. Krumville Bakeshop, a Brooklyn gluten-free baked good business, “has boomed by 40% since selling through the Good Eggs.” [4]<\/p>\n

To deliver fresh local foods and goods by the next business day, Good Eggs has built out a connected system that forecasts consumer demand for items, registers actual orders, notifies producers so that they make those items available in time, and then determines the logistics for delivering the food to consumers. [5][6][7] From a mobile app for consumers, to a platform for producers to “manage inventory and to optimize the sales of their goods”, and another app for managing their operations within fulfillment centers, Good Eggs has software that spans every step in the chain. [8]<\/p>\n

 <\/p>\n

Profitability at Scale<\/h2>\n

While technology enables it to accept customer orders, streamline fulfillment and optimize delivery routing, technology is not a silver bullet. [9]<\/em><\/p><\/blockquote>\n

Despite delivering one hundred million pounds of food to date, Good Eggs announced in 2016 that it was shutting down operations in Los Angeles, New Orleans, and Brooklyn. [10][11] Even though Good Eggs has built out some impressive technology solutions, they neglected the economics of their supply chain and business.<\/p>\n

To help ensure profitability for the company moving forward, Good Eggs is leveraging their technical capabilities to improve key operational issues, such as order fill rates and inventory management. [12] They are adding real-time availability of items for consumers, which they believe will move fill rates as closer to 100% and reduce the frequency of item substitutions or customer refunds. [13] In analyzing the contribution margin per order, Good Eggs also realized that they were losing money on every order.<\/em> [14] To reduce variable costs, they are using software to overhaul their picking and packing processes, improving from “100 orders a day [per person], all of it pen and paper, to comfortably fitting 1000 orders per day.\u201d [15] In addition, they are moving from a forecasting system based on manual predictions for produce to a \u201csystem that can give us more real-time data\u2026 can look many days or weeks out to the future.\u201d [16]<\/p>\n

In the medium term, Good Eggs is focused on more effectively curating their inventory and utilizing manual labor [17]. Proprietary software enables them to determine which products sell the most and when, which helps them ensure sufficient supply for consumers [18]. In addition, by continuing to invest in software to manage internal operations, they can more efficiently use human labor, further driving costs down.<\/p>\n

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[19]<\/figcaption><\/figure>\n

Other Recommendations<\/h2>\n

First, I think Good Eggs should go beyond understanding their most popular items and double down on building a\u00a0recommendation engine that tracks customer preferences. Such information can help determine what SKUs to add, ensure that producers are making the right items at the right times, and increasingly add value to consumers.<\/p>\n

Second, given how important freshness is to their value proposition, they should consider adding connected sensors to monitor the freshness of foods in their fulfillment centers and in transit. If certain foods can maintain acceptable levels of freshness for even an additional day, it drastically reduces the operational complexity of their supply chain.<\/p>\n

Last, as their profitability increases I think they should consider opening a Good Eggs store in San Francisco. It will attract additional consumers with a simplified supply chain (since they would deliver to a single location), benefit the producers by providing increased revenue opportunities, and help Good Eggs evaluate the popularity of various items.<\/p>\n

 <\/p>\n

Open Questions<\/h2>\n

How can Good Eggs replicate their successes in San Francisco in other locations across the US?<\/p>\n

Good Eggs is both a startup trying to scale and a registered benefit corp. How does that seeming dichotomy affect their decisions moving forward that may reduce their reliance on human labor?<\/p>\n

 <\/p>\n

(779 words)<\/p>\n

 <\/p>\n

Footnotes<\/h2>\n

[1]\u00a0Good Eggs, \u201cOur Story,\u201d http:\/\/corporate.disney.go.com\/corporate\/overview.html<\/a>, accessed November 2017.<\/p>\n

[2] Yuka Yoneda, “Good Eggs: New Home Food Delivery Service Offers Local and Sustainable Fare at Fair Prices,” Inhabitat, https:\/\/inhabitat.com\/nyc\/good-eggs-new-home-food-delivery-service-offers-local-and-sustainable-fare-at-fair-prices\/<\/a>, accessed November 2017.<\/p>\n

[3] Marco della Cava, “Good Eggs scrambling to bring fresh food home,” USA Today,\u00a0https:\/\/www.usatoday.com\/story\/tech\/2014\/09\/08\/good-eggs-farm-fresh-food-home-delivery\/15100431\/<\/a>, accessed November 2017.<\/p>\n

[4] Ibid.<\/p>\n

[5] Joe Fassler, “How to put Good Eggs together again,” New Food Economy,\u00a0https:\/\/newfoodeconomy.org\/putting-good-eggs-together-again\/<\/a>, accessed November 2017.<\/p>\n

[6] Stephanie M. Lee, “The Inside Story Of How A Food Startup Cracked,” Buzzfeed,\u00a0https:\/\/www.buzzfeed.com\/stephaniemlee\/why-good-eggs-cracked?utm_term=.coDgKMgpE#.mkm5Lj58e<\/a>, accessed November 2017.<\/p>\n

[7] Ryan Lawler, “Good Eggs Raises $21 Million From Index Ventures To Deliver The Farmer\u2019s Market To Your Door,” TechCrunch,\u00a0https:\/\/techcrunch.com\/2014\/09\/08\/good-eggs-21m-index\/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29<\/a>, accessed November 2017.<\/p>\n

[8] Ibid.<\/p>\n

[9] Danielle Gould, “Why $53M Wasn\u2019t Enough to Scale Good Eggs,” Food + Tech Connect,\u00a0https:\/\/foodtechconnect.com\/2015\/08\/10\/why-53m-wasnt-enough-to-scale-good-eggs\/<\/a>, accessed November 2017.<\/p>\n

[10]\u00a0Lawler, “Good Eggs Raises $21 Million From Index Ventures To Deliver The Farmer\u2019s Market To Your Door.”<\/p>\n

[11] Gould,\u00a0“Why $53M Wasn\u2019t Enough to Scale Good Eggs.”<\/p>\n

[12] Danielle Gould, “Meet the Man Who\u2019s Making Good Eggs Profitable,” Food + Tech Connect, https:\/\/foodtechconnect.com\/2016\/08\/29\/bentley-hall-good-eggs-profitable\/<\/a>, accessed November 2017.<\/p>\n

[13] Ibid.<\/p>\n

[14] Ibid.<\/p>\n

[15]\u00a0Author\u2019s interview with Good Eggs Operations employee, Boston, Massachusetts, November 14, 2017.<\/p>\n

[16] Ibid.<\/p>\n

[17] Gould,\u00a0“Meet the Man Who\u2019s Making Good Eggs Profitable.”<\/p>\n

[18] Ibid.<\/p>\n

[19]\u00a0della Cava, “Good Eggs scrambling to bring fresh food home.”<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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