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Florida International University FIU Digital Commons FIU Electronic Theses and Dissertations University Graduate School 1-25-2008 What Makes Online Grocers Work? A Case Study Analysis of Factors Contributing to Online Grocery Store Profitability William D. Lucky, Jr. Florida International University DOI: 10.25148/etd.FI10022529 Follow this and additional works at: https://digitalcommons.fiu.edu/etd Part of the E-Commerce Commons Recommended Citation Lucky, Jr., William D., "What Makes Online Grocers Work? A Case Study Analysis of Factors Contributing to Online Grocery Store Profitability" (2008). FIU Electronic Theses and Dissertations. 194. https://digitalcommons.fiu.edu/etd/194 This work is brought to you for free and open access by the University Graduate School at FIU Digital Commons. It has been accepted for inclusion in FIU Electronic Theses and Dissertations by an authorized administrator of FIU Digital Commons. For more information, please contact [email protected]. FLORIDA INTERNATIONAL UNIVERSITY Miami, Florida WHAT MAKES ONLINE GROCERS WORK? A CASE STUDY ANALYSIS OF FACTORS CONTRIBUTING TO ONLINE GROCERY STORE PROFITABILITY A dissertation submitted in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY in BUSINESS ADMINISTRATION by William David Lucky, Jr. 2008 To: Dean Joyce Elam College of Business Administration This dissertation, written by William David Lucky, Jr., and entitled What Makes Online Grocers Work? A Case Study Analysis of Factors Contributing to Online Grocery Store Profitability, having been approved in respect to style and intellectual content, is referred to you for judgment. We have read this dissertation and recommend that it be approved. _______________________________________ Bruce Seaton _______________________________________ Peter Dickson _______________________________________ Clark Wheatley _______________________________________ Barnett Greenberg, Major Professor Date of Defense: January 25, 2008 The dissertation of William David Lucky, Jr. is approved. _______________________________________ Dean Joyce Elam College of Business Administration _______________________________________ Dean George Walker University Graduate School Florida International University, 2008 ii © Copyright 2008 by William David Lucky, Jr. All rights reserved. iii DEDICATION I dedicate this dissertation to my parents Dr. William D. Lucky, Sr. and Dr. Luretha F. Lucky who stood as pillars of excellence for me both academically and morally. I also dedicate this dissertation to my sister, Ameera L. Lucky and her children Jaylon and Nyeemah, for providing encouragement to see this project to the end. I would also like to dedicate this work to Barbara A. Lucky, the mother of my children, for her patience and support while I completed the degree. Lastly, I would like to dedicate this dissertation to my children William. D. Lucky, III and Janiah M. Lucky for providing the reasons to keep me going in life. Thanks to all. iv ACKNOWLEDGMENTS I would like to express my deep gratitude to the members of my committee for helping me complete this endeavor. Your tireless support helped shape me into a better scholar. I would like to thank Dr. Peter Dickson for his guidance in helping to focus my research, providing a swift kick when necessary, and to exposing me to other lines of inquiry in the marketing discipline. Dr. Bruce Seaton was also very influential in shaping my project and his open-mindedness and endless optimism helped to sooth his frank, pointed, but necessary critiques. To Dr. Clark Wheatley, I would like to say thank you for providing guidance and insight as my project took shape. Finally, I would like to thank my major professor Dr. Barnett Greenberg for his endless patience and guidance while the research evolved. I know I have tested your patience like no other but you have always stayed positive and upbeat. You helped me learn how to stay focused and how to look at complex topics. The fact that you never lost confidence in me means more to me than you will ever know – thank you. I would also like to thank the rest of the business faculty and especially the marketing faculty that have helped to shape my education. To Mrs. Hilda Aguiar and the rest of the Marketing Department staff, I would like to express my gratitude for helping me transverse the minefield of paperwork at each stage. v ABSTRACT OF THE DISSERTATION WHAT MAKES ONLINE GROCERS WORK? A CASE STUDY ANALYSIS OF FACTORS CONTRIBUTING TO ONLINE GROCERY STORE PROFITABILITY by William David Lucky, Jr. Florida International University, 2008 Miami, Florida Professor Barnett Greenberg, Major Professor This research examined the factors contributing to the performance of online grocers prior to, and following, the 2000 dot.com collapse. The primary goals were to assess the relationship between a company’s business model(s) and its performance in the online grocery channel and to determine if there were other company and/or market related factors that could account for company performance. To assess the primary goals, a case based theory building process was utilized. A three-way cross-case analysis comprising Peapod, GroceryWorks, and Tesco examined the common profit components, the structural category (e.g., pure-play, partnership, and hybrid) profit components, and the idiosyncratic profit components related to each specific company. Based on the analysis, it was determined that online grocery store business models could be represented at three distinct, but hierarchically, related levels. The first level was termed the core model and represented the basic profit structure that all online grocers needed in order to conduct operations. The next model level was termed the structural model and represented the profit structure associated with the specific business vi model configuration (i.e., pure-play, partnership, hybrid). The last model level was termed the augmented model and represented the company’s business model when idiosyncratic profit components were included. In relation to the five company related factors, scalability, rate of expansion, and the automation level were potential candidates for helping to explain online grocer performance. In addition, all the market structure related factors were deemed possible candidates for helping to explain online grocer performance. The study concluded by positing an alternative hypothesis concerning the performance of online grocers. Prior to this study, the prevailing wisdom was that the business models were the primary cause of online grocer performance. However, based on the core model analysis, it was hypothesized that the customer relationship activities (i.e., advertising, promotions, and loyalty program tie-ins) were the real drivers of online grocer performance. vii TABLE OF CONTENTS CHAPTER PAGE CHAPTER I........................................................................................................................ 1 Introduction..................................................................................................................... 1 Statement of Problem.................................................................................................. 2 Research Focus ........................................................................................................... 3 Purpose of Study......................................................................................................... 5 Research Questions..................................................................................................... 5 Organization................................................................................................................ 7 CHAPTER II....................................................................................................................... 9 Literature Review............................................................................................................ 9 Small Town General Stores, Rural Area Country Stores, and Public Markets .......... 9 The Emergence of the Grocery Store........................................................................ 12 From Independent Grocery Stores to Grocery Chain Stores .................................... 13 The Evolution of the Supermarket............................................................................ 17 From the Supermarkets to the Supercenters ............................................................. 19 From Brick-and-Mortar to Click-and-Mortar ........................................................... 21 CHAPTER III ................................................................................................................... 33 Building Theory from Case Analysis ........................................................................... 33 The Research Question and Construct Definition .................................................... 35 Case Selection........................................................................................................... 38 Developing Research Instruments and Protocols ..................................................... 43 Data Analysis............................................................................................................ 46 Within-Case Data Analysis................................................................................... 46 Cross-Case Data Analysis..................................................................................... 47 Hypothesis Generation.............................................................................................
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