Delivering virtual value

: the role of virtual value creation in e-grocery business models and resulting implications for today’s grocery retail firms

Abstract

In recent years, the e-commerce sector across industries has grown rapidly, with the e-grocery market yet to produce any clear winners. This was mainly due to high customer expectations and substantial commercial difficulties, making it very complicated to profitably serve the market. With the ongoing Covid-19 pandemic, the e-grocery field has experienced particular attention and growth. The UK’s Ocado is regarded as an exception in the e-grocery sector due to its pioneering position in robotic automation and Artificial Intelligence (AI), its ongoing transformation to a global solutions business as well as extraordinary share performance, recently making it the most valuable grocer in the UK. To identify distinctive components of e-groceries along the value chain, customer expectations were discovered through surveys, after which commercial difficulties were identified using expert interviews. Further, the Ocado model was analyzed, which allowed to illustrate how it addresses expectations and difficulties by leveraging the virtual value chain (VVC). It became clear that Ocado achieves cost-decreasing and differentiation advantages by building a value matrix, enabling it to profitably serve the market. The study therefore lays out that virtual value creation is becoming an increasingly important component in grocery retailing. Subsequently, scenarios for uptake of VVC adoption among stakeholders in the retail sector were created. The outcome suggests that a business-as-usual scenario in VVC uptake is most likely. In this case, firms will ramp up their IT operating budgets by 2-5% p.a., responding to new realities in both physical and online retail.

Date of Award	29 Apr 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Peter V. Rajsingh (Supervisor) & André de Almeida Pinho (Co-Supervisor)