Introduction
As the future approaches, people value time more, which is evident when observing the most desirable products in the market. Such companies typically try to save the customer’s time. HelloFresh, a company based in Germany, surprisingly has the highest success rate in the United States (last name, year of creation). The corporation claims to provide fresh food from farmers to kitchens, thus making the client save time on grocery shopping. It was originally founded by Dominik Richter, Thomas Griesel, and Jessica Nilsson (refernce).
Originally, the company was funded by a German start-up studio, later in 2019 30.6% of HelloFresh stocks were sold to investors (refernce). For years the company strived to be the world leading food meal preppers; however with the issuing of a lockdown in 2020 March, global shock of the virus was spread. Average grocery shoppers felt uneasy, thus avoided public contact and exposure out of fear, but Dominik was there to simply put a warm blanket over them. Furthermore, HelloFresh consumers went from 2.4 million to a staggering 4.2 million in a span of 60 to 65 days (reference).
This service seems exemplary on paper, but one needs to compare how much an average grocery shopper will spend. Higley (2021) who tried the weekly meal stated “I go to the grocery store about twice a month. On average, I spend $80 each time. which amounts to two weeks’ worth of breakfasts, lunches, and two high-yield dinners”. Additionally, she goes on to say the cost of the HelloFresh meals was $132 per fortnight. One can argue that a $52 difference is quite the difference. However, one must also consider current fuel pricing, $5 per gallon (reference), the time and creativity to create a delicious recipe that contributes to the price of the service.
Industry and Core Product/Services
HelloFresh ventures in the food delivery industry in which they sell meal kits to their online customers. The food delivery company provides customers with fresh and healthy products from the firm. HelloFresh prepares meal ingredients and delivers them in boxes thus simplifying cooking exercises (von Laar & Knief, 2021). Furthermore, all the meals are designed to follow a six-step cooking procedure that lasts no more than 30 minutes (“Order your delicious meal kit,” 2022). Even better, at least 25 new recipes are created weekly and every customer’s package is customized to their specifications (“Why HelloFresh,” 2022). HelloFresh also adds value to its customers by offering them professionally created recipes to follow. Some meal plans can however cost as low as $7 in the US (“Order your delicious meal kit,” 2022). HelloFresh provides its customers with sufficient information to ensure the satisfaction and safety of their customers.
Customer Profile
HelloFresh targets customers between the age of 30 and 50 in all its branches. According to the company, 80% of these customers are busy women who lack time to do grocery shopping or prepare ingredients for sophisticated meals. 20% of the number are men, who often order less complicated meal plans (Vardi et al., 2020). Demographically, HelloFresh targets customers from various countries including America, the UK, Australia, Canada, Italy, Germany, and Belgium among many others (“Order your delicious meal kit,” 2022). In total, HelloFresh had at least 7.2 million customers by 2021. With the increased demand for online food delivery, the company rose from 5.3 million customers in 2019 to 7.2 million in 2021 (Vardi et al., 2020). Although unmentioned, HelloFresh also targets working or financially stable audiences who can afford the pricey meal plans.
Competitor Profile
Blue Apron, also a meal kit delivery company is HelloFresh’s main competitor in the United States. The firm, situated in New York also delivers meal boxes with ingredients and recipes to customers (Zimmerman et al, 2020). The company has added advantages because it is well-known in the US and provides pre-cooked meals, unlike HelloFresh. Other of HelloFresh’s competitors include Freshly, Plated, and Sun Basket (Stolberg, 2019). Although HelloFresh customers like to prepare their meals, they at times prefer to order already cooked food and that is where Uber eats is involved. Uber eats, as a service for Uber rides allows its customers to order food in restaurants and deliver them (Zeinstra & van der Haar, 2020). While the customer pays for food directly to the restaurant, they also pay for Uber for delivery services.
SWOT Analysis
Strengths
A major company’s strength is sustainability, implemented through the procurement of ingredients and suppliers’ certification. HelloFresh purchases its products from certified suppliers and allows the customers to verify them. The sustainability initiative further reduces carbon emissions through proper packaging (Katte, 2019). HelloFresh also has a strong financial performance, especially between 2019 and 2021. The company registered a 102% sales increase that earned 1.3 billion within these years (Katte, 2019). With many people turning to online delivery, the company is expected to maintain high financial performance. With the world moving fast toward the consumption of healthy and fresh food, HelloFresh has the advantage of delivering that information of ingredients and recipes.
Weaknesses
One of the reported weaknesses of this firm is gaps in customer satisfaction. Several HelloFresh customers often complain about failed and late deliveries, stale, food poisoning, and missing ingredients (Teoli et al., 2019). Some deliveries may also take longer than expected thus leading to the perishing of some ingredients. Another problem is that HelloFresh sells its products at relatively high prices and has limited price modifications for meal plans.
Opportunities
One opportunity is that following increased lifestyle diseases, people are opting for healthy food. HelloFresh offers healthy and diet-balanced meal plans that can meet the rising needs for eating healthy food. Food consumers are also adapting new and culturally diverse cuisines (Shastri, 2021). HelloFresh has the chance to provide its customers with a variety of recipes for different cuisines. The firm also can expand its portfolio to accommodate global cuisines and preferences.
Threats
HelloFresh faces direct and indirect competition from various food delivery companies. As the businesses demand more time, people find no time to cook hence prefer ordering readymade food (Teoli et al., 2019). Furthermore, other competitors like Blue Apron offers precooked food thus becoming an alternative for HelloFresh meal kits for busy customers (Shastri, 2021). With low barriers to industry entry, HelloFresh is likely to face the threat of price competition. New companies tend to reduce product prices to attract more customers. HelloFresh will therefore need to lower its prices, earn fewer profits and become unsustainable.
External Factors
HelloFresh is affected by various external factors including political, social, economic, environmental, Technological, and legal. These elements of business operation are not exceptional to the firm because their competitors are also affected. The stability of politics in a country, consumer needs and expectations, economic growth or decline, state of the environment, and regulatory issues can either positively or negatively affect the business (Cheba et al., 2021). HelloFresh operates in different countries and hence is differently affected by external factors.
PESTLE Analysis
Political Factors
The countries in which HelloFresh currently operates have stable political systems. Stability ensures that the businesses remain open during operating hours and experience minimal disruptions (Alanzi, 2018). The company might however be affected by changing policies in transitioning governments. Following lifestyle diseases and ongoing health crises, governments are vigilant in food consumption policies to protect the health of their citizens. New governments might therefore demand more supplier compliance that may cut off some HelloFresh suppliers.
Economics
Trade determines where HelloFresh sources its ingredients and packaging materials. Positive trading terms and conditions positively affect the supply for the company. Economic growth boosts the organization’s profit earnings while a decline reduced the earnings (Alanzi, 2018). The state of the economy also dictates the prices of commodities and meal plans. Thus, although prices might go higher than expected, HelloFresh offers additional services including portioning and planning to add extra value to their meals.
Social
HelloFresh is operating based on constantly changing customer needs and preferences. Following busy lifestyles, customers are now preferring meals plan delivery to their doorsteps (Braker, 2020). Tastes and preferences are also changing as customers lean more towards healthy and organic food. HelloFresh sources its healthy and organic ingredients directly from farms hence meeting consumer needs (Alanzi, 2018). Furthermore, customers also have ethical and religious needs to be met. HelloFresh is sensitive to such needs so they provide meal plans based on customer regions and time of the year considerations.
Technological
HelloFresh is highly invested in modern technology as their major business model. The business sells and interacts with its customers through the use of the internet. The firm must therefore remain competitive by staying up-to-date with technology (“PESTLE analysis,” 2022). To avoid replacement too, the company must differentiate itself through the use of technology. For example, HelloFresh uses customer subscriptions on its website like any other food delivery firm. The organization must outdo others by creating more tools such as applications.
Legal and Environmental
Providing perishable food with potential health dangers such as allergy and food poisoning places HelloFresh at litigation risk. On top of complying with various regulatory issues, the company is careful to avoid lawsuits by delivering the best services (“PESTLE analysis,” 2022). To preserve the environment and reduce carbon emissions, HelloFresh uses a sustainability initiative that ensured the use of environmentally friendly and recyclable packaging boxes (Bauer, 2020). The initiative also ensures that food is sourced from ethically operating suppliers.
Recommendations
HelloFresh should create a room for customized meal plans and increased subscriptions. As people with diverse lifestyles lean towards creativity, they will also require creativity in meal plans (Vardi et al., 2020). Customers will need to create their meal plans by picking what they need on their ingredient lists. HelloFresh should therefore focus on delivering and meeting such customer needs. With the increased use of mobile use by the Z generation, the company is likely to experience an increase in customer subscriptions (Vardi et al., 2020). The firm should therefore be ready to expand its employee base as well as its delivery transportation strategy.
Conclusion
HelloFresh is a highly competitive food delivery company operating in more than ten countries. The company serves customers with busy lifestyles by easing their process of cooking. Although they have several competitors, HelloFresh delivers high-quality ingredients thus reducing rivalry. The organization’s high prices are a major weakness among others. In terms of external factors, Hellofresh is least affected by related changes as it always works towards sustainability.
References
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