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Technological advancements and the rise of e-commerce are constantly pushing the food retail industry to evolve, and the long-anticipated online grocery boom happened all at once amid the COVID-19 outbreak. However, although the demand and potential in online grocery stores are undeniable, food retailers and supermarkets across the globe are struggling to build a profitable business model for online grocery store operations.

S Group, which is always on the lookout for the most innovative and customer-centric digital service solutions, commissioned two students from Aalto University School of Business to act as project researchers and find new business models suitable for online grocery stores. These two students were Florencio Campomanes, a master’s student in Finance, and Nina Zhao, a master’s student in Global Management. The project was carried out as part of the Customized Student Business Projects concept.

This business project aimed to further develop the existing S Group online grocery business model and revenue streams to make it more profitable than physical stores. The students were encouraged to uncover innovative online grocery business models around the world, and also look into any e-commerce business models that could be applied to online grocery stores. S Group was especially keen on learning more about the business models used in Chinese online grocery stores.

The project was carried out in two stages

In the first stage, the project researchers gathered information on applicable business models and conducted two interviews with specialists who shared their views on e-commerce business models and digitization of services. The project researchers then proposed 13 preliminary revenue models for S Group's online grocery business, where company representatives selected four models for deeper scenario analysis.

In the second stage, the project researchers performed market and benchmark analysis on the selected models and constructed fitted solutions for S Group based on the strategic management template Business Model Canvas. Each solution also came with supporting analysis, where revenue potential, pricing, and value potential were estimated.

Very good feedback and excellent cooperation

Jarkko Kyttänen, the Chief Digital Officer, Retail eCommerce, of SOK, was closely involved in the project and was very satisfied with the project’s results.

‘Based on the findings of the project, we will continue to develop our online grocery business. It has been a pleasure working with the team on this project!’

Students were also praised for delivering clear data-driven solutions and overseeing the big picture adequately. The final presentation was a great success, and they received a lot of positive feedback.

Niina Mallat, Postdoc Researcher from the School of Business, Department of Information and Service Management, acted as the academic advisor of the project.

‘These company projects, where we combine high practical relevance with academic knowledge creation capability are learning in Aalto at its best. It was inspiring to guide Florencio and Nina in this project and see the breadth and depth of innovative ideas they explored and verified for the case. A big thank you also goes to S Group and Jarkko, for providing and working with us on this.’

The students found the project very thought-provoking and rewarding.

‘It was very exciting to get hands-on experience in tackling real-life business problems, and we got to apply our skills learned at the university. We gained a lot of knowledge on how to perform extensive business case analysis and effective team working. Niina and the representatives from S Group were very supportive and engaged in our project, which made the project working very enjoyable.’