The value creation failure of grocery retailers’ last-mile value proposition: A sustainable business model perspective

Abstract

How a sustainable business model (SBM) is created for last-mile deliveries (LML) has been highlighted for a long time. However, research is limited regarding understanding the value creation process and it is important that both firms and customers are considered when creating a sustainable business model. In this paper, we explore how a SBM for grocery LML can be created and how discrepancy of value created, and value expected, is displayed. Through interviews with retailers and customer focus groups, we analyze how value can lead to horizontal coherence within layers, or vertical coherence between layers (economic, social, and environmental). We find that discrepancy within and between layers mainly derive from low customer acceptance and different views on what is being offered. We also find that environmental concerns do not add to the value creation process. This study contributes to the understanding of the grocery LML value creation process by using SBM as arising from dual perspectives: firm vis-à-vis customer. In addition, our study contributes by explaining and identifying that the discrepancy in the grocery LML's SBM depends on the perceived value proposition of the product bundle and service solution payoff. • We explore SBM creation for grocery LML and identify value creation discrepancies. • Discrepancy in grocery LML SBM is potentially due to low customer acceptance. • Low perceived individual value limits value captured. • Failed value capturing is a result of societal stakeholders view on the offer. • Environmental layer does not add to the value creation process.