November 25, 2002, 12:00 AM

Food & Drug: Brand and infrastructure go hand-in-hand

(Page 3 of 4)

Harry and David was an early adopter of the web; its transactional site went live in 1996. Today, it generates as much as 30% of sales over the web but Ashbey is not content with that level. “We have done a good job in migrating customers to the web,” she says, “but it’s only the first wave.”

The next wave will be in attracting new customers to Harry and David via the web. Portal deals with MSN, AOL and Yahoo, search arrangements with Overture Services Inc. and LookSmart Ltd. and affiliate marketing relationships with 8,000 sites managed by LinkShare Corp. are driving new, younger customers to HarryandDavid.com.

HarryandDavid.com also gets high marks for its corporate gift services, with a shopping and ordering mechanism that simplifies the process for corporate customers. It’s another example of re-creating the offline experience online. “They know their customer and they’ve chosen to invest where they get a return,” Calvin says.

HarryandDavid.com

Date
1996
Unique Visitors
1 million (peak mo.)
Design By
in-house
Site Search
in-house
CRM
none
Affiliate Management
LinkShare Corp.
Fulfillment
in-house
Order Management
in-house

Returns Liquidation

in-house
Web Analytics
NetIQ Corp.’s WebTrends
Content Management
none
E-mail Management
Digital Impact Inc.

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Omaha Steaks
Surf ‘n’ turf on the web

Omaha Steaks is no stranger to direct merchandising. It’s been shipping out sirloin to catalog customers since 1952. But it’s the web that has made it more than a meat-and-potatoes retailer.

“We found early on that online customers purchase a wider variety of selections than catalog customers,” says Todd Simon, co-owner and senior vice president of Omaha Steaks International Inc. “They’re more adventurous and willing to spend more money. They’re more likely to buy lobster tails.”

Omaha Steaks got an early start on the Internet, in 1991, through a text-based store on the CompuServe network. It did about $135,000 that year, but it viewed the Internet as just another media placement, says Simon. He represents the family’s fifth generation that has owned and managed the company since its beginnings in 1917 as a supplier to restaurants and grocers.

By 1994 Omaha Steaks had developed its own web site, and the following year one of the first graphical stores on AOL. Then it began to learn the true value of the web as a selling channel, Simon says.

“We started to think about what kind of merchandise we wanted to offer online, and the advantages the web offered that we don’t have with the catalog,” Simon says. He notes that OmahaSteaks.com follows the catalog’s tradition of offering steaks and complementary products, such as sauces and breads. But products are merchandised differently online, where customers find prominent displays of pricey hors d’oeuvres and side dishes like Stuffed Antipasto Bread and Champagne Crab Cakes.

The success of selling through OmahaSteaks.com led to the creation last year of a sister web site, AlaZing.com, which offers ready-to-cook meal packages. “We had seen OmahaSteaks.com customers buy a wider variety of steaks, potatoes and desserts, so we saw a market for complete meal solutions,” Simon says. So far, the site is hitting sales targets. Simon notes that online sales are growing faster than other channels, accounting for 20% of consumer sales last year. The company, which also operates 78 stores, reported total sales last year of $302 million.

Meantime, the company has enhanced communications between online shoppers and customer service agents, dedicated a new staff of personnel to answer customer e-mail, and launched a customer registration process that allows shoppers to view their order history.

To broaden its online exposure, it maintains marketing partnerships with Amazon.com, eBay.com, Yahoo.com, MSN.com. and iVillage.com. “Our goal is to be as visible as possible online,”
Simon says.

OmahaSteaks.com

Date
1994
Unique Visitors
324,591/mo.*
Sales
$302 million (last FY)
Design By
N/A
Site Search
N/A
CRM
in-house
Affiliate Management
LinkShare Corp.
Fulfillment
in-house
Order Management
in-house
Returns Liquidation
in-house
Web Analytics
in-house
Payment Processor
First National Bank of Omaha
Content Management
in-house
E-mail Management
in-house
*As reported by comScore Networks Inc.

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Safeway
Bringing home the bacon

The grocery business is known for being one of the toughest to bring online. Fulfillment can be difficult to maneuver as well as costly, and many shoppers simply prefer to choose their own tomatoes.

The industry has some of the most notorious losers on the Internet. But it also has winners, companies that approach the online market steadily and deliberately. A good example is Safeway Inc. The Pleasanton, Calif.-based grocery chain is reporting online success up and down the Pacific Coast and plans to move into markets including Chicago and Baltimore.

Since this time last year, Safeway has launched online grocery sites for several West Coast metropolitan areas, including Vancouver, Wash., Portland, Ore., San Francisco and Sacramento, Calif. After rolling out in those areas with growing success, it launched in September in San Diego, operating under its Vons.com southern California brand. Covering more than 730 ZIP Codes and 320 West Coast cities, Safeway’s Safeway.com and Vons.com sites average about 100,000 unique visitors per month.

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