November 25, 2002, 12:00 AM

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

(Page 4 of 4)

“We realize that the Internet provides several advantages that a brick-and-mortar store cannot,” says Dave Stewart, vice president of marketing for GroceryWorks, which operates Safeway’s online business. For example, Safeway’s web sites provide a “Real-Time My Favorites” feature that provides loyalty card users each time they register online with their 300 most commonly purchased items. The list includes store as well as online purchases.

Unlike failed online grocers that over-invested in warehouse infrastructure, Safeway fulfills orders from existing stores by professional pickers who read web orders from a wireless screen attached to their carts and networked to corporate computers. The system tells pickers not only exactly what customers want, such as how ripe they want their tomatoes, but also the fastest route within the store to shop.

“They’re doing a good job of it,” says David Kathman, retail analyst with Morningstar Inc. in Chicago. “If anybody is going to make online grocery work, it has to be a traditional grocer with infrastructure already in place like Safeway.”

Safeway’s online strategy has benefited from the experience of Tesco.com, the online store of the UK’s largest grocer, Tesco PLC. Both have relationships with GroceryWorks, which is owned 50% by Safeway and 35% by Tesco. Safeway has added improvements, such as making it easier to add products to online shopping carts and developing a text-only sister site for visually impaired shoppers.

Safeway.com/Vons.com

Date
2001
Unique Visitors
100,000/mo.
Design By
N/A
Site Search
GroceryWorks
CRM
GroceryWorks
Affiliate Management
N/A
Fulfillment
GroceryWorks
Order Management
GroceryWorks
Returns Liquidation
in-house
Web Analytics
Fireclick Inc.
Payment Processor
National Processing Co. LLC
Content Management
GroceryWorks
E-mail Management
DoubleClick Inc.

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Starbucks
Smooth blend of stores and web

It’s not quite coffee by the cup-yet-but subscription coffee ordered via Starbucks.com is one of the more mundane uses that Seattle-based Starbucks Corp. is using its web site for. “The web site has been a terrific way to give our customers more of a story about who we are and what products and services we offer,” says Anne Saunders, vice president of Starbucks interactive.

Starbucks is clearly using its site to support its retail network of nearly 4,800 stores. “Starbucks has built an amazing brand around a commodity item and that carries over to their web site,” says Arvin Jawa, manager with Cleveland-based retail consultants LakeWest Group. “The site is not about shopping but about creating interest and getting people into the stores.”

That’s true-the site features a store locator and is incorporating an ordering function so customers’ coffee can be waiting when they arrive at their local store. It also sells Starbucks stored value cards and allows customers to re-load value at the site. “Starbucks has figured out the right way to use this medium,” Jawa says. “These are things that make the purchase process smoother in the store.”

But the site also does not ignore selling. Far from it. Starbucks.com, which hosts 1 million visitors a month, features a range of products, from coffee to coffee mugs and things to eat with coffee. Acknowledging the complexity of today’s coffee makers, Starbucks was one of the first merchants to make extensive use of online video technology. Using video technology from Vendaria Corp. that does not require plug-ins, Starbucks presents how-to videos for high-end coffee makers.

Starbucks also is using its web site to expand product offerings beyond what’s available in stores. For instance, due to limited space, a store may offer a coffee maker only in white when it comes in five colors. The other colors will be available on the web site. Similarly, it offers cups and saucers, teapots and coffee pots, serving items, foodstuff combinations and decorative, coffee-themed items exclusively on the web.

On top of it all, it’s easy to shop. “The navigation is smooth and elegant; ordering is very simple,” Jawa says. “In spite of the fact that I don’t think this is intended to be a shopping site, it’s a very good shopping site.”

Saunders says the company is on the constant lookout for new web offerings. “Our customers are very tech-savvy,” she says. In fact, 90% of customers-average age of 40, well educated with above average incomes-are online at home or in the office, nearly 50% higher than the population as a whole. “We like to keep the site new and fresh for them,” Saunders says.

Starbucks.com

Date
1998
Unique Visitors
900,000/mo.
Design By
in-house
Site Search
Microsoft Commerce Server
CRM
none
Affiliate Management
none
Fulfillment
HighJump Software Inc.
Order Management
CommercialWare Inc.

Returns Liquidation

CommercialWare Inc.
Web Analytics
digiMine Inc.
Payment Processor
CyberSource Inc.
Content Management
in-house
E-mail Management
CheetahMail Inc.

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