November 30, 2004, 12:00 AM

Food & Drug: Finding the right mix of product, service and fulfillment

(Page 2 of 3)

Headquartered in Long Island City, N.Y., FreshDirect is five years into its corporate mission of becoming the web grocer of choice for the nation`s most congested food services market--New York City.

To build critical mass in Manhattan, FreshDirect combines aggressive supply chain management, daily deliveries from a network of mainly local and regional suppliers and an innovative delivery strategy: Online food shoppers can place an order on FreshDirect.com as late as midnight on weekdays and 9 p.m. on weekends and still receive next-day delivery. To deal with congestion, a common occurrence in Manhattan, FreshDirect often expands the number of workers assigned to a single delivery van to three and uses a network of central drop-off points and pedestrian employees to make deliveries on time.

On the web, FreshDirect features more than 8,000 SKUs and is adding new lines such as Aaron`s Best, a line of kosher meat products. Each month about 300,000 unique visitors click on FreshDirect.com and spend about $110 on each order. To personalize the shopping experience, FreshDirect features its executive chefs and food department managers prominently in merchandising portals and on the sides of its 100 delivery vehicles.

FreshDirect has the infrastructure in place to process as many as 1,000 orders per hour. Recently, FreshDirect started a catering and food delivery service for more than 200 corporate customers in central Manhattan. "We use the web to expedite order taking and our local food supply network to deliver fresh food at very competitive prices," says FreshDirect president Steve Michaelson. "We are implementing a regional strategy that`s working in a very challenging market."

Although web grocer Peapod Inc. is beginning to serve New York`s suburbs, FreshDirect, for now, is the only online food services company aggressively going after New York City. "Their web site is very straightforward with a good selection of merchandise," says Willard R. Bishop Jr., president of Willard Bishop Consulting, a Barrington, Ill., food services and retailing consulting firm. "They will be very successful if they keep costs down and be even more efficient with their supply chain."

FreshDirect Inc.
23-30 Borden Ave. Long Island City, NY 11101
Date Launched
July 2001
Unique visitors (monthly)
300,000
Annual Web-Based Sales
$120,000,000 (2003)
Vendor Relationships
Site Design
In-house
E-Commerce Platform
In-house
Web Hosting
In-house, InterNAP
Site Search
In-house
Content Management
In-house
Order Management
In-house
Payment Processor
Cybersource
Fulfillment
In-house
E-Mail Marketing
Silverpop
CRM
In-house
Web Analytics
Sane Solutions, NetTracker


Peapod.com
Piling grocery carts higher

Peapod`s goal is to get shoppers down its virtual grocery aisles and checked out quickly--and along the way, to sell shoppers as much as possible. After 14 years in the business, it`s mastered the art of balancing the online shopper`s need for speed with increasingly sophisticated grocery merchandising that boosts basket size.

Its "1-2-3" interface--new this year--is just one example. "First-time customers weren`t getting their orders in because there was so much information. What they want to see is the browse aisle, search and specials, so now it`s lined up that way in three panels," says Thomas Parkinson, chief technology officer and senior vice president.

On the first visit, the home page offers shoppers the choice to learn more about Peapod or, upon entering a ZIP Code, to start shopping. On successive visits, registered customers see progressively different displays, with merchandising becoming more extensive as they gain experience with the site and build up history in the database.

The strategy has raised the average order from $100 to $145 this year. Conversion rates stay on retail`s high side at 10% to 15%, Parkinson says. The company, in which Dutch food company Royal Ahold acquired a majority stake in 2000, is growing on plan at the rate of 25% a year. Feeding that growth is Peapod`s co-branding in eastern markets with grocery chains Giant and Stop & Shop. "The bricks-and-clicks strategy when we enter a new market is critical. You`ve got shoppers loyal to those chains, so there`s instant credibility for Peapod," says Parkinson.

One of Peapod`s most novel innovations to date is in development for possible rollout next year. By fitting its delivery trucks with GPS navigation, it plans to be able to contact customers when trucks are within 10 minutes of delivery.

Jim Okamura, senior partner with J.C. Williams Group retailing consultants, says Peapod has continued to meet customers` expectations as it`s scaled up in size, an operationally risky transition that`s felled other companies. "They deliver on the promise of providing a more convenient shopping experience, for example, in how they have been able to manage their delivery window. That means a lot to customers," he says.

Peapod.com
9933 Woods Drive Skokie, IL 60077
Date Launched
July 1990
Unique visitors (monthly)
244,000*
Annual Web-Based Sales
$140,000,000**
Vendor Relationships
Site Design
In-house
E-Commerce Platform
In-house
Web Hosting
In-house
Site Search
In-house
Content Management
In-house
Order Management
In-house
Payment Processor
Paymentech
Fulfillment
Own warehouses, limited store fulfillment
Affiliate Marketing Management
Performics
E-Mail Marketing
In-house
CRM
In-house
Web Analytics
MyComputer
Content Delivery Network
Speedera Networks

Rich Media
The Stone Road
*comScore Networks report, October 2004
**Internet Retailer Top 300 Guide est., 2003


Schwans.com
More products = more loyalty
comments powered by Disqus

Advertisement

Advertisement

Advertisement

From IR Blogs

FPO

Ernie Diaz / E-Commerce

Can Tencent win the mobile commerce battle with Alibaba?

The two Chinese Internet giants are increasingly encroaching on each other’s territories. A Beijing-based marketing ...

FPO

Matt Swan / E-Commerce

Do cash-back sites really drive incremental sales?

Yes, suggest data from Affiliate Window, an affiliate marketing network. And consumers spend more when ...

Advertisement