November 30, 2004, 12:00 AM

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

(Page 3 of 3)

Retailers know it`s less costly to sell more to existing customers than to acquire new ones. This year, the Schwan Food Co. proves that maxim by putting a new product category at the center of a new rewards program that`s encouraging broader purchase across Schwans.com.

With a growing list of more than 400 items ranging from cookware to travel, the new home and gift store at Schwans.com expands the online offering into territory beyond the premium food and meal solutions that are the staples of Schwan`s b2c business. While added sales from the category are a win on their own, the new tab also drives sales across the online store. Registered online shoppers earn a point redeemable toward the purchase of goodies in the store with every dollar spent on food at Schwans.com.

Schwan`s has a call center, and the route managers who deliver pre-ordered goods locally also sell from their trucks. Yet, "We know that when we bring our customers online, they buy more from us, their average order increases, and customer retention goes up," says director of e-commerce and emerging channels Glenn Bader. "This was a way to not only increase the frequency of purchase but to get offline customers to order online."

Jupiter analyst Patti Freeman Evans adds that the addition of the home and gifts category also provides a strategic entry point for new consumers to try the brand out. "Grocery is growing, but still one of the smaller categories in online retail. So a site has to offer additional value to make consumers willing to pay for shipping or wait for delivery," she says.

The program also supports the route mangers that Bader calls the backbone of the b2c business. As the volume of web orders rises, managers hit the road with a larger amount of the day`s inventory pre-sold, reducing their time at customers` doors. Bader says 800,000 customers have registered for the rewards program and that redemption is exceeding even Schwan`s most aggressive forecast. Part of that results from another expansion move launched this year when Schwans.com started shipping orders of frozen food via FedEx to areas where its trucks don`t deliver. "We`ve turned on every ZIP Code except Alaska and Hawaii," says Bader.

The Schwan Food Co.
115 W. College Dr. Marshall, MN 56258
Date Launched
1998
Unique visitors (monthly)
800,000*
Annual Web-Based Sales
$150,000,000**
Vendor Relationships
Site Design
In-house
E-Commerce Platform
Microsoft
Web Hosting
In-house
Site Search
Inktomi
Content Management
In-house
Order Management
In-house
Payment Processor
Paymentech
Fulfillment
In-house
Search Engine Management
OneUpWeb, Traffic Buyer

E-Mail Marketing
In-house
CRM
E.piphany
Web Analytics
WebSideStory
Content Delivery Network
AT&T;
*outside estimate reported by company
**Internet Retailer Top 300 Guide est., 2003


SimonDelivers.com
Starting small

Internet history is full of companies that tried to sell groceries online and failed. That`s part of what makes SimonDelivers.com stand out. This online grocer has found a formula that is successful--at least on a small scale.

"They`ve been able to sustain their business to a level that proves this model works," says Bill Bishop, president of Willard Bishop Consulting, a Barrington, Ill.-based supermarket consulting firm. "The difference between Simon Delivers and the others is that Simon Delivers has taken greater control over its delivery schedule so that it can reduce its costs."

Simon Delivers adopted what Bishop refers to as the "newspaper route delivery" model where delivery trucks follow a neighborhood-based route to more efficiently deliver groceries.

Another advantage to Simon Delivers is that it started small and didn`t take on too big a challenge right away. "We didn`t try to develop a national footprint right away; we stayed regional to prove that our model works before we expanded," says Christopher Brown, CEO. Its territory includes a seven-county region near the Twin Cities. And while it plans to take on additional territory, right now its current market suits it fine. "There are a million households in the Twin Cities and we serve between 25,000 and 30,000 of them. We think there is plenty of room to grow. Then, we can pick a second city and duplicate what we have done here."

Equally important to the online grocer`s success as delivery is the web site itself and making sure consumers find it easy to use. "We recently simplified our site. Now customers can take a quick look at just our specials. They can also click on My List to view the products they routinely buy. A high percentage of our customers buy the same items every week. We let them automatically order those items and then they can browse the aisles for additional items," Brown says.

Simon Delivers also offers "one-click meals." By clicking on such a meal, shoppers get the recipe and can automatically order all the required ingredients. It also provides shoppers a quick summary of organic and natural food items and a search capability for shoppers looking for low-carb meals. To spur additional sales, it has added floral and home office supplies.

SimonDelivers Inc.
3440 WinPark Drive New Hope, MN 55427
Date Launched
1999
Annual Web-Based Sales
$64,000,000 (2004)
Vendor Relationships
Site Design
In-house
E-Commerce Platform
In-house
Web Hosting
ACS/BlueStar
Site Search
DT Search
Content Management
In-house
Order Management
SAP
Payment Processor
Wells Fargo, Paymentech, First Data Merchant Services

Fulfillment
SAP/Catalyst
Affiliate Marketing Management
In-house
Search Engine Management
DT Search
E-Mail Marketing
In-house
CRM
In-house
Web Analytics
WebTrends

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