January 24, 2007, 12:00 AM

FreshDirect staying close to home

Online grocer FreshDirect LLC won’t be going national anytime soon. Instead the company will grow its base in New York City and the surrounding area with enhanced site tools and more relationships with celebrity chefs.

Mark Brohan

Research Director

FreshDirect LLC won’t be going national anytime soon and that’s perfectly fine with company president Steve Michaelson. In the past there’s been speculation that FreshDirect, No. 68 in the Internet Retailer Top 500 Guide to Retail Web Sites, would take its business model nationwide and compete head on with rivals such as Peapod LLC, No. 45 in the Internet Retailer Top 500 Guide to Retail Web Sites.

Indeed, in the past several years FreshDirect has expanded into parts of New Jersey, Brooklyn and Long Island. But Michaelson says that FreshDirect is content with its present territory and will spend 2007 further refining its established business model.

In the works, he says, are new site improvements such as an expanded shopping list, more relationships with popular chefs and the addition of more content to its recipe center, a program that enables shoppers to select and download a recipe and simultaneously shop online for ingredients. “We’re fairly settled into our territory and we like our current footprint,” Michaelson says.

FreshDirect now has more than 450 recipes online and recently added Real Simple, a magazine published by Time Inc., as a content provider. The company also has a similar relationship with Workman Publishing, publisher of 53 cookbooks, including The Silver Palate, The New Basics, The Barbecue Bible, French Laundry and Bouchon. In conjunction with its One-Click Recipes, FreshDirect also is pushing into quick, but fresh, meals prepared by well-known chefs.

For example, in October, FreshDirect began marketing a line of eight prepared meals by celebrity chef Terrance Brennan, who owns and operates the Picholine restaurant in New York City. FreshDirect will add another celebrity chef in April and a third in September. “Our market is the premium fresh food market for at-home convenience,” Michaelson says. “We compete with Whole Foods and retailers with similar products."

In 2007, FreshDirect also will update its shopping list tool and conduct a pilot of global positioning technology for its fleet of delivery vehicles. “We are only five years old and just getting started,” Michaelson says. FreshDirect currently has more than 250,000 customers and has fulfilled nearly 5 million orders since opening for business in September 2002. In 2006, online revenue increased about 25% to $200 million, the company says.

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