Smarter online merchandising boosts Peapod’s average order
The average order at online grocer Peapod.com has grown from $106 to $143 in three years, Mark van Gelder, president and CEO, told the Retail Systems 2003 Conference and Exposition in Chicago Wednesday.
Part of the increase was due to better online merchandising, he said. “You have endcaps in the store, so you should have endcaps on the web,” he said. “But the web people didn’t understand what endcaps are, so we took them to the store and showed them.”
He also said that Peapod has worked hard to reduce out-of-stocks. Three years ago, as much as 6% of merchandise was out of stock. Today, that rate is 0.5%. “People will tolerate it in stores, but when they’re online, their tolerance for out-of-stocks is very limited,” he said.
One of the keys to Peapod’s success, he said, has been educating IT staff to the importance of customer service. “Amazon may think of itself as a technology company, but I don’t think of myself as a technology company,” he said. “We want people who can handle the store and are very customer-focused.”
Van Gelder also marveled at the small incentives that customers will accept as a way to change their behavior. Noting that Peapod offers 2-hour delivery windows, van Gelder said that customer demand is not equal for all delivery times, with some time slots filling up faster than others. When that happens, the system is programmed to offer a $1 discount to customers who will shift their delivery time to a more open period. “It’s amazing to see how many people will switch,” he said.
He also noted that Peapod creates convenience for shoppers by allowing them to enter their loyalty program number from one of the supermarket chains associated with Peapod, and then presenting the customer’s favorites based on the loyalty program information.
Back...
