Digital Chef

The gourmet food and cookware category isn’t overstocked with Web merchants yet, but the kitchen is filling up fast.

Until recently there were no Internet stores offering the depth and range of high-end food and kitchen goods that consumers are accustomed to finding through such print catalog staples as Williams Sonoma and Chef’s Catalog.

But sensing that gourmet foods and fancy cooking gadgets will be among the Web’s next blockbuster sales categories, more merchants are beginning to fill the void. The gourmet kitchen catalog business is already a multi-billion dollar market and with predictions that online sales could top $400 million by 2002, food industry consultants say that the category may become so filled with competitors that no single store could—or should—aspire to dominate it totally.

Nevertheless, that’s precisely what Kevin Appelbaum, chief executive officer of Digital Chef Inc., St. Helena, Calif., says he intends to do. Digital Chef’s mission is to be the Web’s most comprehensive source of online shopping for gourmet food and kitchenware.

“Delivering on the promise of delivering everything a cook desires on the Web—that’s what we’re going to do,” says Appelbaum.

That’s a tall order. But with a corporate strategy that includes the venerable Culinary Institute of America as a joint-venture partner and marketing relationships with big search engines, Applebaum insists that Digital Chef is up to the challenge

Indeed, with $13 million in new funding from venture capitalists, Digital Chef is expanding the size of its Web store and rolling out an even more aggressive electronic commerce strategy. Key elements of the strategy include:

Site content rich enough to maintain the interest of serious gourmet food fans and cooks is a central element of Digital Chef’s marketing plan.

Today, food aficionados can click on the site’s Gallery Chef page and print out recipes supplied by 46 top chefs from upscale restaurants around the country. Likewise, Digital Chef works with leading cookbook publishers such as Random House, Alfred A. Knopf, Doubleday and others to constantly update Cookbook Showcase, a search function that enables cooks to look for individual recipes by type of food, region or author. Applebaum is convinced that content-wise Digital Chef is already the top Web site in its class. But to turn itself into the category’s most successful Web store, Digital Chef must achieve an even higher profile with gourmet food lovers. And for that Applebaum is counting on Digital Chef’s relationship with the Culinary Institute of America.

Applebaum approached the institute about two years ago to see if the cooking school would be interested in providing access to the deep content on its Web site and its famous reputation in return for more Internet exposure and an equity stake in Digital Chef. The two parties formed an instant liaison.

Establishing credibility

By linking its site to Digital Chef, the culinary institute accomplishes a key goal: growing its reputation beyond just professional chefs and reaching out to more mainstream amateur and student chefs. In return, Digital Chef gets to feature the Culinary Institute of America on its Web page and obtains exclusive Internet access to the school’s chefs, recipe files and indepth index of cooking articles.

“Putting the CIA logo on the Digital Chef page is like getting the Good Housekeeping seal of approval,” Applebaum says. “It makes us more viable in the market place.”

Digital Chef went live in April 1998 and began selling in October. Since then Digital Chef’s staff has worked hard to make the site’s content lively and detailed enough to hold the interest of serious gourmet cooks. But rich site content is only one aspect of Digital Chef’s corporate strategy. Equally important is drawing and retaining customers by purchasing prime retail space on Yahoo and America Online.

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Digital Chef is a premier retailer on Yahoo’s online shopping service and is featured prominently in the search engine’s various cooking categories. Likewise, Digital Chef is paying America Online $7.5 million and a share of sales to draw business from AOL’s more than 13 million users. Under the two-year agreement, Digital Chef receives top placement in the gourmet, grocery, home, kitchen and garden categories on AOL’s shopping channel. Additionally, Digital Chef is featured on AOL in such popular areas as the Food Channel, The Influence Channel, People Connection, Digital City and other life style-oriented Web pages.

Today, the AOL and Yahoo deals generate 80% of Digital Chef’s site traffic and Applebaum believes that number will rise substantially once more gourmet cooks start finding digitalchef.com on the Web. “There are only a set number of shoppers on the Internet and we have to go to where the people are,” Applebaum says. “The portal deals enable us to do that.”

Building a brand

It’s still too early for Applebaum to discuss Digital Chef’s financial picture, including sales and when he expects the Web store to become profitable. For now, Applebaum says his primary mission is building up Digital Chef’s brand name. And he’s doing that by constantly looking for new places to show off Digital Chef’s gourmet food expertise. A good example is Food Central, a heavily visited section of CNN.com.

CNN is big on giving its TV viewers and its site visitors lots of lifestyle information on topics such as food and health.

Food Central offers the latest food and nutrition news together with recipes, restaurant reviews and more than 75 message boards that allow Internet users to swap cooking tips and other tidbits. As a contributor to Food Central, Digital Chef provides exclusive daily recipes and step-by-step teaching guides written by prominent chefs.

“This is a very focused market and if we can get to where people are looking on the Internet for serious cooking information, we will get them to remember the Digital Chef name,” Applebaum says. “Portal arrangements and supplying information to Food Central build up the brand.”

Applebaum started Digital Chef because he believed consumers wanted a one-stop Web store where they could easily look up and purchase exotic food products they couldn’t find in grocery or specialty stores.

No longer alone

Digital Chef was the first serious Web retailer to stake out the gourmet food category, but it no longer enjoys the luxury of being the market’s sole proprietor. In fact, the online gourmet food and kitchenwares business is heating up fast with several new competitors.

In September, Cooking.com, operated by a team of former Walt Disney interactive marketing executives, opened, while Rolling Pin Kitchen Emporium Inc., which operates 37 retail stores throughout the south, and Worldwide Kitchens, a division of Baltimore-based Maryland Equipment Co., are also coming online.

Applebaum is aware that other Web retailers have big ambitions for selling online to gourmet cooks, but he’s unfazed by the competition. Instead of standing pat, Applebaum is expanding Digital Chef to include kitchenwares and adding seasoned retailing executives to the management team. In January, Applebaum hired Sarah Esterling, former vice president of merchandising at Cooking.com, for a similar post at Digital Chef and named Bill Wallace, the culinary director of Draeger’s Market in San Francisco, as vice president of food.

Both positions are new and designed to capitalize on each executive’s long time knowledge of food retailing and sales. Esterling, for instance, developed and launched Williams Sonoma’s private label food and cookbook business, while Wallace developed the curriculum for Draeger’s Culinary Center, a well known California cooking school.

“We already have the content in place and now we are hiring retailing executives with the length and breadth of experience to really start to build up the site,” Applebaum says. “Mass merchandising doesn’t work in this niche. We had to get people on board who know how to specifically package and sell gourmet foods and kitchenwares.” Now that it has more capital and a bigger management team, Digital Chef is expanding into kitchenware.

Direct marketers such as Williams Sonoma and Chef’s Catalog have already proven that gourmet cooks are willing to shop at home for the culinary gadgets they want. But Applebaum believes the speed and convenience of Internet shopping will persuade shoppers to put away their catalogs and order online. And to entice them, Digital Chef now offers about 1,500 kitchenware products from such well-kown brand name manufacturers as Kitchen Aid, Braun, Black & Decker, Sunbeam, Oster, Toastmaster and others. “Complementing foods with kitchenwares makes us a more complete Web retailer,” Applebaum says. Adding cookware to Digital Chef’s product mix caps a busy two years for Applebaum.

And though he isn’t talking details yet, he’s still planning a major advertising campaign that will soon feature Digital Chef in leading gourmet food magazines and on serious TV and radio cooking shows. That upcoming campaign, plus other elements of Applebaum’s plan, impresses analysts and professional cooks with the comprehensiveness of Digital Chef’s overall corporate strategy and Web plan.