![]() The typical grocery store carries about 25,000 different packaged goods items and roughly 2,200 perishable products. About 50 percent of sales in a typical grocery store comes from such packaged goods as cereal, soda, and laundry detergent the other 50 percent comes from fresh products - meat, seafood, produce, deli products, and baked goods. Rather than reproduce a traditional supermarket online, the FreshDirect management team has set out to create a totally new model. Or Tony Como, head of vegetables, who has 32 years of experience and the ability “to spot the best of the crop from 20 feet away.” Take David Weber, who, with 30 years in the business as butcher, grader, buyer, and distributor, has delivered top-quality meat to Brooklyn’s Peter Luger Steakhouse, Connecticut-based Stew Leonard’s, and New York’s Fairway Markets. Ultimately, the pair drew inspiration from the Dell model.Įqually passionate and experienced food professionals, their impressive resumes colorfully featured on its Web site, run FreshDirect’s operations. Fedele to propose launching a chain of fresh-food stores. Ackerman triggered the partnership that led to FreshDirect when he approached Mr. With his intense personality, seething with energy, Mr. Fedele was a cofounder of and partner in Fairway Uptown, an ambitious and successful venture to build a massive fresh-food emporium in Harlem. Ackerman to launch FreshDirect, the 50-year-old Mr. ![]() The company’s other founder, Joseph Fedele, brings hands-on experience in the local market to the operation. ![]() Ackerman, 35, brings a broad strategic view of the industry from his experience as an investment banker specializing in supermarket mergers and acquisitions at Donaldson, Lufkin & Jenrette. The FreshDirect management team has deep roots in the fresh and prepared food business. “We focus on fresh products and offer higher quality at a lower cost by eliminating waste throughout the grocery supply chain in each individual processing step.” Online shopping and home delivery can be inconvenient,” Mr. Border described a vision of carrying a million stock-keeping units (SKUs).įreshDirect’s focus, by contrast, is not the service, but the product. Groceries, as an ongoing “replenishment” purchase, would provide the base load for delivering a plethora of products bought online. In fact, Louis Border, the creator and founder of Webvan, never wanted to be in the grocery business, but saw it as a pathway to achieve dominance in the “last mile” to the consumer’s home. Unlike Webvan, however, the founders of FreshDirect never sought to become one of the few companies to “earn the right to cross into a person’s home,” the goal espoused by Webvan’s former chief executive, George Shaheen. The inspiration behind FreshDirect dates to Columbus Day 1998, during the heyday of dot-com mania, when erstwhile e-tailer Webvan was also making the venture-capital rounds preparatory to its June 1999 launch. The question is whether the consumer appetite will match the volume and offerings of food scaled to deliver. FreshDirect craftily offers a selection of basic but still high-quality staples, and employs variety and sells specialty items only when they will clearly pay off. The Internet offers a critical tool to achieve the operating efficiencies FreshDirect needs to profitably serve its targeted customers.įreshDirect’s operating strategy also turns the traditional grocery business model - which offers wide variety to a diverse consumer population linked largely by geographic proximity - on its head. It allows us to do for food what Michael Dell did for computers.” Like the Dell Computer Corporation, FreshDirect employs a make-to-order philosophy to eliminate the middleman and create a more efficient supply chain. As FreshDirect’s cofounder Jason Ackerman recently told Fortune magazine, “The only reason we chose the Internet was that it helped us reach people at a lower transaction cost. Unlike its predecessors, FreshDirect has a well-thought-out operating strategy - and it’s a model that might just work.įreshDirect doesn’t look to other retailers, and certainly not to other e-tailers, for inspiration. Like its deceased predecessors Webvan Group Inc., Inc., and Inc., is a pure-play startup pursuing a dream of rapid home delivery of food products. (See “ The Last Mile to Nowhere: Flaws & Fallacies in Internet Home-Delivery Schemes,” by Tim Laseter et al., s+b, Third Quarter 2000.) Despite the carnage among the same-day home-delivery e-tailers on that stretch of the information superhighway we dubbed “the last mile to nowhere” in strategy+business, a new online grocer recently began delivery operations in New York City.
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