FreshDirect Equal to Ecommerce Delivery, Sourcing Challenges
Progressive Grocer: So what happens to the products that get the one-star rating? Are there people who will order them anyway even though, you’ve said, pretty much, don’t buy them?
DM: Yeah, yeah.
Progressive Grocer: Buy at your own risk, is that it?
DM: And there’s less of them, right? So there’s significantly less people that will buy something that’s one star versus five stars. There were some items people just need to have, right? They just want oranges all year. Maybe they’re going to juice them, who knows? The other piece of it is, we really back off on those items, right? So we’ll have on our site, probably 20 different, 15 different citrus items today. When we get into June and July, you may see three or four. Right? So we manage and curate the assortment regularly, because, again, we’re doing the work of driving the consumer into what we think is best.
Progressive Grocer: I see. So, you go all over the world to source stuff, right?
DM: I used to. The team does, yes.
Progressive Grocer: Right, OK, the company does. But how important is local as a philosophy or as a business strategy?
DM: Super-, super-important. And here is why local is so good. It’s for what we just talked about. Local is seasonal, and whenever you eat seasonally, you’re going to end up with better product. Part of the challenge today is, there are no real seasons anymore because of modern transportation. And product can come from all over the world, and we have greenhouses. So consumers are hard-pressed to understand even when tomato season is. But the reality is, [it’s] in August and September, and even early October. [That’s when] I have the best tomatoes in the Northeast.
We have a high, high commitment to local growers. What we’ve found is local growers were really, really great at just that. At growing. They were not great at marketing, and they weren’t great at logistics. So we took that burden onto us. And the deal, the relationship that we built with these growers was, it’s our responsibility to market and build a brand for you. And it’s our responsibility to get the product from you. So we have our own fleet of trucks and drivers that are out at these farms picking up every day, which allows the growers to do what they do best, which is grow.
We have a lot of local growers, from [New York’s] Long Island to upstate New York to New Jersey. And the reality is, even down to Virginia. But the important piece is, they are relationships that we’ve fostered over time, and there’s a strong direct connection with them.
Progressive Grocer: Do you feel that your FoodKick service, which offers a curated selection of foods, is the future of ecommerce as something ever more customized?
P.J. Oleksak: We are super-proud of what we’ve built with FoodKick, and that FoodKick/FreshDirect combination is a really strong, competitive positioning. We believe that together, there’s just really nothing stronger on the market. When you think about FoodKick, it is doing two things for us as an enterprise. It is facilitating a need for our existing customer base on the FreshDirect side, because we know that fresh [food] doesn’t necessarily last seven days. You need a fill-in shop towards the end of the week, or you have a spontaneous moment in your life where you just need something that you had had not planned for in your week.
So it has added an extra level of service and opportunity to take care of our existing customer base, and it’s really offering a service to a totally different customer base as well that … doesn’t live in a planning mode. They don’t know … how many meals [they’re] going to have at home. So it’s servicing a different customer base as well. We think together, the combination is really powerful as we expand, and we are excited about the success we’ve seen with the FoodKick model. It is a proven model that customers have responded incredibly well to, and it’ll be a big part of our expansion strategy, but together as an enterprise, the two [components].
Note: Interview has been condensed and edited for clarity. Read part 1 of the interview, in which McInerney and Oleksak discussed their company’s growth potential, and how ecommerce has evolved over the years.