On-line shopping is not yet a venture for distributors that prefer to follow only a proven course.
Logistical approaches of retailers delivering on e-tail promises are as wide and varied as retailer's approaches to supporting their traditional operations. No clear-cut logistical model has emerged as the true path from those offering on-line shopping - both click-and-mortar and brick-and-mortar based operators. As a result a myriad of logistics systems are being employed.
"The early[on-line-only] players have shown that the proposition can be costly," says Tom Schaffner, spokesperson, Unified Western Grocers, Inc., Los Angeles. "There are many different models. Clear cut models take time to develop. It also takes causalities to get there."
Other supermarket operators are quick to point out that home delivery has been around for ever. Today the on-line facet is simply layering on a new twist.
"There have always been telephone orders," says one Midwest operator. "We would always accommodate our customers who needed us to select their items for them or those who needed home delivery. It's just part of giving good service."
Boise-based Albertson's has taken two different approaches to its warehouse, fulfillment and delivery systems in two areas: Fort Worth, Texas and Seattle, Wash. In Fort Worth, a section of an existing warehouse has been set aside as a fulfillment station for the operator's on-line shopping service. In Seattle, the chain uses a retrofitted Albertson's unit combining a small bricks-and-mortar operation with a fulfillment center. Fort Worth customers are serviced via UPS. Seattle orders are delivered by the chain's fleet.
On-line shopping has been available in Albertson's Fort Worth marketing area for two years. A limited non-perishable assortment of 5,500 SKUs are available. The dedicated fulfillment center within the existing Albertson's 108,000 square foot warehouse serves as the picking point.
In Seattle, Albertson's uses an existing 31,000 square foot remodeled unit which when retrofitted presents a 14,000 square foot conventional supermarket with 17,000 square feet reserved as a dedicated fulfillment center for picking and packing of orders. Retrofitting an existing unit saved the company the outlay of building a new distribution facility expressly for on-line home shopping fulfillment.
Multiple service options for consumers are also built into this click-and-mortar operation. Shoppers can select items in the bricks-and-mortar side of the store. Customers can order via the Internet and have the order delivered. Additionally customers can elect to pick up their order, already packed and ready to go, at the store. For those customers without on-line access Albertson's makes available store-based terminals which can be used to order items which then can be packaged for pick up later that day or for home delivery.
Home delivery in Seattle centers on a dedicated fleet of 30 trucks. Orders of more than $60 delivered free, orders of less than $60 have a $5.95 fee. Customers select one of eight 90-minute time frames ranging from 9 a.m. to 10 p.m. The delivery area encompasses a 35-mile radius. A total of 16,000 SKUs are offered on-line while 4,500 are offered in-store.
Safeway, Pleasanton, Calif., has also entered into the on-line home shopping arena but in a dramatically different way. The chain has elected to partner with GroceryWorks, Dallas, as its exclusive on-line grocery channel. The chain made this move with the believe that customers that shop on-line do not shop on-line exclusively, with e-tailing complementing, not replacing or surpassing, brick-and-mortar operations.
The chain began the program in the Dallas, Fort Worth and Houston markets by employing fulfillment centers serviced from Safeway distribution centers. Plans are to expand to 16 markets by the end of 2001. The retailer hopes the GroceryWorks alliance will give it a leg up on the technology side at a lower cost than would otherwise be the case.
Other operators are also looking to on-line providers to serve up the technology expertise while keeping the retailer's good name in front of consumers. Bristol Farms, El Segundo, Calif. is rolling out a program following a successful test of its on-line ordering and home delivery over the past holidays. As a result of the Southern California chain's test the operator has selected to outsource on-line service to ShopEaze.com, Santa Clara, Calif., saving company time and money.
Bristol Farms started its on-line presence offering customers the ability to order select items, including gift baskets, prepared meals, floral arrangements and catering services. These items were delivered to the home or picked up at the store. ShopEaze is further developing the proprietary Bristol Farms-branded e-commerce site to add a much broader range of top moving items for sale and home delivery, and eventually offer virtually everything sold in Bristol's markets.
Bristol Farms plans to deploy the enhanced on-line shopping service and home delivery at one of its units and will bring all of its markets on-line prior to the end of the year. Bristol will use ShopEase's approach to on-line shopping, including electronic coupons, customized shopping lists, sample offers and diet and nutrition updates.
Haggen, Inc., Bellingham, Wash., has also announced that it will soon be offering on-line shopping for customers in both its high-service oriented Haggen units and its value-oriented Tops warehouse-style stores. Again ShopEaze is providing a turnkey on-line approach for the chain. However, Haggen and Tops are not offering delivery. Instead configured shopping lists will be downloaded as pick lists for in-store personal shoppers to fulfill the order. The operator will establish customer pick-up with designated drive through lanes at all retail outlets.
Top Shelf Market, Lafayette Hill, Penn., is another operator that has teamed up with a technology company to bring on-line shopping to its customers. The independent has been offering on-line groceries since mid-May servicing the greater Philadelphia area. The company hangs its hat on its 18-year track record of home delivery from its Top Shelf Market brick-and-mortar operation and its ability to offer 10,000 top quality perishables and brand name groceries at traditional supermarket prices. Weekly sale prices are advertised akin to the brick-and-mortar operations. Customers are given a 100% satisfaction guarantee. A unique secure delivery system allows for unattended delivery which does not demand that a customer be home to accept a delivery. Delivery is made in airtight containers and coolers to a garage through a keyless entry pad or to another specified location outside the home.
The servicing company, Marketonestop, additionally offers pick up and delivery of dry cleaning, photo processing, U.S. postage stamps, and video rentals.
When asked what the strategy is for when big-name competition enters the trading area, Top Shelf Market's president Debbi Skaler indicated that the promotional budget couldn't touch those of the larger operators. "We can't afford the media blitz, but we have always been known for our quality and service. We have always been looked at as a good service-oriented operator. Because of that we should be able to get a piece of the on-line pie."
Jewel-Osco, Melrose Park, Ill. has partnered with Peapod for the bulk of its on-line shopping. However the chain offers on-line ordering of flowers, product, meat, seafood, deli items and bakery goods through it's own portal. Dubbed the Party Planner, customers can place their order on-line or via phone for pickup at a unit in their neighborhood. Floral deliveries can be arranged in the chain's marketing area for an $8.50 charge.
Dorothy Lane Markets, Dayton, Ohio, positions its Killer Brownie line and its Heavenly Ham signature items as headliners on the operator's Web site. The prime buyers are visitors to the area that have sampled the items or Daytonions that have moved out of the area, says Norman Mayne, owner. The operator was getting numerous telephone orders, so a Web presence with on-line ordering was a natural extension, he said. Gift certificates and Riedel Stemware are also available on the retailer's website. Delivery is made via UPS.
Box lunches are the only item on Dorothy Lane Markets' on-line ordering page that is available for local delivery. Customers can custom their order in the morning for afternoon delivery or order the day before. This is particularly useful for local businesses, says Mayne. The operator's catering trucks make the delivery.
At Draeger's, Menlo Park, Calif., on-line selections are limited to gift certificates and gift baskets. This provides an on-line aspect to the operator's existing gift service that has been operated by telephone or by in-unit associates. Orders are fulfilled in store and shipped via UPS. Overnight options are available.
Still other operators have found that their partnerships with third-party systems have proven to be a useful entree into web technology and fulfillment.
Hy-Vee, West Des Moines, Iowa, has taken advantage of the technology presented by HometownGrocer to offer customers on-line shopping and home delivery. Order pick up is also a service option offered customers. Orders are picked by Hy-Vee associates in various units (see SN story July 3, 2000) using custom-designed equipment to boost efficiency and not adversely impact the experience of in-unit shoppers. The relatively small demand at present makes it possible for in-store order picking, says a chain spokesperson. The retailer handles delivery.
