AUSTIN, Texas -- Whole Foods Market here said last week it will unveil its new Web site -- wholefoods.com -- March 22, offering discount pricing on an initial selection of 6,000 natural-food items and nutritional supplements.
"We'll let customers tell us what direction to take the product offerings," said John Mackey, chairman and chief executive officer. "We're being very flexible, and as we get feedback, we will invest in those directions that offer the greatest profit."
Offerings will include a full selection of nonperishable grocery items and supplements, plus gift packages, flowers and books, he said; the site will also start out with 20,000 pages of educational text, he added.
Mackey said the Web site will be an on-line mail-order program, not a home-delivery system, and will use United Parcel Service to deliver customer orders.
To reflect the Web site's lower cost structure, he said, Whole Foods plans to "discount strongly" on-line, with prices on most items that are lower than their in-store price, "rather than providing an umbrella to protect the stores.
"If the Internet is a better mousetrap and a more effective way to sell product, then we'd be foolish not to price it aggressively, because that's what we expect our competition to do.
"Our stores will just have to stand that market test because we'd rather do it to ourselves than have someone else do it to us."
Initially, Whole Foods plans to offer 6,000 stockkeeping units, moving up to 10,000 within the first year, Mackey said, "and we expect that number to continue to go up."
Mackey made his remarks during a phone conference with securities analysts following release of Whole Foods' results for the 16-week first quarter ended Jan. 17, which showed sales up 12% to $408 million and comparable-store sales up 6.2%, while net income rose 7.7% to $13 million.
Among other topics discussed during the call:
Whole Foods plans to introduce a new management and incentive system for measuring corporate performance called Economic Value Added, which is designed to improve decision-making, streamline accountability and increase overall organizational effectiveness.
The company's Fresh Shopper loyalty card will be rolled out chainwide later this year following a successful Midwest test.
According to Mackey, Whole Foods will direct initial marketing efforts for the Web site at its existing customer base. "We have 1.5 million people a week in our stores, and we'll leverage that base to break even on the Web site. Once we're successful, we can plow the profits back into the markets and extend the franchise outside our existing base."
He said Whole Foods is uncertain what effect the Web site will have on overall sales "because we have no history in this area, so we'll take a wait-and-see attitude until we get it launched. We are hopeful but cautious about the results.
"We know what to expect on the expense side but not on the revenue side."
He declined to pinpoint Whole Foods' initial investment but said, "It's less than the cost of a typical new store, and the break-even will be less than for a typical store."
Whole Foods has hired Stern Stewart & Co., which pioneered development of the EVA concept, to assist with implementation of the management framework, he said.
