FRESH SUMMIT 2000 2000-11-20

CHRIS YTUARTE

ANAHEIM, Calif. -- Retailers who want to expand their businesses through consumer-direct, on-line perishable sales need to know exactly whom their shoppers are going to be, deliver on specific needs of that demographic with quality products, and must make the consumer comfortable with the entire procedure in order to be successful, said a panel of Internet retail experts at the Produce Marketing Association's Fresh Summit 2000, held here.

The three panelists, Kevin Coupe, vice president, "content guy" for Ideabeat.com, Darien, Conn.; Jonathan Sills, vice president of strategy and product development at Proflowers.com, San Diego, Calif.; and Mike Burrington, produce category manager for HomeGrocer.com, Kirkland, Wash.; discussed various issues, ideals and solutions that retailers can face when entering the on-line shopping game.

"Eighty-three percent of grocery companies do not have an e-commerce department," said Coupe. "And of that 83%, 73% do not even plan on having an e-commerce department."

According to Coupe, many supermarket retailers are still hesitant to test the on-line sales market, and he said that many grocery executives feel reluctant to get involved at such a late stage in their careers.

"The food industry is populated with lots of senior executives who are saying 'I hope I can retire before the Internet becomes a really big thing' and 'Let that be somebody else's problem,"' said Coupe. "But it's not likely to work out that way."

Representing the younger contingent of perishables retailers, Sills and Burrington said the on-line delivery business presents an opportunity for retailers to impress first-time consumers and make a name for their company in the field while it is still relatively new.

Most shoppers are wary of buying produce on-line, according to Burrington. Yet, once they take the initial step, produce purchases are the No. 1 reason for repeat usage at HomeGrocer.com, he said.

The main concern from consumers is a reluctance to let someone else pick produce items for them, said Burrington. "But that didn't stem anyone's enthusiasm [at HomeGrocer.com]."

Instead, Burrington said, the Internet company, which has no brick-and-mortar stores, focuses on service, convenience and maximizing the business advantages of on-line existence to assure consumers of the safety and quality of such an endeavor.

With most deliveries coming directly from the growers, there is minimal handling of the produce and better-quality product with a longer shelf life upon reaching the consumer. The entire system creates "an optimal cold chain," he said.

The company's ability to shorten the supply chain while using a mix of direct buying from large and small grower/shippers is an important foundation for e-commerce in the produce industry.

And, without having an actual overhead store location, HomeGrocer.com can operate in a unique and cost-effective manner, said Burrington. The company is able to "prep to demand" all products the night before any orders are to be shipped, which cuts down on extra inventory and wasted time.

The service aspect of on-line produce delivery requires retailers to make the consumer feel comfortable with the product as well as the presentation, since the transactions most often take place in private homes.

"We actually enter into 95% of our customers' kitchens," said Burrington. "So we go the extra step to make it pleasant for them."

Deliverymen for HomeGrocer.com are carefully hired to ensure such in-home comfort for consumers, and are trained to be the "milkmen of the next millennium," according to Burrington. Each deliveryman keeps the same route to maintain relationships with customers for long periods of time, and they do not accept tips under any circumstances.

HomeGrocer.com deliverymen even go as far as to bring dog treats to homes they know have canine residents, and always put surgical shoe coverings over their footwear just before entering any house, so as not to track dirt onto carpets or floors.

Like produce e-tailers, consumer-direct, on-line floral companies also need to enhance their service methods and the quality of the product they actually deliver to keep consumers coming back, according to Sills.

"Until they figure out how to send actual flowers over a wire, [the Internet] is a viable means for shipping something perishable and have it still be alive when it gets to the other end," he said.

Along with reducing transit time, e-commerce also enables the floral industry to strengthen the feedback loop between itself and consumers by reducing the amount of intermediary parties muddling up the process. The lack of a middleman also promotes better order tracking.