Will FreshDirect’s Changes Work?

Richard Braddock of FreshDirect decided to stop soliciting new customers.

In a case study we’ve just published, Jessica Bruder writes about FreshDirect, the Internet grocer, and its struggle to overcome an employment crisis at a time when it was hemorrhaging money and customers. The article focuses on a decision made by Richard S. Braddock, FreshDirect’s chief executive, in early 2008. Mr. Braddock decided that his company’s customer service was so poor that it had to stop soliciting new customers — its biggest source of revenue — until it figured out how to serve them. The risk, of course, was that the company would run out of money before it solved its problems.

Below, you can read what several business experts think of FreshDirect’s strategies, and you can leave your own comment. We’ll follow up next week with a blog post that will explain how those strategies are working.

 John A. Deighton, a professor at Harvard Business School who specializes in consumer behavior and digital marketing:

“Great execution seldom saves a flawed concept. There’s no shortage of cases to learn from. Consider Webvan, HomeGrocer, NetGrocer, Streamline, Homeruns, WebHouse and Peapod. The pain point for each one of them has been getting groceries to customers’ homes. Entrepreneurs have solved the other problems: warehousing, taking orders online and convincing customers to pay a small delivery fee. But the true cost of the little trucks that drive the groceries to the door can be very high, particularly when they’re serving unprofitable customers: singles who place small orders, users who don’t live in close proximity to one another with off-street shared service delivery, and people who all want their deliveries at 10 a.m. on Saturday. That tends to eat up the savings in the other parts of the system. How about drop-off points that customers can walk to? To save the business, it needs to fire some customers and ask others to cover what it costs to serve them.”

Stew Leonard Jr., president and chief executive of Stew Leonard’s, a family-owned chain of food stores and wine shops in Connecticut and New York:

“When you go to buy something on the FreshDirect Web site and it recommends another item? I think that’s a brilliant idea. I wish I could do that in the store. And the customer service part is terrific. It’s very, very important for them to make sure that exactly what customers visualize shows up in their home or apartment or condo. If someone’s planning a recipe at night and an ingredient doesn’t show up, that customer’s going to be really angry. It’s the same with us, and we talk about it at the store. We’re only as good as the smile on people’s faces after they eat our foods.”

Gabriel Shaoolian, chief executive and founder of Blue Fountain Media, a Web site design and online marketing company in New York:

“FreshDirect has a great chance to create what we call a stickiness factor, adding features that bring people to their site on a more frequent basis. They need to integrate social media marketing, give people the opportunity to tweet about certain items or post them to Facebook. These are really simple things to add in. I also think they should take some notes from Wikipedia: users generate the content, and it’s a resource center. What if customers could upload recipes themselves to FreshDirect.com and other people could share and rate them? They’ve got recipes on the site already. But take this one: ‘Breast of Chicken with Comte-Scallion Polenta.’ There’s no option to print this recipe. I can’t add it to my Facebook page. I can’t even tweet about it. What if I’m throwing a party and I want to say, ‘Hey, what do you guys think?’”

Visit the New York Times to read this article: Will FreshDirect's Changes Work?

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