The online grocery company “Webvan” is very often considered to be the biggest electronic commerce failure in history with having spent almost $1 billion. After their bankruptcy in July 2001, experts believed that the whole online grocery business model was either a failure or a fraud. Nevertheless, FreshDirect started its operations in the online grocery industry in July 2002 and learned from mistakes others did in the past and it can be stated that FreshDirect is a highly successful online grocery. But what did they do so different that made them so successful? FreshDirect strictly follows the Lean Startup approach by Eric Ries. Identifying customers problems first, getting evidence for these problems by “getting out of the building”, segmenting the target market, developing a solution and creating a minimum viable product, constantly executing the build-measure-learn loop and iterating as well as pivoting if necessary is the key to their success.
In the following, I would like to put emphasize on particular digital marketing activities that are central to FreshDirect’s success.
High-touch requirement of customers
When analysing FreshDirect’s digital marketing activities, it becomes very clear that one of the main obstacles of online groceries in general can be seen in the “high touch” requirement of customers. Philippa Gamse mentioned in her book “42 Rules for a Web Presence That Wins” the rule “Weigh high-tech against high-touch” and this rule is of utmost importance to FreshDirect. Visiting FreshDirect’s website (www.freshdirect.com), one of the first things that catch your eye is the “Daily Freshness Rating”, which is based on both customer reviews of the same day about, e.g. the quality of today’s tomatoes and FreshDirect’s quality experts that continuously check the quality of the food. In addition to that, FreshDirect also understand that people prefer videos over just text. Thus, they show a short 1-minute video that clearly points out how FreshDirect is strongly committed to provide products of highest quality and how they assure that day by day. These digital marketing activities effectively diminish the customer’s concerns about the freshness of delivered products, which they were not able to check by themselves and helps building a trustworthy relationship between the customer and FreshDirect.
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In general, FreshDirect’s website is very user-friendly and it just makes you to want ordering food immediately. After having done so, the real shopping experience begins when you return to their website and want to order a second, third and so forth time. FreshDirect’s website remembers your previous orders and names them as your favourite products, but also recommends various other products from the same category at the same time. This feature is called the YMAL (you might also like) tool and basically bases on the same sophisticated algorithm Amazon or Netflix use. In addition to that, FreshDirect started also using the “customers who bought that product also liked” tool. Furthermore, what impressed me very much is their very good search site. In my opinion, there is nothing more annoying, if you use a search site and the answer you get is only “No results found” or “Not available” et cetera. FreshDirect’ search site is very strong, so if you for example misspell a product’s name or if you just do not exactly know to what category a product belongs to, the search site will recommend and forward you very precisely to products and categories that might be what you are looking for. The whole shopping experience at FreshDirect therefore is very personalized and gives you as a customer the feeling that FreshDirect really cares about you and want to help you find the right product in the most convenient way.
Building a social community + going mobile
Last but not least, FreshDirect is also increasingly engaged in building a social community by running a Twitter and a Facebook account. FreshDirect has a very well-defined target segment and carefully focuses on not to address everyone, but only the customers that they want. As a result, FreshDirect has build a very strong loyal customer base where 65% of its total customer base are repeat, loyal customers that create for 80% of total revenues (Online Grocers: Finding and Executing the right model).
A part of the value proposition to customers of FreshDirect can be seen in convenience and time savings, it was a logical step to go mobile. Customers are no longer bound to using desktops or laptops, but can order food via their smartphone or tablet wherever they are. In addition to that, customers can also follow them via their smartphones on twitter and facebook. As John Leeman, the CMO of FreshDirect states: “Mobile is changing our business because we now get to be a part of our consumers’ lives in many more situations than sitting at a computer.”
In sum, it is very impressive to see to what high extent FreshDirect utilizes digital marketing and how successful they are with their approach. In my opinion, FreshDirect is doing an outstanding job in that respect and I could not find an online grocery that does it better right now.