About a year and a half ago, longtime patrons of the pioneer grocery delivery service FreshDirect began complaining that the instructions arrived hours later. Was Broken eggs And Wasted fruit. One customer reported that he paid $ 200 for groceries – just for nothing Seltzer and a loaf.
The source of the problem was FreshDirect Headquartered in the Bronx for a million dollarsIn the summer of 2018, after the company moved out of a small facility in the Long Island City section of Queens, the company is building a complex automated delivery center with a nine-mile conveyor belt, creating confusion on the new warehouse floor, resulting in canceled orders, lost items and long wait. There is time
At the peak of the crisis, Jason Ackerman, CEO of FreshDirect, Resignation And was replaced by David McInerney, who helped run the company in the early 2000s. In the months that followed, FreshDirect made logistical fixes that gradually eliminated distribution problems. However, a lot of damage has been done.
“We had so much confidence, we could build a trust bank,” Mr McEnerney said in a recent interview. “Over time that trust has diminished.”
The battle for FreshDirect has further diminished: its control over the grocery supply industry in New York. For more than two decades, FreshDirect has followed the well-known MoonhatNight as the country’s first company to run a successful grocery delivery program. But now, the company is facing a growing breadth of rivals, including Amazon, who owns Whole Foods and has won several FreshDirect customers during the chaos in the Bronx.
“When Freshdrift first started, they didn’t have competition anymore,” said Phil and Lempert, a retail and grocery analyst. “100 things work against them.”
Although it is one of New York’s most popular online grocery services, FreshDirect24 reduced its market share from about 66 66 percent to 46 percent a year, according to research firm Second Major. During the same time period, Amazon’s share increased almost threefold, from about 8 times down to 22 percent. Competitors such as Instacart and the Peeped brand of Stop and Shop have also made ground.
“Amazon will be selling FreshDirect more,” said Bert P. Flickinger III, a retail and supermarket consultant. “This is the story of the proverbial David vs. Goliath.”
At some level, FreshDirect’s struggles are a simple evolution: a new business leading a startup before well-funded imitators move slowly. But the future of the company also represents a test of whether Amazon can affect fresh food with its deep pockets and huge logistical infrastructure, a market in which regional companies like FreshDirect have historically prospered.
Last month, another New York-based supermarket chain Fairway National retailers like Amazon and Trader Joe’s filed for bankruptcy for the second time in five years, blaming them for increased competition. In the autumn, JPMorgan Chase’s wealth-management arm, led by a 9 189 million investments 20 in Freedirect. In the year, the sale of its parts was discussed with a handful of regional and national grocery chains, according to Mr Flickr, who said he had discussed the number of chains that JPMorgan had come up with. (He declined to say the names of the chains; there was discussion Previously reported by the New York Post.)
Nevertheless, Mr McInerney insists that he is not concerned about FreshDirect’s competitors. The company has been profitable in the past, though a spokeswoman declined to disclose any details about its current financial performance, except that it “shows double-digit revenue growth.” In 2017, FreshDirect Sales generated 600 million to 700 million produced, According to news reports.
FreshDirect did not dispute that JPMorgan had discussed its share sale, though Mr McEnerney said the company had no “immediate plan” for acquisition by the competitor. (JPMorgan’s Wealth Management Branch declined to comment.) At this point, FreshDirect Distribution New York, New Jersey and Washington, DC as well as Connecticut, Pennsylvania and parts of Delaware. But Mr. McEnerney, a relaxed and energetic former chef, has a broad vision for the company’s future – an empire spanning from Washington to Philadelphia to Boston.
“Our goal is to control the northeast corridor,” he said. “If I look to the future, shopping can be dichotomous, where people buy packaged goods in one place and buy new food in another.”
Groceries are increasingly making regular adjustments in the U.S., hoping that culinary skills and locally supplied supply chains will give them a chance to compete with Amazon’s logistical superiority. Kroger changed his slogan in November “Refreshing for everyone” – The branding move, experts say, was to emphasize its advantages over online competitors, who have less experience in serving fresh food.
“Many large supermarkets are making sure that they have high quality fruits and vegetables, high quality prepared foods, high quality deli counters,” said Jihad Fumar, a grocery industry analyst at Credit Suisse. “” That’s a lot of the way local grocery businesses deal with Amazon. “
FreshDirect, however, has no retail store. Its carefully selected meat, cheeses and produce are distributed from a distribution facility like the Bronx warehouse and to a separate facility in Prince George’s County, Maryland.
For the past 18 months, the company has made multiple adjustments to regain the trust of customers who are ignited by distribution issues in 2018 the In the past, customers who reported missing items will receive store credit and an apology. Now, FreshDirect offers to provide missing items immediately at no additional cost. And because first-time customers get their grocery bags in a different color than regular distribution, FreshDirect operators know to be especially careful.
But above all, FreshDirect has infused its future on delivering high quality fresh food around the world. On a recent afternoon, Mr. McInerney was tied up on a Bronx warehouse, grabbing colleagues as he passed by, and shaking their hands with enthusiasm. Then he stopped next to a box of unusually large blueberries.
Prior to being CEO, Mr. McEnerney worked as FreshDirect’s “Chief Food Adventurer”, traveling extensively with a team of food traders to scout new products. On one trip, he said he visited David Jackson, a blueberry supplier from FreshDirect, at his firm in California. In a shed where blueberries are being packed in boxes, Mr McEnerney has noticed that some berries are larger than others.
“I said, ‘Dave, can you pick the biggest one for me?'” He recalled. And so FreshDirect’s signature “jumbo blueberry” was born.
“Just because we had boots on the ground, we saw that farmers couldn’t think of anything like their own,” Mr McEnerney said.
Mr McEnerney tells a similar origin story about FreshDirect’s eggs – in which case he chose an unusually small, especially flavored variety.
But no matter what the taste, the eggs have to be left intact in order for the customers to order. And after switching to the Bronx, these national basic necessities have become a challenge for FreshDirect. The food was out of stock. The order arrived late or went missing. The customers were enraged.
The logistical chaos was largely larger and more complicated than the Long Island City headquarters, largely due to inadequate planning and the transition to new facilities, according to six people familiar with Freshdrike, including several current and former employees.
This was in line with the widespread lack of resources throughout the organization. For years, former employees said FreshDirect’s website was unprofessional, so posting updates was difficult and time-consuming.
After the initial problems at the new headquarters, FreshDirect will be more organized and more streamlined with the advice of Alix Partners, Holly Atlin. According to a former employee for a reason, meetings become more efficient. Mr Atlin was determined to schedule and forbid the staff to take out laptops where they were present. (Miss. Atlin declined to comment.)
“In the face of an infection like many businesses, we have listed internal and external expertise to make sure we are in a better position to grow,” said Sabrina Strauss, a spokeswoman for FreshDirect. “” They helped us on an interim basis to support our business and take a positive path. “
Now FreshDirect is trying to get past the Bronx’s problems. For his part, Mr McInerney claims to be more interested in fresh fish and poultry than possible acquisition or competition from Amazon.
“What we do is focus on what we do best,” said Mr McEnerney. “Which is fresh food.”
In a storage room at the Bronx headquarters, he took out a box containing a large halibut, digging through a layer of ice crystals until the glossy fibers emerged.
“It’s a sight fish,” he put it out of the box, “Look how beautiful! Yesterday the fish came out of the water.
He left it behind.
“Pretty cool, isn’t it?”