You are here
MINNEAPOLIS -- A keen eye on customer needs -- and lightning-fast responses to what those needs are -- were the drivers behind the first-ever profitable quarter for SimonDelivers, Inc., c.e.o. Christopher Brown told Progressive Grocer in an interview during which he outlined some of the strategies that led to the online grocer's successful second quarter ended March 27.
The basis for the company's strategies is SimonDelivers' customer data, and what it does with this data. As a pure-play online grocer, every transaction is recorded, as opposed to brick-and-mortar retailers, whose non-loyalty club cash customers remain anonymous. "We have six years of 100 percent customer transaction data," said Brown. "We know who our best shoppers are, who our regular shoppers are, who may be infrequent, or who has left us completely. We know what they buy, how often, and on what days, and of course, where they live. Because of this, we're able to offer the convenience, freshness, variety, and value that our customers want."
Having such an intimate knowledge of its customers allows for extremely targeted promotions -- and SimonDelivers does have extremely high direct response rates, according to Brown -- but more important is the fact that it enables the retailer to efficiently deliver service. "Ten to 15 percent of our customers don't need promotions," said v.p. of sales and marketing Jim Dorcy. "They need messaging about service. In fact, one of the things the brick-and-mortars can learn from us is how to better service their customers using their data."
This messaging, for example, has enabled SimonDelivers to manage its customers' expectations about delivery times. Many online customers use an on-demand delivery schedule in which the customer decides the delivery window. While convenient to the customer, this method can result in less-than-truckload deliveries and increased delivery costs.
By using a route-based model, in which there are set delivery times for each area, efficiency is greatly increased. "This is one of those areas our initial detractors said would hurt us," said Dorcy. "But by prepublishing the delivery windows for each area, we found that it was really no big deal for our customers to adjust to that schedule, and at the same time we doubled our productivity. At the same time, we're using technology that has brought our pick accuracy up to 99 percent and enabled us to extend our delivery hours."
SimonDelivers will use the remainder of this fiscal year to continue to invest by improving its overall service and customer experience. This year SimonDelivers has implemented a new pricing strategy by matching over 2,000 items on price with local retailers. In addition, SimonDelivers will be launching Saturday delivery options to its core metropolitan geography, beginning June 11.
Since its inception in April 1999, SimonDelivers has significantly increased market share and now delivers across the entire major Minneapolis/St. Paul metropolitan area; as far south as Rochester, Minn.; as far east as Hudson and Prescott, Wis.; and as far west as Waconia, Minn.
Looking ahead, the sky's the limit for what SimonDelivers can do. "We've been approached about possibly providing behind-the-scenes online delivery service for brick-and-mortar supermarkets, and we are always looking to expand into additional markets," said Brown. "We consider each one carefully, but it's hard to say where we'll be in the future, because it's not our decision -- our customers will dictate which direction we take in the future more than we will."