The retail landscape in the U.S. has been littered with companies that have failed trying to make a buck at the online grocery business. But now, at least one, FreshDirect claims that it is making money -- and quite a bit of it, too.
FreshDirect CEO Rick Braddock told DailyFinance that the New York-based company has been "profitable since 2008 and was substantially profitable in 2009."
Mr. Braddock said growth rates have picked up even more this year and credits the company's understanding of its shoppers for the increase.
"We run FreshDirect with the idea that profitability does matter and one way that we manage for profitability is by creating and using the best customer database in the business and we use it in real time," he told DailyFinance.
FreshDirect uses its database to remind shoppers of items that may need to be repurchased and offers complementary product suggestions to build add-on sales. Roughly 20 percent of FreshDirect shoppers are prompted on weekly purchases with the average order increasing by an average of 10 percent in the process.
The grocer also offers rating systems to help shoppers make the right buying decisions. The company has a team of inspectors that use a five-star rating system for produce and seafood. Factors such as freshness, ripeness and taste determineCan the number of stars. More than half of FreshDirect's customers use the system.
Discussion Questions: Could FreshDirect work in other markets other than densely-populated New York? What impresses you most about the operation? Are there other online grocers that you think are on a profitable track, as well?