John Leeman
CMO
FreshDirect
John Leeman, chief marketing officer, spoke to eMarketer about the challenges presented by the online grocery business and how FreshDirect is evolving to meet them.
John Leeman: I think the challenge is that there are multiple codes to crack, not just one. One code might be for stay-at-home moms with kids—a totally different code from me and my wife, who go out a fair amount but still cook at home a lot. Everybody’s got a different code and grocers need to decide which ones they want to serve and how best to win with them based on their store’s brand positioning. There are low price leaders like Wal-Mart, which satisfy different needs than companies that deliver a premium product, like FreshDirect.
“Logistics have become much better over the past decade. That’s how companies like FreshDirect have transformed the farm-to-table restaurant concept into the grocery store model.”
eMarketer: What’s different about the online grocery business now vs. 10 years ago?
Leeman: There are a couple things. First of all, at a fundamental technology level, broadband internet, and even mobile internet, are much more accessible today. So with almost no digital divide, all kinds of stores can target their consumers online. Second, the just-in-time supply chain concept now applies to much more than Dell computers. Logistics have become much better over the past decade. That’s how companies like FreshDirect have transformed the farm-to-table restaurant concept into the grocery store model.
eMarketer: What advice or best practices would you give to retailers considering ecommerce?
Leeman: I think everybody’s approach is going to be different based on their company’s positioning, the customer base that’s right for that positioning, the markets they’re in and the gaps in those markets. But overall, a best practice is to take a scientific approach and understand your target segments’ most important needs and then execute flawlessly. The marketing is the easiest part.
eMarketer: How is mobile changing how consumers buy groceries? How is it changing your business?
Leeman: We have a fantastic and simple iPhone and Android mobile app but we would venture to say that the richer shopping experience is probably online using a computer or using a browser on an iPad. Tablets are allowing people to have access all the time, which just adds to our convenience promise. 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 the kitchen, while out shopping for other things, in boring meetings. I think iPads and tablets just bring the best of both worlds together.
“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.”
eMarketer: FreshDirect is 10 years old. What are your biggest challenges in the business right now and are you overcoming these hurdles?
Leeman: This category has a number of barriers. So beyond the positioning of the store, we still have to get people to want to shop for groceries online. Our marketing model is a combination of converting people to be open to the category and then positioning ourselves within the category. We are targeting more of the right kind of customers for us. We’re not targeting just any kind of customer or even any kind of online customer.
We also recognize that one of the most powerful levers for a new customer is word-of-mouth referral and advocacy by current customers. So we’ve been building our social media community to unleash that power and help people inform other people about how much they like the product.
eMarketer: How are you doing that?
Leeman: We needed to take our digital and social media marketing to another level. Last fall, we began building a social media community and a curriculum of engagement that involved information, entertainment and all sorts of customer services. We wanted to create a vibrant community to help us engage with customers. Now we’re building tools and levers within our marketing and online store to enable people to advocate for us better and to do more. You’d be surprised how excited people can get after they discover how cool FreshDirect is compared to regular grocery shopping!
eMarketer: Are there any other digital levers that you’re using?
Leeman: We’re doing a lot of experiential marketing and experimenting with HouseParty.com. It’s a way for us to leverage interactive marketing recruitment to better target and facilitate awareness, trial, conversion and advocacy all at once. Plus our unique prepared meals and dishes from our kitchen are perfect for demonstrations in this kind of setting.
eMarketer: Do you think that more consumer education needs to be done for this category?
“This category has a number of barriers. So beyond the positioning of the store, we still have to get people to want to shop for groceries online.”
Leeman: I think it’s less education about the fact that you can buy groceries online and have them delivered, and more about how you can be assured that you’re getting high quality grocery items and the experience is going to be worth it.
eMarketer: What do you think the online grocery model can teach retailers?
Leeman: Don’t sacrifice innovation just because it’s hard to find the investment to fund it. Using everyday business situations to pilot-test new strategies and techniques before scaling them can be a cost-effective way to evolve into smarter ways of working.
A longer version of this interview is available to eMarketer Total Access clients only. If you’d like to learn more about becoming a Total Access client, click here.
Check out today’s other articles, “Facebook Users Interact with Brand Content Over Ads” and “Online Protections Haven’t Hurt Digital Ad Spend in France.”