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The Issue: FreshDirect Focuses on Customer Service


The online grocer is defying the odds and expanding during the economic downturn

During the dot-com boom in the late 1990s, several online grocery companies like Priceline's (PCLN) grocery division and Foster City (Calif.)-based Webvan burst on the scene. They expanded aggressively into various cities. But when the bubble burst, capital dried up, and these companies went bankrupt.

During the current downturn, FreshDirect, the online grocer, based in Long Island City, N.Y., is defying the odds. CEO Richard Braddock (formerly the CEO of Priceline) says that while previous Web grocers used capital to expand, he is focusing on the customer experience. "We are going to make mistakes," he says, "but we will make you feel special, and our job is to offset the inevitable mistakes with some great solutions and great service."

The Information Edge

The edge for FreshDirect, says Braddock, is its extensive database where it can gather more information about shopping patterns and behavior than a traditional bricks-and-mortar grocery store can. Finding ways to provide better customer service to the most loyal customers is particularly important during a downturn, he argues. "The core issue now is that consumers are paralyzed with the fear of the unknown, and that is holding back their spending," he says. So retailers like FreshDirect need to get creative about finding ways to increase sales.

Using its database, FreshDirect launched a new feature this spring that analyzes a customer


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