The Project: Use technology that allows the online grocer to custom-make each food order -- at prices as much as 35% lower than rivals.
The Payoff: FreshDirect is on track to hit $90 million in revenues in its first year. Labor costs 60% lower than rival stores could lead to profits by yearend.
Sick of the wilted, pricey lettuce for sale in your local grocery store? Joe Fedele isn't. Iffy quality and high prices created the perfect opportunity for Fedele to launch FreshDirect, an online grocer in New York City a year ago. With the Web, the company can offer fresh food at prices up to 35% below rivals.
It was a big gamble. After the dot-com bust, online groceries seemed doomed. But Fedele, who has raised over $100 million, says he makes it work by buying direct from producers and making purchases to order. While the company is private and doesn't release its finances, Fedele says FreshDirect will rake in $90 million in revenues this year and be profitable by January.
The Net does more than just take orders. Web systems parse 3,200 daily orders to processing areas, where 600 employees cut meat, bake cookies, and pick fruit to order. Labor costs are 60% lower than other gourmet grocery stores, Fedele says. "This is mass production of customized orders." Look elsewhere for limp lettuce.
By Heather Green