|Netgrocer Brings Grocery Stores to the Internet
years ago Daniel Nissan left Tel-Aviv in Israel to work in New York City as a software
marketing manager for a leading edge technology firm that was developing breakthrough
telephony software for the Internet.
It wasnt Daniels first visit to the US, but it was his first
experience living and working in NYC. Nissan, a typical New Yorker, was on the lookout for
a convenient way to shop for groceries that would save time and money.
After observing New Yorkers in midtown Manhattan doing their shopping, Nissan
pondered an idea of his friend, Evan Yri. Yris plan was for people to be able to
order their non-perishables, household supplies, and health and beauty aids at the
convenience of their keyboard using the Internet. Nissan joined his friends company
as President and Chief Executive Officer and in July 1997, and Yris dream became a
reality with the launching of the Netgrocer service.
Aided by advances in Internet technology and an ever-growing user base of
World Wide Web shoppers, Netgrocer entered the growing world of Internet Marketers where
so far, there are more failures than successes.
Industry pundits acknowledge the explosive growth of the World Wide Web and
the growing acceptance of users to transact business on it, but is Netgrocer an idea whose
time has come? Home banking, for example had several false starts, and although it is
finally gaining momentum, the jury is still out on if it will gain wide
acceptance. Nissan is confident of Netgrocers success because of the enormous size
of the grocery and health and beauty aid business. In this industry, even a small
percentage is a large piece of business, because the market is so large," remarks
The service has an intuitive HTML interface, which is actually a proprietary,
sophisticated, but easy to use "shopping cart" system developed by
Netgrocers development team. To use the NetGrocer service customers need:
- A Web browser such as Netscape Navigator 4.x, Microsoft Internet Explorer 4.x,
or AOL 3.0
- An active connection to the Internet
- A valid credit card
According to Nissan, shopping cart software was developed internally in order
to be able to incorporate advanced shopping features into the Netgrocer service such as
cart manipulation, shopping pattern recognition, user customized product sorting.
For example shoppers can change the quantities in their shopping cart, click
on items in the cart to take a closer look, and so on without having to backtrack their
steps. Netgrocers advanced pattern recognition feature makes it possible for the 2nd
and succeeding shopping visits to the service to take five or ten minutes instead of the
typical one to two hour process in the conventional supermarket. The My Netgrocer feature
can provide an automatic shopping list for you every time, you shop. This feature can show
you all the items you have purchased in whatever category you go to. Its akin to
taking everything off the shelf at the grocery store you dont normally buy to make
it easier to find the things you probably want a store within a store based on your
Just think. No searching for a parking place, no dings in your car doors, and
no pickup lines. You dont have to comb your hair, shave, or get dressed. And best of
all, even if you do, you dont have to be offended by others who dont. [g].
For suburban and rural customers, Netgrocer saves gas and vehicle emissions.
For metropolitans, the service can save cab fares and tipping. For everyone, especially
dual income families, the service saves time.
Contrary to what you might think, Netgrocer isnt more expensive than
the average grocery store, according to the companys co-founder. "Netgrocer
doesnt just offer convenience and timesaving; our service is also a significant cost
saver," remarks Nissan. The service offers its members everyday discount prices for a
variety of popular brand name products. Speaking from the companys executive offices
in midtown Manhattan, Nison said: "The prices are especially competitive for people
in expensive markets like midtown areas of major cities, vacation areas, rural
communities, and for diplomats and service members living overseas."
Netgrocer is the first, and by far the largest, online grocery store serving
tens of thousands of customers throughout the USA. Currently the service offers 7,500
items, which are purchased directly from manufacturers, and sold directly to consumers. By
buying and selling direct Netgrocer can save the costs of accouterments such as fancy
music and bright lights typically associated with retail-based food delivery systems, and
pass on the savings to consumers.
A typical supermarket has 30,000 items but many of them are duplication
different versions of basically the same product. Netgrocers strategy is to
offer the most popular sizes and brands in order to reduce their inventory carrying cost
and keep their prices competitive. Certain items, such as laundry detergent, are offered
in a larger range of sizes and brands to accommodate the varying needs of apartment
dwellers versus homeowners and other contemporary consumer trends.
As any mail order marketer can tell you, economical, fast and reliable
delivery is essential to the success of their service. Netgrocer chose Federal Express as
its exclusive delivery mechanism. But users dont have to pay exorbitant freight
charges for this high service level. Fed Xs Express Saver service, (which typically
arrives overnight), is guaranteed to arrive anywhere within 3 business days for $2.99 for
orders under $50, and $4.99 for orders over $50. In order to take advantage of Fed
Xs favorable rates, deliveries are limited to the 48 contiguous states and
diplomatic pouches, APO, and FPO addresses (via three gateway cities). You can track the
status of your order on the Netgrocer Website or using the tracking number you can check
its progress at the Federal Express Website.
All shipments are done from the companys 125,000 square foot warehouse
in North Brunswick, New Jersey using a space age packing system developed by Sealed Air
Corporation. Instead of Styrofoam chips, a special pillow is placed into the box. Two
liquids are poured into compartments in the pillow. When the groceries are put into the
box pressing against the pillow causes a chemical reaction between the two liquids. In
less than a minute the mixture in the pillow hardens into form fitting foam. This
packaging system works so well that even potato chips can be shipped this way without
being broken and crumbled in shipment.
Netgrocer is a privately held firm. Sedant, formerly SEEUSEE International
has purchased a 33% interest in the firm and holds options on additional shares. The
service is growing at 50% 100% per month as more users get onto the Internet and
become comfortable with transacting on the Web.
Netgrocer takes full responsibility for any missing packages; but since the
service was launched in June there has been only one case of a confirmed missing shipment,
which was quickly corrected. There were a few others but they turned out to be customers
putting Netgrocers tracking capabilities to the test.
Another aspect of this service will appeal to health conscious consumers.
Each of the items offered is profiled with a photograph, description, price, sodium
content, fat content, calories, and other nutritional information. Not only is this
information provided for each item, but you can actually sort the products based on their
price, brand name, category, sodium content, caloric content, or fat content.
Recurring purchases can be set up for products you use regularly, such as cat
litter, diapers, formula, soap, shampoos, laundry detergent, toilet paper, and so on.
Normally, you avoid buying heavy items by mail, but with Netgrocers
flat-rate freight, who cares! Netgrocer is a great way to purchase those bulky heavy items
that you are sick and tired of lugging to and from the car and that frequently smush your
Wonder Bread and mangle your vertebrae.
Another advantage is that customers can purchase items they are sometimes
embarrassed about buying such as hemorrhoid remedies, Tampax, hair coloring,
Hey, just because some pitchman spouts off about these things on television doesnt
mean everyone at the grocery store has to know you are using them, right?
There is no charge to sign up or use the service other than the price of the
discounted merchandise. You sign up by pointing your web browser to
http://www.netgrocer.com. The service offers a secured server for entering your credit
card billing information. Members are issued an account ID number and password (which they
can choose themselves). Any family member, employee, or friend you authorize can use this
ID to make purchases.
There really isnt much reason to fear using credit cards on the net.
Under Federal law you are only liable for the first $50 of any unauthorized credit card
use. Disputing a credit card charge is relatively easy; just call an 800 number and say
the word. In comparison, getting a refund when you paid cash or after your check clears
can be quite an ordeal.
Besides shopping for your household, you can also shop for kids away at
college, or their grandparents, or send your order ahead to your vacation destination
where groceries may be harder to find or more expensive. Travelers staying at efficiencies
can also easily outfit their pantry this way.
The Netgrocer system takes a little getting used to at first and may require
a few sessions to get acclimated. Cons: Selections are somewhat limited. The prices are
competitive especially with metropolitan and remote areas, but not always as low as my
local supermarket in the Southern California suburbs. Pros: Prices are lower for big
cities, remote and resort areas. Delivery costs are lower than a typical round trip drive
to your local grocery store. And the service offers a convenient way to do your shopping,
especially for recurring items and special circumstances.
On balance, there certainly seems to be a market for this service. After
trying it a few times you can log on and fill your shopping cart with whatever your want
and have it delivered to your or your love ones doorstep, gangplank, campsite, or
whatever, with nothing more than a few points and clicks.
333 7th avenue
New York, NY 10001
Using the Netgrocer Website
Netgrocers website uses HTML frames. A static panel on the left gives
you a view of your shopping cart. Items in the cart be viewed or changed at any time with
a simple click of the mouse. The cart total is clearly displayed and a single click takes
you to the checkout. A static panel on the top of the screen provides simple site
navation. From there you can easily access the Grocery, Health and Beauty, Computer
Software, Corporate Cupboard, Kids Corner, and Photo and Video departments. A site
search and site map are also available here as well as access to "Shopper"
shopping list searching function.
You do you actual shopping in the main panel. This panel displays Best Buys
followed by the products in the department you selected. The product name, size, price are
displayed. By default thumbnails are displayed of all products. The product thumbnails
have links to enlargements, and there are also hotlinks to buy the product or get more
Immediately upon placing your order you receive an email confirmation. Once
there is a Federal Express confirmation number it is also emailed to you. You can check
your order status anytime by logging in the Netgrocer Website. Actually, you can do more
than just check status. If it hasnt shipped yet, you can modify it, reschedule, and
cancel it. If it has shipped yet you can track it. If you like, you can even arrange to
make the order a recurring.
The pages load relatively fast even though they may have several thumbnail
graphics. There are hotlinks for downloading newer versions of Netscape Navigator and
Microsoft Internet Explorer.
Netgrocers toll-free number is prominently displayed on the site. I
called customer service for help with a cordless phone in one hand an a toothbrush in the
other expecting to be on hold for several minutes listening to corny announcements. But, a
rep was on the line so promptly I didnt even have time to "spit" out my
mouthful of Aim.
After a grabbled hello and a quick mouth rinse I asked him a few technical
questions and would rate the customer service staffs technical knowledge above
After shopping a few times, and going over the system with a critical eye I
did find a few quirks. The Federal Express tracking pane doesnt fit as nicely
compared to their other panes, which are extraordinarily well laid out. The software
isnt compatible yet, with my special Surf Express Web cache software, but it can be
easily disabled while shopping. One of my transactions didnt go through, but to my
surprise, I received a warning, and a screened popped up that allowed me to easily
resubmit my transmission which was accepted. I suspect I was running too many browser
windows at once. Overall, the Netgrocer Websites design, layout, and navigation are
quick good and the services shopping cart software is excellent.
333 7th avenue
New York, NY 10001
(customer service, general information)