How FreshDirect Lives Up To Its Name

The Wall Street Journal: “FreshDirect launched its online-only service in 2002 in New York. Its green and orange trucks now provide next-day delivery to customers across the New York-New Jersey, Philadelphia and Washington, D.C., metropolitan areas, with plans to expand into Boston next … Amazon, Target Corp. and other large companies have invested hundreds of millions of dollars to expand food delivery and build out their grocery e-commerce operations. Supermarket chain owner Koninklijke Ahold Delhaize NV’s Peapod unit, the longest-running online grocery service in the U.S., has expanded to 24 markets and is investing in technology to cut its handling and delivery costs.”

“The grocers are trying to solve one of the toughest problems in home delivery: Getting food to doorsteps in the same condition consumers would expect if they went to the store themselves … FreshDirect’s logistic hurdles start well before delivery. It must get products from its suppliers to the building, process the food, then pick, pack and ship orders before the quality degrades. That is why its new facility has 15 different temperature zones … Software determines the most efficient route for each order, and tells workers which items to pick … The site has shaved the time it takes to fulfill an order by 75%, according to FreshDirect, and doubled the number of items picked per hour, compared with the pace at its old facility in Long Island City, Queens.”

“The stakes in getting the technology right are high. FreshDirect is competing with grocery chains that often fill online orders through their stores, using a mix of staff and third-party services like Instacart Inc .. Online-only operations with centralized warehouses tend to be more efficient than logistics run out of stores, because they use fewer workers and can position goods for faster fulfillment, said Judah Frommer, a food retail analyst with Credit Suisse … FreshDirect says its relatively small scale also can be an advantage since it doesn’t have to be all things for all shoppers.” FreshDirect Chief Executive Jason Ackerman comments: “We focus on being the best local food, fresh food retailer. And a lot of the tech is to support that.”

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