Electronic Commerce: Forget the shopping trolley, use a CD-Rom

The big supermarket chains could learn a great deal about online food retailing from a small company in London. Sandra Vogel reports.

Grocery shopping on the Internet has had something of a bad press of late, with Tesco in particular hearing dissatisfied noises from both the press and the public. But supermarkets are not the only players in the online food retail business. FoodFerry is a small but rapidly expanding London-based outfit that has achieved remarkable success with the Internet. This is partly because it tackles remote shopping from an entirely different angle to that taken by the big name supermarkets.

A supermarket's expertise lies in putting goods on shelves and encouraging people to buy them. While some attention is given to fulfilling shopping lists, much is placed on encouraging impulse buys. Special offers, and tricks such as positioning goods at eye level and wafting smells at shoppers, are among the managers' weapons. They are wielded with abandon in order to move people around and achieve maximum profit.

The skills mix needed by the online grocery store is different, and is dictated in part by the technology itself. A serious online shop needs software that is easy to use for people who are not necessarily computer- literate. Connections need to be constantly available, and information must always be up to date. It is hopeless if a shopper tries to place orders and finds the server is down, or is able to place orders for out- of-season fruit or discontinued brands of soup.

Beyond technological considerations, the practicalities of remote shopping are very different from the supermarket variety. Many arise because customers give a large part of the shopping task over to third parties. Financial transactions, whether or not they are made over the Internet, need to be handled efficiently and accurately. Orders need to be delivered on time, every time, so that customers know they can rely on the service. Prices must remain stable, never changing between the time an order was placed and when it is delivered. And there must be a reliable way of dealing with "out of stock" problems.

FoodFerry seem to have all this under control, not least because food delivery is at the centre of their business rather than on its margins. It was set up in 1989 by James Millar, a lawyer, and Jonathan Hartnell- Beavis, an engineer, who thought there were plenty of people who shared their hatred of supermarket queues and who would pay that little bit extra for the joy of home delivery. They started small, operating in a few London postcodes, using a printed food catalogue and two delivery vans. Their premise was right, and by 1996 FoodFerry had a turnover of pounds 1m and had started to take orders by e-mail as well as phone and fax.

Today FoodFerry has 24 staff and operates out of offices in Covent Garden, which ensures ultra-fresh produce. They earn brownie points from customers for their support of organic and free-range produce, and because they try wherever possible to use UK suppliers.

FoodFerry is about to expand its online activity in a big way with a new hybrid CD-Rom and Internet-based service, which is expected to improve both quality and efficiency. Customers will use the user-friendly CD-Rom to scour virtual shelves, selecting items for their virtual shopping trolley. Then they go online to place their order. As the order is uploaded, updates to the CD-Rom are downloaded, to ensure stock and pricing information are current. Details of special offers and even advertising can be downloaded at the same time.

The CD-Rom has a range of features that show off FoodFerry's grounding in delivery and its understanding of customer care. Online shopping services from mainstream supermarkets have been particularly criticised for substituting goods for "out of stock" items in an unpredictable way. This leaves the customer always wondering whether they will get what they ordered. FoodFerry approach the problem by giving the customer free rein to attach notes to individual items, with instructions for the people who gather the goods together. If you have ordered Williams pears but would accept conference pears as a substitute, it is easy to attach a note to this effect. James Millar, now strategic director of FoodFerry, even says that his staff will contact customers if instructions are unclear.

The CD-Rom takes the requirements of speed and efficiency to heart, in several ways. Customers can set up and save trolleys of goods they buy regularly. Repeat ordering is straightforward. And the disk contains a set of recipes commissioned from the TV chef Gary Rhodes, whose entire ingredients can be ordered at the click of a button, something which Millar says is ideal for the lazy dinner-party organiser.

For those wanting ingredients, nutritional values or preparation instructions, a click on any item brings up a window with the information. Goods ordered before 10.15am will be delivered that evening.

The downside? Well, goods cost a little more than in a supermarket, but not much more, and the range is rather smaller than that at your average out-of-town supermarket, at around 2,500 lines. But Tesco and company need to start looking over their shoulders because, though FoodFerry only operates in around 35 London postcodes today, the story could be very different tomorrow.

FoodFerry (http://www.foodferry.co.uk) e-mail: sales@foodferry.co.uk; tel: 0171-498 0827; fax: 0171-498 8009.