Taking A Grocery Store Online

The concept is fairly straightforward. Allow customers to purchase their groceries online, and deliver these orders to customers' homes — without charging any more than a traditional, brick-and-mortar grocery store. To execute this business plan, Dallas-based GroceryWorks.com relies on some sophisticated logistics technology. Since incorporating in February 1999, the online retailer was up and running in November of that same year. During its first six weeks in operation, GroceryWorks.com averaged 200 deliveries per day to Dallas and its suburban areas. However, the company eventually wants to increase that daily total to 2,000 orders. GroceryWorks.com requires minimum orders of $25, but the average order amount is more than $70.

While the company's headquarters is in Dallas, the warehouse facility and its 80 employees reside in Carrollton, TX. "We pay about $4 per square foot because the warehouse is not located in a high-priced area. A typical grocery store will pay about $25 per square foot to be located on Main Street," comments Jeff Waller, director of site development at GroceryWorks.com. Another difference between the online grocer and a traditional grocery store is customer base. Adds Waller, "Most of our customers have an average annual family income of $50,000. And, most online grocers make 80% of their deliveries in the evening. We were surprised to find out that only 50% of our deliveries are in the evening, and 50% are in the afternoon."

Process Orders Quickly
At the heart of the GroceryWorks.com operation is a line of products from EXE Technologies (Dallas). As orders come in through the GroceryWorks.com Web site, they are downloaded into the EXE system. The order information is then exported to RoadNet, a routing and delivery system developed by UPS (United Parcel Service). RoadNet then transfers the order back to the EXE system with the routing information embedded in the order. The information is then exported to the warehouse, where employees use integrated RF (radio frequency) handheld computers from Intermec Technologies (Everett, WA) to pick and pack each order.

Fresh produce, meats, and seafood are not stored at the Carrollton warehouse. Instead, GroceryWorks.com has extended the EXE system's capabilities to each of its fresh food suppliers. "These suppliers actually fill the orders and ship them to us. We receive the order from the supplier and then consolidate the fresh goods with the rest of the customer order at our warehouse," says Waller. "That was one of the big factors in choosing EXE. We had to be able to consolidate and cross-dock the merchandise that we receive from certain suppliers."

Ed Hess