FreshDirect Gives Customers Tasty First Bite

With offers of $50 in free food handed out by people dressed as 7-foot-tall fruits and vegetables, it isn't surprising that New York-based online fresh-food retailer FreshDirect has attracted 50,000 customers since launching last fall.

The challenge is retaining customers, of course, but FreshDirect seems to be succeeding there as well with 75 percent of first-time customers buying from the company again. Further, more than 17 percent of households where the service is available have tried FreshDirect, and the company is attracting more than 3,000 new customers weekly.

The company, whose site is, even expects to be profitable by the end of the year.

The $50 in free food is the centerpiece of a campaign that includes guerrilla marketing, advertising on cable TV and inserts in Time Warner cable-subscription bills. Sweetening the free-food deal is that FreshDirect waives the $40 minimum order.

“We know it is an incredibly rich offer, but the reason we did it was because we needed to entice people to come in and try something new,” said John Boris, vice president of marketing/business development at FreshDirect. “Ordering fresh food online is a new idea for New Yorkers, so we need to get people to understand and experience the FreshDirect product. If we weren't confident that [customers] were going to come back, we'd be wasting our money.”

The average order is $80 and growing, Boris said.

The service is available on Manhattan's east side, and it will be available citywide and in office parks of major employers in New York suburbs by the end of the year.

The company, conceived three years ago, said it shortens the supply chain by purchasing fresh foods direct from the source and processing orders in a manufacturing facility using batch-manufacturing processes. As a result, FreshDirect says it can save customers up to 35 percent compared with local retail markets.

Marketing began at launch in September by targeting specific Manhattan ZIP codes with “brand ambassadors,” some in inflatable fruit or vegetable costumes and others in branded FreshDirect uniforms. They roamed high-foot-traffic areas where FreshDirect was available. Each time a new area opened, it deployed more ambassadors.

As the company's service spread throughout the east side, FreshDirect reinforced the guerrilla concept with local static outdoor advertising such as ads on bus shelters and phone kiosks. It placed ads on buses and in subways, and in January it began a cable-TV campaign on Time Warner Cable in Manhattan.

“We really tried to maximize our marketing dollars by concentrating our efforts very locally with as much one-to-one contact as possible, with guerrilla and local outdoor advertising,” Boris said. “Then, once we got to that critical mass, we flipped the switch and reinforced it with more mass media targeted to the Manhattan marketplace.”

Boris said this approach avoids over-reaching, as happened to Webvan. Also, unlike other online grocers, FreshDirect sticks to meats, produce, breads and other fresh foods, avoiding cleaning products, paper goods and other typical grocery items.

FreshDirect also does online marketing. It maintains a 100,000-count e-mail database split evenly between current customers and those who entered their ZIP codes so the company can let them know when the service expands to their neighborhood.

“We let them know when we have information that is pertinent or relevant to them, such as if we have a new line of prime beef,” Boris said. “We also use it sparingly so that we don't annoy people. The fewer messages you send out that are more targeted toward the customer's interest, obviously the greater response you'll have.”

For example, a Valentine's Day offer of a fondue dinner drew a click-through rate of more than 50 percent, and the company exceeded its sales forecast for that meal by 300 percent.

FreshDirect also has entered a deal with AOL Time Warner where it has some online advertising geo-coded to the New York metropolitan area. The target is women ages 25 to 54. In addition, FreshDirect fliers are in the March inserts of the Time Warner cable bills.

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