Remember the 1940s, when milkmen delivered to homes? They're back, offering more than milk to those who order by computer.
"We call ourselves the milkmen of the millennium," says Mike Smith, distribution director for HomeGrocer.com, one of the fastest-growing online grocery companies.
HomeGrocer runs refrigerated trucks, delivering to homes within 40 miles radius of distribution centers. Company headquarters is in Kirkland, Washington, a suburb of Seattle. The company operates other distribution centers in Portland, Oregon; Los Angeles, San Diego, and Orange County, California; and Dallas, Texas. Plans call for eight to 10 more cities, including Atlanta, Chicago, and Washington DC within 12 months.
Smith had a big role in HomeGrocer's tremendous three-year growth pattern. Founded in late 1997, the company started with 50 employees. It now has 2,000. As employee Number One, Smith has had a major role in company development.
"In 1997, I had a chance meeting with HomeGrocer's founder and president Terry Drayton through a retailer I then worked for," Smith says. "My strength was transportation software, and I showed him a possible solution for HomeGrocer. We soon realized it wouldn't work well in this application. However, we also discussed my 18 years' experience in distribution. When I joined the company, Drayton had me sit at a table with a blank sheet of paper and told me to develop a distribution plan."
Drayton revealed his commitment to refrigerated distribution on a CNN program. HomeGrocer had been named one of the 12 "Cool Companies of 1999" by Fortune magazine. Asked what he thought was the coolest thing about HomeGrocer, Drayton responded "the trucks."
Knows Its Customers Trucks are essential for next-day home delivery. HomeGrocer essentially sells service, Smith says. It is successful because it knows its target customers. "Typical customers are women with two children," he says. "These people are really busy, even time-starved. Our focus is to give them another hour and a half a week for their families."
That hour and a half represents the average time it takes to shop for groceries, he adds. This includes travel time and getting through the store with children who want to play.
Using the HomeGrocer web site, customers can shop in minutes. "The first time new customers shop on HomeGrocer, it may take about 40 minutes," he says. "But once they establish a shopping list, they are much quicker."
HomeGrocer offers more than 17,000 items, including thousands of name brands. This compares to 30,000 to 50,000 items in a supermarket. "Instead of seven to nine different chicken soups, HomeGrocer may offer three or four. These choices are based on customer preference studies."
Drivers: the Human Side Drivers represent the human side of HomeGrocer. The company screens candidates carefully. "We are looking for self-starters who have personal pride and understand customer service," Smith says. "They have to like personal interaction, something you just can't teach. On the other hand, we can help good candidates learn how to operate a truck."
New HomeGrocer drivers take a two-week training course with roughly one week of classroom instruction on company history, market position, and image. Another week is spent with the trucks under the supervision of trainers, Christian Garland and Rick Smith. Field training includes role-playing in which the trainee pretrips the truck and makes a delivery to the trainer's home.
Drivers wear uniforms with the HomeGrocer logo-a peach and the company name-brown shoes, and brown belts. Disposable shoe covers help prevent tracking dirt into homes. Uniforms make a positive impression on customers and their neighbors, Smith says.
Routes change daily, but the company keeps drivers in a familiar neighborhood. "We want drivers to get to know customers well so they can anticipate needs better," he says. "Our drivers gain customer trust. People said customers wouldn't let us in their homes, but we do it every day."
HomeGrocer's goal is to provide high quality customer service at a competitive price. No fee is charged for orders of $75 or more. Orders less than $75 carry a $9.95 delivery fee. Drivers don't accept tips, Smith adds.
Seven-Day Delivery HomeGrocer provides next-day delivery Monday through Sunday. Drivers work five eight-hour days or four 10-hour days. The day starts early for the warehouse crew, but drivers start at 11 am or later. On Saturdays, they start about 8:30 am. Weekday deliveries are scheduled from noon to 9:30 pm. Customers choose delivery times on a first-come, first-served basis on the web page.
"We guarantee a 90-minute delivery window," Smith says. "Drivers carry groceries inside and place them where the customer wants-usually the kitchen table."
The web page is set up like a grocery store, with aisles of items such as bakery, deli, dairy, and health and beauty aids. Though groceries make up most of the inventory, floral arrangements, books, videos, office supplies, postage stamps, and games also are available.
"A distribution center is mature when it fills 2,000 to 2,400 orders a day using 120 trucks," Smith says. "Our goal is 28 to 30 stops per route."
The busier a distribution center gets, the more complex the routing becomes. HomeGrocer uses Roadnet 5000 routing software. "One of the biggest challenges is dealing with the unpredictability of customer demand," Smith says. "Roadnet 5000 does a good job of routing our fleet in a cost-effective manner. Our drivers use Nextel cell phone/radio to call dispatchers and customers."
HomeGrocer runs 290 trucks, mostly new model FL60s Freightliners and 4700 LPs Internationals. They have 17-ft multi-temp Johnson bodies with Dole holdover plates plumbed to Copeland compressors.
New Distribution Centers With new distribution centers, the fleet will increase to nearly 800 by end of year. The company owns the Freightliners and leases the 60 Internationals from Ryder Transportation Services. Ryder provides full maintenance and emergency road service for the entire fleet.
Ryder performs warranty work on the Freightliners, says Roger Welling, Ryder's director of business development in the food and beverage industry. "We provide bumper-to-bumper maintenance on HomeGrocer's trucks," he says. Ryder also has a warranty agreement for the Allison 2400 Series automatic transmissions in the fleet.
"We provide regular preventive maintenance, including oil changes every four months or 7,000 miles," Welling says. "HomeGrocer has so many trucks at each location that we do a lot of maintenance on site. We run service trucks with 24-ft bodies equipped with a work bench, arc welder, tanks for new and waste oil, and special tools."
Ryder teamed up with HomeGrocer and Valley Freightliner in Pacific, Washington, to write specifications for the FL60s. They are powered by Caterpillar 3126 engines and use Meritor running gear.
"We wanted a driver-friendly truck with an automobile feeling," says Eric Manegold, sales representative for Valley Freightliner. "These trucks have good ergonomics and are easy to use. They have air-ride seats, air-conditioning, an arm rest on the driver's door, column-shift for the transmission, and fender-mounted mirrors to help eliminate blind spots."
Multi-temp Johnson Bodies The FRP Johnson bodies have three compartments separated by two three-inch bulkheads. Bulkheads have doors between compartments. All deliveries go through the rear swing door.
Truck bodies have eutectic plate refrigeration with Doleplates for -18 degrees F in the front compartment and 35 degrees F in the middle compartment. The third compartment is dry.
Refrigeration uses two Copeland compressors-a scroll for the low-temp plates and a reciprocating compressor for medium temperature, says Ron Ricci, Johnson Truck Bodies vice-president of sales. Light-weight aluminum racks along the sidewalls and front wall hold product totes. "We built a step-well into the rear bumper to improve driver access," Ricci says.
HomeGrocer prefers eutectic plates because they are less expensive and easier to maintain than mechanical systems, Smith says. They don't make noise on the route. Trucks aesthetics are another factor. Without protruding units, HomeGrocer trucks appear smoother. "HomeGrocer considers trucks rolling billboards," he says. "We wash them three to five times a week."
