How Fresh Direct Is Disrupting the Grocery Business

Books. Yes.

Music and movies? Absolutely.

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But buying groceries online? That’s the disruptive idea that Jason Ackerman had when he founded Fresh Direct.

There are more than 35,000 supermarkets in the United States and the average American shops in one of them twice a week. The typical supermarket carries over 48,000 individual products.

Americans spend an average of $29 per shopping trip. But Fresh Direct doesn’t have an actual store—just a warehouse and a website.

The Fresh Direct founder says, “Most people, when they think about shopping online, have the question, am I going to be comfortable or trust you to pick out my fruits and vegetables, or cut my fish and meat? And that’s always the initial hurdle.”

Wired Business Conference 2011 - A CNBC Special Report
Wired Business Conference 2011 - A CNBC Special Report

A trip to Fresh Direct’s warehouse shows how complex the system is, but also how very much like a supermarket it actually is. When customers place their orders online, Fresh Direct employees fill them, much like customers in supermarkets, filling baskets with oranges or orange juice.

Want a half pound of sliced turkey? Fresh Direct’s deli slicers do that. 2 pounds of cod? An in-house fish monger takes care of that. Each team member, whether handling fruit, fish or fowl, contributes to the order, until it is packed and ready for delivery.

It’s a combination of old world skills and new world technology, with software that tracks orders from the time they're placed to the time they're delivered.

“One of the great things about being online is we know everything about a customer’s shopping behavior. And the more a person shops with us, the more we understand what they buy, and what they’re not buying this time and we’ve done a great job of using what we call ‘smart shopping’ to remind you and make recommendations of products that you’ve bought in the past, or something that isn’t in your cart, to really help you make it a quicker transaction.”

Ackerman says the lack of a brick-and-mortar store is an asset.

“Grocery is a very routine way in which people have shopped. And we’ve really changed and disrupted how they (consumers) can think about a better way than the store to buy their food. Where it’s not just convenience, but they can also get great quality and change the way that they think about food shopping.”

Look for special coverage of the Wired Business Conference, Tuesday, May 3, on "Power Lunch" at 1pm ET on CNBC. Michelle Caruso-Cabrera will report from the event and will speak with key participants, including some of the tech world's most-watched leaders.