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HOW TO INCORPORATE

Myth 5: Brand Is Everything
 

NetGrocer.com's interim CEO Fred Horowitz shifted his site's focus from branding to selling groceries -- and created a spectacular turnaround in the process.
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REALITY CHECK: Image is fine. Sales are better

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NetGrocer.com founder Uri Evan launched his Web-based grocery business in 1997. Evan planned a groundbreaking, brand-building site. Customers who came to his home page would first learn all about the company and its mission. Then they could click down to do their grocery shopping.

A 63-year-old techie with a Kissinger-esque accent, Evan built the tech infrastructure and raised capital for his on-line venture. In the months after launch, the company, based in North Brunswick, N.J., was ready to charge into an initial public offering. But there were signs of trouble. NetGrocer struggled to convert its traffic to sales. Also, $1.3 million was tied up in inventory, shipping expenses were high, and NetGrocer was operating deeply in the red. In September 1998 the planned IPO was scuttled at the last minute. Evan and his board asked Fred Horowitz, one of the company's angel investors, to become its interim CEO.

Horowitz didn't know all that much about the Web, but he did know how to sell grocery-store products. He had helped to build a $240-million laundry-detergent manufacturer in the 1980s. "Freddy placed more of an emphasis on retail and merchandising than the original team, which was more computer and systems oriented," Evan says.

Maybe Horowitz wasn't a Web-slinger by trade, but he could see that NetGrocer was going about its business all wrong. The problem was symbolized by its home page -- a tasteful opener that laid out the company's mission. The new CEO thought this genteel welcome was a lot of garbage. Customers had to click through level after level of the site before they could even buy anything. Web or no Web, if you want to sell groceries, you have to get that product in front of the customers -- right on the shelf, as it were.

Today the revamped site is an unabashed hard sell. It bombards visitors with pictures of products, coupon offers, and "click to buy" links. "Every supermarket can hang 20 or 30 posters near the entrance to provide information about the deals they're offering," says Evan. "That kind of merchandising was missing from our original site."

The redesign created a spectacular turnaround. The average order size is up 20%. Repeat customers typically spend $60 an order. And the company's conversion rate -- the number of people who check out the site and then actually buy something -- has almost tripled. "That's a dramatic improvement," Horowitz says. "If you can get conversion, you have the foundation for a successful business."

Last updated: Feb 1, 2000




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