How Peapod is adapting to a new wave of online shopping
Mike Brennan has navigated 16 years of e-commerce convulsions, and is now enjoying a growth spurt at pioneering online grocer Peapod.
“Online grocery shopping is becoming more common as people use their mobile devices for almost any kind of shopping,” said Brennan, a 49-year-old Chicago Ridge native who has risen up the ranks to become chief operating officer at Skokie-based Peapod, a unit of Dutch retail congolerate Ahold.
About one-third of Peapod’s orders come from customers using smartphones and tablet computers, with the vast majority originating from iPhones and iPads.
Peapod — among the 50 largest online retailers nationwide with $500 million in 2012 revenue — offers an app and a mobile-friendly website that together generated about $150 million in mobile sales last year, up 50 percent from 2011.
Grocery retailers and startup companies are showing renewed interest in the online grocery business — 12 years after grocery-delivery service Webvan’s demise — because of more sophisticated technology and strategies, analysts say.
“Two industry giants — Amazon and Wal-mart — are testing online food delivery, and that is making people pay attention, too,” said Jim Hertel, managing partner at food consultancy Willard Bishop in Barrington.
One of Peapod’s selling points to health-conscious shoppers is that workers pack produce in chilled containers, so that the food stays fresher longer.
Yet Peapod has had to go beyond trumpeting quality to keep up with customers’ fast-changing shopping habits and expectations for instant service.
Brennan must constantly monitor shoppers’ habits to roll out the next-best-thing solution, including selections of organic produce and prepared meals.
So Peapod’s website lets customers click “My Specials” to see whether any of their regular purchases are on sale, and if so, buy them at the discounted price.
Another shortcut is “Guess My Order,” which lets shoppers put their regular purchases into a shopping basket with one click.
“People buy about 60 percent of the same items each time they order, so this helps them be quick and successful shopping the way they want,” Brennan said.
Last year, Peapod set up virtual grocery “shelves” at some train stations in Chicago and six other cities. The interactive billboards let commuters use their mobile devices to swipe a QR code to download a free app, and then scan each item’s barcode, whether it’s milk or salad dressing, with their phone so they can shop while waiting for the train. The scanned items go into a shopping cart, and the customer sets the delivery time for a two-hour period the next day.
And about those annoying two-hour windows. Peapod is working to make them more tolerable by sending customers a text alert when they’re next in line.
“They know the delivery will come within the next 10 minutes so they can get other errands done in the meantime,” Brennan said. “People aren’t sitting at a big screen (desktop computer) anymore. We’re starting to see Mom sitting in the stands at soccer or swimming practice doing [her] shopping.”
The latest from Peapod meets shoppers’ distaste delivery fees and desire to pick up their groceries when they want. Peapod has set up pickup sites in Deerfield, Palatine and Schaumburg for same-day pick-up. Customers who order by 10 a.m. can pick up their orders after 4 p.m. at the sites, located at shuttered restaurant and bank branch facilities.
Brennan said a pickup site will open in Chicago, but he’s not sure when or where.
How does Brennan keep employees motivated as the company makes rapid changes in a competitive market?
He refuses to micromanage employees. He sets clear goals and targets for workers to meet, and explains how their success fits into the big-company picture.
“Rather than reacting to a problem, we anticipate what’s coming next,” he said. “What do we need to do about it?”
Photo by Rich Hein