Simply Organic md Ian Smith talks e-retail pros and cons with local store owner Mike Sherwood Mike Sherwood: Does the bulk of business come from your web site or from shoppers downloading and faxing orders? How do you attract them? Ian Smith: We are an e-tailer but we will have to publish a paper catalogue for some customers for some time to come. Some 60% of our orders are from the net ­ the rest by telephone, fax and post. We thought it would be 25% in year one. The large majority of orders are directed on to our web site from traditional marketing techniques ­ mainly mailings ­ so the number of people who just know us as a web site is quite small. MS: Fruit and veg makes up only 2% or 3% of our profit before tax. But no matter what I charge I can't supply quality. By the time it gets to me it's crumby. We expect to waste 40% of what comes in the door. It's 20 days from farm to plate. How long is your lead time? IS: The freshness of our produce is superb and that's down to beautiful time management. We do hold stocks of dry goods because the supply chain is not that robust yet. But in fresh produce we don't hold stock, suppliers do. That's one of our competitive advantages.Wastage is virtually nil. The average is three days farm to door though in a best case scenario it's two days. Fish is 18 hours door to door. That speed is a function of cutting out a huge chunk of the supply chain. MS: Does that reduced stock holding mean you can drive costs down? IS: Yes, of course. We don't need 10 facings for baked beans. Everything has one facing. The cost base is very low but the highest cost to us is distribution. I think that would be neck and neck with staff costs in a traditional retailer. But our delivery costs will go down. Now we may have two deliveries to a particular postcode, in two years' time we may have 2,000. Once our distribution costs start coming down we will really start moving ahead. MS: Have you looked into delivering to other businesses? IS: We have been approached by a great many restaurants, juice bars and retailers because we're an organic oasis. It was a very fragmented industry. We've gathered all these suppliers up and told them what we wanted. We're an interface between them and the end consumer. Our core business is the consumer but we do some wholesaling to a couple of people on our terms including a couple of shops. I could easily be distracted, but I'm cherrypicking the ones I want. MS: That's very interesting to me. You've started something. If you're not prepared to do it for the likes of us, someone will come along who will. What you're doing will have a dramatic effect on all of us, but particularly the big boys. I'm enthralled by what you're saying. I believe I can emulate it in the local area. IS: If you wanted products it's not beyond the realms of reality that we can organise it. MS: There are lots of stories about internet breakdown at the moment. Is this a problem for your business? IS: I liken the AOL breakdown in February (only 3.9% of our shoppers use it) to the water board coming along and digging up the pavement. It's a risk but the effect is a very small percentage of our customer base. Those issues will be ironed out this year. The future is e-commerce partnerships. We've teamed up with to try and get customers online as quickly and easily as possible ­ and for free. MS: How do you see the future for your business? IS: The future is huge. It's about capitalising on the huge opportunity of the boom in e-commerce, home shopping and the organic market. MS: Yes, the future is in convenience and serving the customer. IS: What is the biggest headache for your business? MS: Crime and the government's inability to conceive it's even a problem to us. IS: You could set up webcams to watch at home. They're cheap. We're thinking about having one on site so customers can see us packing fresh produce. MS: What is your biggest challenge? IS: People may think the multiples going into organic internet sales is a problem for us. I disagree. Our unique selling point is the number of lines making us a one-stop shop. We offer consumer choice. We bring to the table the ability to choose line by line as if it's non organic. Many of the supermarkets say they do 500 odd lines but if you go in store you can't find them. I don't see conventional retailers going online as a threat. We need the likes of Tesco and Sainsbury helping to create the market, then we can ride the tidal wave. In what we're doing, fulfilment is king. n {{FEATURES }}