Looking back, Looking forward: Major lessons from 15 years of running Fry Inc.

You may have already heard the news, but this week marks a change for me. Fifteen years after its launch, I'm stepping down as the President of Fry, Inc. I am continuing on with the company in a strategic role as Founder while Rudy Pataro takes on the day-to-day responsibilities of the running the firm. I don't have concrete plans for how I'll be spending the rest of my time, but I expect to be more involved with my family's printing business, which gave birth to Fry in the first place back in 1994.

As you can imagine, the last few weeks have brought me a surge of memories. I was lucky enough to be here for the start of the e-commerce revolution. But it's depressing to realize that some of the people I work with now were in elementary school when we launched the first Godiva.com. They don't remember handcrafting GIF images (GiF images? What are those??) to render quickly over a 28k baud modem. They don't know that all Web site backgrounds were gray in the early days. They don't remember carrying a 20 pound projector on the plane to go make a new sales pitch. Yes, I feel old.

This is one of those moments when you're supposed to sit back and take stock. If you have to be old, at least you can be smart. So, what have I learned in the last 15 years? 

• Well, I learned that "build it and they will come" only works in the movies. We launched that first Godiva site in time for Christmas 1994, and we averaged three orders a day that holiday. I would excitedly call Adam Rockmore at Godiva every time we got one. There was very little in the way of online marketing back then, but even today too many of our customers put too much of their budget into site construction, and too little into plans to get people there. Just as a young couple can get themselves in trouble by buying a home outside their price range, small businesses need to start conservatively online and put more effort into marketing and customer acquisition. Take $75,000 out of your development budget next year and put it towards a Facebook campaign and you'll be better off.

• I learned that some questionable ideas come around every few years, like a bad flu season. How many times have I heard a retail exec say he wants to hear streaming music when he opens his home page? Well then put on a pair of headphones because your customers don't! One bad but expensive idea is to combine commerce and content. "Content is King" was the rallying cry of the late 90s and many retailers decided they should be destination sites. Housewares commerce sites were filled with information about cooking, outdoor apparel sites developed travel and hiking content, and fashion apparel sites had more pages than Vogue. It quickly became obvious that the customers weren't reading this content and the immense cost to produce it generated little return. There are already too many sources of free content online (as the print media have discovered) and your customers will never see you as an authoritative source (except for a few special cases). Yet this concept keeps being reborn every five years.

• I learned that if the customers don't trust your too-expensive-to-produce content, then it's better to get them to make it for you. One of the principles of the Web 2.0 revolution is that online customers want to participate on your site, they want to share their experiences, they want to communicate with their cohorts. The most obvious examples are user-generated product reviews, which started exploding in 2006. These are hugely important to establishing credibility with your customers and should be considered a must for most sites. But you should look for other opportunities to involve your users on your site. Let them help you by tagging products, submitting photos, writing merchandise content, posting tweets, or any other way you can get them involved with your products and your brand. The youth apparel retailer Wet Seal, for instance, has had huge success with its Runway. Customers mix and match products to make their own outfits which they save online for rating and comments from other users. Each outfit becomes an ensemble ready for purchase by other customers. 

 

• I learned that you don't have to dance with the one who brought you to the prom. Well, more specifically, you have a great opportunity online to expand your product inventory beyond anything you could hope to accommodate in your bricks-and-mortar store locations. Amazon has had great success diversifying its product assortment through partnerships and brilliant strategic planning. You can follow suit by exploiting a "supplier direct fulfillment" model. After carefully looking at who your customers are, and what other things you might be able to sell them, develop a list of potential new suppliers. Launch new categories on your site (get the new vendors to provide the product content for you), and route the orders directly to your new partners for direct shipping straight to the customer. It takes a bit of work to model exactly which products to carry and to establish the right supplier partnerships, but this technique boosts the gross margins for many of our customers.

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  Lastly, I learned that you have to always be experimenting. If you're not evolving, you're dying. Our e-commerce industry is fifteen years old but it's not done innovating yet. Next year you could try out a wonderful new idea that changes the way you view your online business. If you don't, chances are good that your competitor will. One of my favorite examples is the general merchandise retailer Meijer. A large family-owned business from Grand Rapids, Michigan, no one would confuse Meijer with a sexy Silicon Valley startup. Yet from their first e-commerce site, launched with Fry in 2007, they have tried one innovative idea after another. From a supplier direct fulfillment business model, to coupons delivered via widgets and iPhones, to in-store grocery pickup, to marketing with laser beams on skyscrapers on the Magnificent Mile, Meijer has been aggressive about regularly trying new ideas. And I can tell you, it's a real joy to work for a company like that.

Thanks for joining me on this trip back through time. I have been so privileged to work with both the amazing people of Fry and the fantastic companies who chose to partner with us. I am proud to have been there at the birth of an industry. More importantly, I am still excited to see where this whole thing will go. Fifteen years from now, we'll look at our RFID-equipped mobile devices, receiving promo offers as we walk the aisles at Meijer, and wonder how we got there. I can't wait!

Comments

[Becky Trombley Domegan]

Best Wishes, Dave!