This week, in my Kauffman FastTrac class, our guest speakers were John Yerkes and Matt Rider, the founders of Zoomin Market. John literally grew up in the grocery industry, while Matt cut his teeth optimizing and redefining logistics and reverse logistics processes for multiple companies across the wireless industry ecosystem. Together, they saw the opportunity to fundamentally redefine how Americans shop for groceries.
While drive-in grocery stores are popular in Europe, Zoomin is the first drive-in grocery store in the United States, and it’s all enabled by mobile technology. The disruptive threat is so significant that WalMart has been watching the company’s every step.
So, what is a drive-in grocery store? The process is fairly simple. You shop online, filling your virtual cart with groceries. You pick a time you want to pick them up, then you complete the transaction and drive to the store. A server brings your groceries to your car and, in minutes, you’re on the way home.
For Zoomin, more than half of their orders are coming from mobile devices, and all of their employees are using tablets to fulfill the orders. Like any grocery store, Zoomin has four environmental zones for foods ranging from frozen to fresh produce, but unlike walk-in stores, the company doesn’t need to keep shelves over-stocked and decorated to appeal to the shoppers eye. They’ve studied Amazon’s stocking system for efficiency (Matt says “let the geniuses be geniuses” and focus on what you’re great at). They use the same wholesalers as their traditional competitors, so their selection and their cost of goods are comparable. However, they can operate in a much smaller building, with much less inventory, and significantly fewer employees than the stores they’re competing against. They’ve chosen to price competitively with no pickup fees (unlike European companies), using their cost advantage to drive richer margins.
Speaking of employees, company culture is very important to both John and Matt. Delighting customers is important to them and they gave a number of examples, from surprising a customer with a product she wanted and didn’t think they had (for free), to greeting the dog of a regular customer with his favorite treat (set aside just for him) each time they pull in for their pickup. All of this, of course, is enabled by the mobile technology that makes it easy for employees to make notes so that each time you pull in they know you better and can serve you better. When asked about their hiring practices, John smiled and explained that they hire “pickers” and “grinners.” “Pickers” are detail oriented perfectionists who make sure that the order is filled correctly and with the quality that delights customers. “Grinners” deliver the order to the customers and establish that strong connection that makes them feel special and appreciated. But to fit in to the Zoomin culture, all the employees have to know how to have fun!
I happened to have a meeting near their store on Tuesday, so I set my wife up with their website and offered to pick up her groceries. She found it easy to place the order. If you want to get your food as quickly as possible, Zoomin says it will be ready in 30 minutes, but we picked a future timeslot after my meeting and I got a notification well in advance that everything was ready whenever I could arrive. When you pull in to Zoomin, you either text them to let them know you’ve arrived, or you enter your 5 digit order code to a touch screen kiosk. Either way, you are then assigned one of the 10 covered pull-through stalls. One of the Zoomin staff rolls out a cart with your shopping bags and loads your car for you, and you are on your way. John and Matt said that the average in and out time for customers is about two and a half minutes. Because of that, the store is drawing customers from a much broader geography than a typical grocery store (customers trading dramatically less time in the store for a little more driving time).
In class, I had asked John and Matt about produce. They said they love that question because everyone’s first reaction is that you’ll never buy produce that you can’t pick yourself. In reality, produce is their top selling category, so in our order, we bought a lot of produce. My wife loved the fact that she could order bananas as either green, ripe, or spotty and she could order avocados as ripe or firm. Most of what we got was fine, but some of the items, although not technically “bad” – probably are different from what we would have picked. (For example, we bought a potato and what we got was the biggest potato I’ve ever seen – a bargain since the price was 79 cents no matter the size – but actually almost a bit scary and not one we would’ve picked.) Also, when the groceries were brought to my car, the Zoomin employee explained that when they went to pull the white organic mushrooms that my wife ordered, they didn’t look good, so they could instead give us white non-organic (and credit the price difference) or brown organic ones instead. I picked the brown ones – and proved that even when I’m just picking up the groceries, I can still buy the wrong item. Which reminds me of another of the benefits that reviewers have identified with Zoomin – the elimination of impulse buying of unneeded items. (Ever since our son and I came home with the purple mustard and green ketchup that we thought was so cool, my wife has hesitated to send us to the store together…)
But back to how disruptive this concept can be to the grocery industry. As I mentioned above, Zoomin’s costs are dramatically lower than their competitors in key areas (real estate, inventory, head count). In Europe, many retailers have had to add a drive-in option for their customers, but this requires them to ADD to their building and hire MORE employees, while still maintaining all of the costs for their continuing traditional customers. If this model is successful in the U.S., it will be hard for existing grocers to respond. Which explains why WalMart is so interested in what Zoomin is up to. The week they opened, a handful of WalMart executives showed up with hopes of studying their operation (John and Matt met with them in the church next door instead). A few months later they found a local engineer poking around outside of their building with a clipboard and flashlight. He said that WalMart had hired him to figure out how Zoomin had implemented their refrigeration system. Last Fall, WalMart opened a test concept drive-in store in Bentonville, Arkansas.
It seems to me that John and Matt have thoughtfully implemented a defensible strategy. Convenience, friendliness, and a dramatically better cost structure will be tough, even for WalMart, to match.
If you want to try out Zoomin, be sure to use the coupon code FIRSTZOOM to save $5 off your first order.