Natural Foods Merchandiser

It's spud! —online competition a hot potato

by Anna Soref

Apples to apples, taters to taters

Silk Organic Soymilk, Vanilla

spud! $2.79

Whole Foods: $2.39

Ezekial's Sprouted Grain Bread

spud! $4.29

Whole Foods $3.39

Seventh Generation 4-roll Toilet Paper

spud! $3.19 (on sale)

Whole Foods $3.69

Organic Valley Butter, Unsalted, 1-pound

spud! $6.00

Whole Foods $5.99

Organic Green Leaf Lettuce

spud! $1.58

Whole Foods $1.50

At the West Coast's newest naturals chain, you won't find shopping carts, cash registers or product samples. But from toothpaste to lettuce, Canada's online grocery delivery business, spud!, offers enough natural and organic products to fill a family's virtual shopping cart.

It's the brainchild of David Van Seters, a dedicated environmentalist armed with an MBA. In 1998, he hired four employees and launched the first spud! "It took off like wildfire," says Leslie Fox, spokeswoman for the Vancouver, B.C.-based company. In addition to Vancouver, the company now has locations in Calgary and Victoria and began its U.S. invasion in Seattle three years ago. It opened warehouses in Portland, Ore., Los Angeles and San Francisco in 2007. Spud! now employs more than 400 people.

The company offers about 800 SKUs, enough products so that spud's 13,000 customers can skip traditional grocery stores, Fox says. "I think that's one of the misconceptions about being a home-delivery store—typically they offer only produce. One of the things that makes us unique is that not only do we offer organic produce, but also one of the widest ranges of groceries that I've ever seen from a home delivery. And if we have demand for a product we don't carry, we'll get it."

Many of the company's locations also offer indulgences like bread from local bakeries and fresh flowers. During the holidays, customers will find gifts, gift baskets and items like energy-efficient Christmas lights.

More than 60 percent of spud!'s product is local and the company tries to keep the selection seasonal, but there are exceptions like coffee and bananas. "If we get this mass campaign to bring in watermelon in December, we'll bring it in but we'll say: ‘This product travels 4,000 miles from wherever.' We educate people and then give a variety of options—local, fair trade, organic—and then they vote with their money," Fox says.


In each of its locations, spud! has a warehouse structured similarly to a store, with shelving and products organized by product code. When a customer places an order online, an invoice is generated for the packers. Dry ice and freezer packets keep items cold, and everything is packed in reusable rubber bins. "We reuse a lot of our packaging. We're a very socially and environmentally responsible company. Not only is it important to us as a value, it helps us save money," Fox says.

If any item's broken, wilted or unsatisfactory in other ways, a credit is given. "We have a 100 percent satisfaction guarantee that is clear on our Web site," Fox says.

The company's prices are comparable to many natural products stores', according to Fox. "You are going to find cases when they are a little higher or a little lower or the same. But just like a regular store, we offer discounts, case-lot promotions, maybe two-for-one promos. We have an everyday-value program where a lot of our staples reflect negotiations with suppliers."

"Our studies show that in nine minutes you can do your entire grocery shop [using spud!]," Fox says, although at the beginning there may be a learning curve getting comfortable on the Web site. "So when you're tired or with children, it's great to avoid the hassle of a store," she says. You also prevent endless trips to the store, which not only saves time but gas, Fox says.

The delivery service is a boon to people who might be house-bound due to circumstances like illness or a new baby. "We get seniors who love the program or cancer patients who can't get to the store but want to eat wholesome organic foods. I love the service for myself because I don't have a car but can get 10-pound bags of kitty litter and laundry soap delivered to my door," Fox says.

But convenience isn't everything, admits Fox, who says that some people simply love the traditional shopping experience. "Customers like picking their own produce, they want to smell and taste and touch, and by shopping online you deprive them of that experience," she says. "But through our satisfaction guarantee we're saying, ‘Hey, wait a minute, we can pick produce as good as, and sometimes better than, you can.' "

Customers also like that there's no minimum on orders or a membership or "anything weird like that," Fox says, although there is a minimum, based on area, for free delivery. And delivery can be anywhere in a certain zone. "We deliver to car trunks or offices if requested," Fox says.


Rather than animosity, Fox says that spud! has found camaraderie with traditional naturals retailers. "We all seem to have the view that there's a bigger purpose here—it's about growing the organic community, about shopping local and supporting organic farmers and suppliers," Fox says. "These points unite us and are definitely more binding than what divides us. Unless we have the education and the interest in those issues, none of us is going to survive and I think there's enough market share for everybody."

But not everyone agrees with Fox. "[New] retailers take away business from small retailers like us," says Edna, who would not give a last name, manager of Sunshine Health Foods store on Battery Street in San Francisco. But she's not worried that online services like spud! will take away from retail stores too much, especially small stores like Sunshine. "Our clientele has an allegiance to our store and they like to be catered to. They wouldn't be happy with having a box of groceries dropped off at their doorstep. It's like having your waiter bring your food and not return," she says.


The company supplies its own trucks, in most cases fuel-efficient vans, and its Seattle trucks run on biodiesel. "We're always looking to participate in any type of pilot study [on fuel efficiency] we can find," Fox says.

"We're the only grocery store that we're aware of—and we'd love to see more out there—that measures the distance of every single product that travels from its last point of value-added to our warehouse, called ‘food miles.' " The average distance a spud! product travels is 932 miles, compared with 1,553 for a typical grocery store, Fox says.

Natural Foods Merchandiser volume XXVIII/number 9/p. 22

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