Rebuilding a New York City Institution Online
Chain Store Age Magazine
May 2007
By Samantha Murphy
Zabar’s has long been a family-owned New York City institution. The landmark food store uses the smells of freshly baked goods, imported cheeses and rich coffees as the core of its in-store experience.
Keeping true to the company’s roots, brothers and co-owners Saul and Stanley Zabar, president and VP, respectively, still hand-select, taste and market fresh products daily. These experiences help the family attract approximately 35,000 customers a week and produce $40 million in sales a year.
But demand for the store’s specialty items has far surpassed the borders of the city, especially as tourists and relocated Manhattanites long for their Zabar’s fix. This demand was one factor that pushed the company to jump into the e-commerce wave in 2000.
The family quickly learned that having an online store is only the first step. It didn’t take long for Zabar’s to process 30% of its annual online sales during the month of December alone. And as shoppers placed their holiday orders, the company quickly began receiving 2,500 to 3,000 orders daily—a significant jump compared to its typical 150 daily-order count during the off-season.
Finding it hard to keep up with such increases, the retailer realized it needed additional capacity to handle these spikes.
"Our previous site was a do-everything-in-one-box kind of system," said Larry Zilko, VP of IT for Zabar’s. "We used an e-commerce engine called Intershop Infinity, but we also made it do call-center, inventory-management and product-management functions. We also extended it to do functions we originally didn’t have in place."
Inevitably, it didn’t take long for Zabar’s to outgrow the system. "The Web was changing and there were a lot of opportunities we couldn’t take advantage of," he said. "It was time to market ourselves better because we were missing out on those opportunities."
By 2006, sales were increasing at a rate of 20% a year. "We needed to rectify the problems and revamp the site in time for the bustling 2006 holiday period," Zilko said. "We knew we had to outsource the hosting of the solution, and that it wasn’t going to be something we would directly maintain."
In April 2006, Zabar's turned to Woburn, Mass.-based Demandware, a company that provides a flexible on-demand e-commerce platform that integrates with other solutions to enhance the multichannel experience.
As an on-demand service, Demandware provides the infrastructure, management and delivery of e-commerce. This enables retailers to achieve high levels of security, reliability, scalability and site performance without having to invest upfront in expensive infrastructure and personnel. The platform leverages e-commerce software, Web services and highly scalable grid computing and software.
The platform also blends other on-demand applications, such as an order-management module that can be incorporated into a retailer’s call center; a product-recommendation engine for cross-selling related products; e-mail marketing software; a payment processor that is also an address-identification solution; and Google for Web analytics.
"Demandware knew how to advise us in streamlining the site," Zilko said. "We were able to make it much more user-friendly and add more efficient checkout operations."
The solution was officially deployed in November 2006, right before Zabar’s busiest month.
"As a result, our order volume increased at a healthy rate and business was better than the previous season," he said.
The outsourcing partnership has also helped the chain beef up its call-center operations.
"Up until a few years ago, the call center was located in the store itself," he explained. "Now the company outsources the operation to a Web-based call center, and we also manage our own center in-store."
There are between five and 15 staffers working the in-store call center simultaneously, with one manager for the company’s mail-order operation. The call center and the Web, which feeds into one backend, receive about 200 orders per day during Zabar’s off-season.
The Web-to-call-center ratio has also shifted toward the Web, Zilko said. In fact, the company sees 60% of its orders coming through the Web and 40% through the call center. The site used to process 50% of orders and the call center processed 50%.
"Since our customers are now more comfortable ordering on the Web, we’ve made our site much easier for them," he added. "We had a smooth migration and there are no complaints on the difficulty of placing an order."
The big picture: Now that Zabar’s can handle its busiest shipping periods, the company wants to focus on learning about who is coming to the site.
"One of the biggest advantages we’ve gained is that analytics are now built into the system," Zilko said. "We’ve learned a lot of things about our customers that we never knew before and it has translated into the ability to increase sales.
"We now know what customers are searching for on the site and what products they buy together. We are also able to see how they shop between categories," he said.
"As a result, we can now make business decisions to capitalize on that," he added. "We’re integrating what we learned into e-mail marketing and cross-selling across the site."
Although Zabar’s hasn’t yet tapped into targeted marketing, Zilko said the company plans to pursue it later this year.
The company also plans to further enhance its online presence. For example, online customer reviews that can further engage shoppers and help in their purchase decision-making is one priority.
"We’re also looking into blogs and would like to open specialized micro-sites for coffee," he said. "We want to get videos up online to describe and promote the products," he noted.
However, this is only the first step. Currently, the site features a video about the Zabar brothers performing their ritual store-level taste-testing routine.
"We want to show not only how our products are made and chosen, but also how the store is one of those special places that gets so busy you can’t even get through the door," he said.
Although a shopper may be ordering a fruit basket thousands of miles away in Florida or California, "We truly want them to visibly see what we’re all about. Because seeing our store is really a New York experience," he said.