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On the early performance of the Web site: People buying through AlliantLink.com that were previously Alliant customers are increasing their order sizes significantly. I had predicted that the drop [order] size would go up 10%. But it has already gone up about 40%. That's significant. Whether that continues or not, I can't predict, but I can tell you that was a pleasant surprise. They must find it more convenient to use. And its reliability is such that they must be buying more food via AlliantLink.com than what they were buying before. That means we must be pushing some of our traditional competitors out of the account. That's a very positive trend for Alliant. On how much of Alliant's business is being transferred to the Web: We're not just shifting everything to AlliantLink.com. We will be a combination of the traditional bricks and mortar, and the salespeople in that bricks and mortar, and the emergence of AlliantLink.com. We couldn't do that [shift every customer to the site]. That would be a very dangerous thing. People won't change that fast. And there's a lot more market share that we could gather out there by using a strong sales force to go after it. We're hiring salespeople right now to go after and gain new market share using AlliantLink.com as a sales opportunity. But if people don't want to use it, the key thing for us to do right now is to sell them food service and food distribution very profitably. On the benefits of AlliantLink.com: [The Web site] keeps asking customers questions and prevents them from double-ordering or doing silly things like ordering turkeys if you're a hot-dog stand. [Under the old computer system], if you put in an order and went home ill that day, and someone else didn't realize it, and comes in and places an order, the truck driver rolls up the next day at the restaurant with two orders. The customer says, "I only want one of them." If it's a half of a trailer truck, every time you do that it's very expensive to the company. The customer won't pay for the two orders. The real problem is that another customer didn't get what they wanted to get because it's on this other truck. If someone normally orders 50 turkeys, and they suddenly ordered 100, but we only had 100, all of a sudden we would have used up all of our turkeys under the old system. That meant that we'd have to go back to the other customer and say, 'We don't have turkeys for tomorrow.' He says, 'OK, I'll order from someone else.' On the biggest advantage to the restaurant customer: It's more reliable and easy to use. And it has a real-time reservation system. If customers know what they're going to get when they order, then they have more confidence to order more food from Alliant because it's faster and more reliable than anyone else. That's the theory of what we're trying to do here: be the most reliable and fastest vendor in the industry. You'll see a lot of Internet plays pop up, but the real-time reservation capability is such that you don't see a lot of that. That's tough to build. Our competitors will send an e-mail usually an hour or two later saying they have everything or they don't. But two or three hours later is too late if you're running a restaurant because you've already planned your menu for the next day. The speed and reliability is all around real-time reservations. It's a tough thing to copy. It sounds small, but that's the difference between us and our competitors. On the advantages to the food supplier: We will help the suppliers for the first time ever communicate with the customer. That has never happened in food service in a direct way. Typically what a supplier tends to do is market to a distributor. Now we're allowing the food suppliers to get a window right to the customer. That's the concept of our exchange. It's about sharing information from the supplier to the customer. That's different in this industry. I call our 44 warehouses the black hole. Food used to go in there, but suppliers wouldn't know how the [restaurant] customers [we ship it to] liked it or didn't like it. Now through our e-commerce capabilities, we're making that knowledge available with the theory that suppliers should be able to make more money by selling more product. And Alliant should be able to make more money by trapping advertising revenues and getting better deals from the suppliers. On why this is so innovative in the industry: Don't ask me why. Distributors really didn't value the information. They didn't put the connection together on how valuable that information would be to the supplier. It has been a historical thing in the industry. Some people said it's because the food-service people are worried about the suppliers going straight to the customer. If I have 100,000 [restaurant] customers and 50,000 sell steak, that's important for us to know, so we have steak to offer them and the other things to offer them that go with steak -- french fries, ketchup. The supplier says, "I'd be willing to buy that information from you. I want to have more of a strategic arrangement with you if you can pass information on to me about my customer base that no one else can." On the pitch to food suppliers: My proposition using AlliantLink.com is I'm going to help you with a marketing program to help improve your sales on your most profitable products. And I expect to get some of that profit, and I expect to pass on those profits to my customers. For certain suppliers my commitment is to grow their revenues through e-commerce, and as they grow, I want to pass on profits to my restaurant customers. We're not going to do this overnight. We're going to phase it in, then take a couple of markets and test this. We'll take two years to roll this out. And we'll have 75 suppliers on board by the spring of 2002. On why this job was appealing: I've moved around to different leadership challenges. I started my career at AT&T...I've gone from there to Digital Equipment to Inland Steel to Compaq. Alliant is one of the largest private companies in the U.S. It will be one of the largest IPOs. It will be a real bricks-and-clicks play of Old Economy bringing in the new. That to me is a tremendous challenge. I like going into a company and turning it around and doing something that's very difficult to do. And this is my first time as CEO of an entire company... I really wanted to move on to do something else, to run a company of my own. |
