Tech Talk: Fruit Seller Uses Tech to Cut Costs

By Elizabeth Wasserman

An Oregon-based online fruit retailer found that investing in technologies --from business management software to a new label maker -- helped increase sales and lower costs in these tough economic times.

The Fruit Company, located in Hood River, Ore., is an online retailer of fine fruits and gourmet gift specialties. By investing about $200,000 in IT during the past few years, including software and hardware, CEO Scott Webster tells IncTechnology.com that the company is now reaping the benefits of increased sales and lowered costs.

Elizabeth Wasserman: Tell us about your business.

Webster: It's an interesting story. My grandfather moved out here in 1942 from the Bronx, N.Y.  He had been importing fruit into Manhattan. He moved out to Hood River and bought a bunch of orchards. My brother, Addison Webster, and I are now owners of Roy Webster orchards. Something else that Grandpa did a long time ago was he started a gifting company. Shipping was so expensive back then. We picked up on that. We got the old catalogue back out and basically remade the gifting side of the business into an online store. In 1999 we were open for business under the name The Fruit Company. Our main staple in our gifts is pears. We grow 11 different varieties. We contract with other growers to be the premier provider of the best fruits in the world. We also sell apples, citrus, stone fruits, baby pineapple from South Africa and we import larger pineapple from Maui. Our peak season is the two months prior to Christmas when we employ about 120 people. During the off-season, our staff is about 37 people.

Wasserman: These are tough economic times right now. How can a small business use technology to help cut costs?

Webster: About a year and a half ago, we ended up investing in quite a bit of technology. We spent close to $200,000 in new technology. One of the things it helped us do is be able to see transparently into the financial foundation of the company at any time. Before we were typical business running on QuickBooks and a bunch of Excel spreadsheets. Then we invested in SAP's Business One software. It ties together everything from our customer relationship management to inventory and distribution to our financial accounting. Now when a Web order is placed in New York City, within second that order is put through our system. How the SAP system works on the floor is that they have a bird's eye view on the dashboard to everything coming through the system. Labels get printed and handed to the production folks on the floor. They scan the barcode and it spits out companion label that tells them what compartments in the marketplace to pick the fruit from. After they pick that gift, it goes on a conveyor and goes down to one of the packers. The packer takes that label again and scans it. When he scans that gift, a monitor on the screen tells them how long it takes that to be built. It will show them graphically as the gift goes through four different stages of being built.

Wasserman: What's the benefit to your business?

Webster: We know exactly what our cash flow looks like, what our books look like in real time. It's helped us automate more as we've gone from a traditional model to a lean manufacturing model over the last year and a half. It also helps us determine what to pay our packers. When a customer calls to complain that they received a bruised piece of fruit, we can track that back to the packer that built that gift. We've moved to a pay for performance type model. We don't just pay everyone the same amount on the floor.

Wasserman: What other types of tech have you deployed to save money?

Webster: We also invested in a new label maker. It used to be we had to manually match the shipping label to the gift card that went inside. Now they come off together, with the gift card printed on a white linen peel-off sticker that goes inside a gift card. There was one incident a few years back when we had 100 orders that got the labels and the gift cards mixed up. That was a customer service nightmare.  

Wasserman: You also renegotiated your telecom contract?

Webster: One of the things we did when we went into this economy was we looked at our profit and loss statements with a fine tooth comb. We went over every line. We called every one of our vendors. When it came to long distance rates, we were able to get from 4.9 cents per minute to down to 2.4 cents per minute. We looked at every last thing. We thought we were going to save $200,000 a year by going through the P&L, but we saved almost $850,000 on about 40 different lines. Where we saved the most money was by moving to a lean manufacturing process on the plant floor. That saved us $300,000 alone. We also smoothed out the production process. We knew that our peak times were on Monday because we have the orders that collected in the system from Saturday and Sunday. So instead of having people working eight hours a day, we had them work more on Mondays, less on other days. We have a system now that allows us to really improve our quality control as well as make the production line as efficient as possible.