A Fresh Approach To Technology

Online grocer FreshDirect has kept a pretty tight rein on its business, expanding slowly only in the New York metropolitan area. Now, with a new IT infrastructure built with blade servers and virtualization technology to withstand more traffic, the company has growth on its mind.

FreshDirect made its first deliveries in July 2002 and has carefully extended its service base by ZIP-code areas, from Brooklyn to Queens to Manhattan. With annual revenue of around $150 million and intentions to continue to expand its boundaries, FreshDirect in 2004 hired chief technology officer Myles Trachtenberg, who in the past year has led the company through an update of its enterprise technology. The revamp was completed in September.

The update was part of what Trachtenberg says is the company's belief that it can use a variety of industry best practices to succeed. "I like to think of us as three types of businesses pulled together," he says. FreshDirect has sought to emulate the E-commerce success of Amazon.com, the just-in-time manufacturing capabilities of Dell, and the distribution expertise of FedEx.

About 99% of FreshDirect's business is generated through its Web site, but the company has attempted to differentiate its service from those of other grocers offering home delivery, including large national chains such as Albertsons Inc. and Safeway Inc. To do this, FreshDirect concentrates on preparation and delivery of fresh foods, which account for about 70% of sales, Trachtenberg says.

When Trachtenberg joined FreshDirect, its infrastructure was running on Sun Microsystems servers that had been purchased more than five years earlier. Trachtenberg wanted to update the systems to create an infrastructure that would ensure high availability to meet customer demands for a quick and easy online experience, as well as the scalability to allow FreshDirect to continue to expand. Trachtenberg also wanted to move to an Intel-based system.

After evaluating systems from IBM, Hewlett-Packard, and others, the company decided on blade servers from Egenera Inc. FreshDirect has 15 server blades based on Xeon processors ranging from 2.4 to 3.1 GHz, running on Red Hat Linux 3.0. FreshDirect also uses virtualization technology from VMware Inc. to double usable server capacity.

Keeping FreshDirect's Web site operational is essential to company growth, Trachtenberg says. The site handles about 4,000 orders a day, each with an average of 30 items, which requires the movement of about 1 million items in the warehouse each week.

Before the Egenera server installation, the average response time on the FreshDirect Web site was about eight seconds. Today, the response time is two seconds during peak demand and one second during low demand periods, Trachtenberg says.

Using the blade servers and virtualization, FreshDirect has straightforward redundancy to guard against system downtime, and the hot-swap capabilities of the blades ease the need for hardware changes, Trachtenberg says.

Within its data center, FreshDirect uses SunFire 480 and 1280 servers to run its SAP enterprise-resource-planning software and database. Inside the warehouse, each order is broken up for sorting and packing. The order is first run through a logistics application by RouteSmart Technologies Inc., which uses algorithms to divide up orders based on destination, delivery schedules, and capacity.How rapidly FreshDirect expands its territory has yet to be determined. "There's still a lot of growth left in the areas we serve now," Trachtenberg says. "In New York City alone, I'd say there's definitely potential for between $300 million and $500 million a year."