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Joe Fedele

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Entrepreneur Joseph Fedele (usually known as Joe Fedele) co-founded New York-based online specialty grocery FreshDirect in 1998 along with investment banker Jason Ackerman. Joe Fedele served as CEO and Co-Chairman from 1998-2004.[1] FreshDirect became an iconic consumer brand, launching a high-quality food manufacturing and delivery service.[2] The company created new processes of the retail business model and incorporated JIT (just-in-time inventory stocking). By taking orders in advance, FreshDirect devised the "made-to-order" rather than "made-to-stock" production model. The idea was to eliminate all middlemen and as a result, create a more cost-effective and less wasteful process than the regular retail model.[3] Fedele and Ackerman won the Ernst & Young Entrepreneur of the Year award for 2003 for the Metropolitan New York Area.[4] Fedele was nominated for the national Ernst & Young Entrepreneur of the Year award in 2003, eventually won by John Mackey.

Prior to FreshDirect, Fedele was CEO and President of Fairway Market on West 132nd street in Manhattan from 1993-1998.[5][6] Fedele founded the conversion of the business from Fairway to Fairway ("Like No Other Market"). During that period, Fairway disintermediated its supply chain for perishable and specialty products and introduced just-in-time inventory stocking. Fedele and his partners won the Ernst & Young Entrepreneur of the Year Award in New York City in 1996.[7]

Early Life and Career

Fedele was born in Brooklyn, New York and attended Hofstra University, acquiring a BBA in Accounting, Finance, Economics and Mathematics in 1975. In 1982, he founded PFI, one of the largest protein and perishable trading companies in the US with customers such as Marubeni, Komatsu Gosho, Sumitomo, Price Club, Walmart, and others.

In 1991, he founded the "Business Process" that converted Fairway from its small format original single store on 74th and Broadway to the new Fairway ("Like No Other Market"). This independent store in Harlem was attracting more than 20,000 customers a week within two months of opening.[8] A combination of variety, quality and low prices in a marketplace atmosphere, attracted shoppers from all over the New York City area, as well as from the Upper Manhattan, to the inner-city neighborhood where it was located. Fedele's overall marketing strategy at the new Fairway was to offer "the best quality at the lowest prices." That sounds like a retailing cliche, but for Fedele and company it is a mantra that dictates the obsessive way they do business, and the long hours they spend trying to make it a reality.[9] The key to "the best quality at the lowest prices" was cutting out all middle distributors. Fairway bought from "the guy who takes it from the land, takes it from the sea, puts it in a can or slaughters it. This way, it's four to five days fresher and 30% cheaper," said Fedele.[9] Fedele, who calls himself a food technologist, believes that the direct buying ensures quality. Perishables that go through layers of distribution experience temperature fluctuations and inevitably suffer from adulteration. Quality is also reinforced through selectivity. "Our expertise is to pick the best quality grades in meat, fish and produce," according to Fedele.[9]

In 1998, Fedele launched FreshDirect. Fedele initially raised $120 million and leveraged a no-store concept to develop a better plan: start by dealing directly with farmers, fishermen, and slaughterhouses and build a single super-efficient manufacturing and distribution facility to hold down costs. That kept gross margins high enough to cover the added costs of reliable delivery, offered in densely packed neighborhoods. Kenneth Boyer, an associate professor at Michigan State University's business school who studies online grocers, says a visit to FreshDirect "really blew me away." [10]

Controversy

After selling his interest in Fairway (to Mr. Glickberg and his partners) to start FreshDirect in 1998, Fedele became been embroiled in a series of disputes with Fairway's owners, who accused Fedele of over-representing his role in the creation of Fairway's Harlem branch. In response, Fedele says that his description of himself as the branch's "co-founder" is an understatement. Fedele has been quoted saying, in response to Glickberg, "my former partners at Fairway did business in the traditional retail way for 30 years before we became partners, having multiple distributors between them and the products that they sold. I guess after I became their partner they had this epiphany of totally disintermediating of supply chain which resulted in the "highest value proposition possible to the consumer. Getting them better, fresher food at 30% savings and giving us a sustainable, competitive and differentiated advantage."

Fairway began hanging signs in its aisles attacking Fedele's credibility and the quality of FreshDirect's produce. New York Magazine wrote (May 17, 2004):

The FreshDirect posters blaring that the company was BROUGHT TO YOU BY A CO-FOUNDER OF FAIRWAY UPTOWN and featuring a photo of Fedele made [Fairway owner Howie] Glickberg furious. He posted signs inside the West 74th Street store reading FAIRWAY IS IN NO WAY AFFILIATED WITH FRESHDIRECT. FreshDirect jabbed back by sending staffers dressed as giant fruits and vegetables to pass out fliers in front of Fairway. Then the FreshDirect website added a lengthy description of Fedele's role in the uptown Fairway, headlined: HEY FAIRWAY, WHAT ARE YOU AFRAID OF? Fairway threatened to sue.[11]

Fairway never sued.

See also

References

  1. ^ Joe Fedele LinkedIn
  2. ^ "The Online Grocer Version 2.0 Forget Webvan, say the founders of FreshDirect. Their business is about food--and that's why they're sure it's going to succeed. - November 25, 2002". archive.fortune.com. Retrieved 2019-02-14.
  3. ^ "Crazy Business Ideas That Actually Worked: FreshDirect". Minyanville. 2010-07-17. Retrieved 2019-02-14.
  4. ^ "EY Hall of Fame".
  5. ^ Frank Kammel (1996), Supermarket Business, May 1996, pg. 179
  6. ^ Michael Carry (1996), Progressive Grocer, April 1996, pg. 39
  7. ^ http://eoyhof.ey.com/#!/search
  8. ^ LLC, New York Media (1996-02-19). New York Magazine. New York Media, LLC.
  9. ^ a b c "'A cultural happening.'(Fairway market)(Store of the Month) - Free Online Library". www.thefreelibrary.com. Retrieved 2019-02-15.
  10. ^ "The Big Cheese Of Online Grocers Joe Fedele's inventory-turning ideas may make FreshDirect the first big Web upermarket to find profits. - January 1, 2004". archive.fortune.com. Retrieved 2019-02-15.
  11. ^ Smith, Chris (2004). New York Magazine, May 24, 2004. Archived June 5, 2004, at the Wayback Machine
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