Food distributors have growing appetite for portions of ecommerce

Food distribution companies have a big appetite these days for serving up more digital commerce. Two cases in point include US Foods Inc. and Sysco Corp., a pair of the biggest food distributors.

At US Foods, which does most of its $32 billion in annual sales through B2B ecommerce, the latest initiative is a push for better mobile commerce through a new app. Meanwhile at Sysco, the biggest digital update is providing customers with more personalization tools.

Sysco is a large multinational distribution company that provided services to more than 650,000 customer locations, including restaurants, health care and educational facilities, lodging establishments and other foodservice customers during fiscal 2021. The company says it accounts for about 17% of the approximately $285 billion annual foodservice market in the U.S. and generated 2021 sales of $51.3 billion.

450,000 products available online

Six years ago, Sysco spent $105 million to acquire Supplies on the Fly, an ecommerce platform provider. It enabled Sysco customers to place orders for more than 170,000 products online or by telephone. It also offered restaurant supplies and equipment exclusively to Sysco customers.

Since then, Sysco has used the acquisition as one cornerstone of its ecommerce technology and business strategy. Today, foodservice customers can go online to SyscoShop.com to research and purchase items from an inventory of more than 450,000 products, finance purchases, receive a complementary business consultation, and access up to 14 months of previous order history and modify existing orders up to the delivery cut-off time, among other digital features.

Sysco has its ecommerce infrastructure firmly in place, CEO Kevin Hourican told analysts on the company’s recent third quarter fiscal 2022 earnings call. And though Sysco has yet to release many details, the next big digital push for Sysco is adding more online product personalization tools for new and existing customers.

“Our sales associates have the highest customer satisfaction scores in the industry, and we want to increase that competitive advantage. We have worked hard over the past year to bring stronger digital tools to the selling process to enable the success of our sales teams,” he said, based on a transcript from Fool.com. “Our technology team has built a system that provides each sales rep with a next best action to be presented to our customers. For some customers, this may be a conversion from a national brand product to a Sysco brand item, saving them money.”

More ecommerce changes ahead for Sysco, US Foods

More changes also are on the way for Sysco and ecommerce.

“We’re making meaningful progress on our website improvement, which is the ordering platform, our digital ordering platform, which I want to be clear is not just a desktop. It’s a mobile version. We have click-to-order through emails now, where we can send an email to a customer with an offer and/or with a suggested order. And with one click of one button, we will ship that product to them,” Hourican told analysts. “They don’t even have to go to an ordering platform. These are what we call removing points of friction, tools and capabilities, leveraging modern technology.”

Another big food distributor also with a larger appetite for more ecommerce is US Foods.

“We continue to invest in enhancing the customer experience,” interim CEO Andrew Iacobucci told analysts, based on a transcript from Fool.com. “US Foods has led the industry for over 10 years in this area, and digital is paramount to our success.”

Sometime in the third or fourth quarter, US Foods plans on a rolling out an expedited mobile commerce and app initiative called Moxi. The updated app features faster product search, quicker list management and ordering, and enhanced product-at-a-glance features, among others.

“We are launching our next-generation digital tool, which we call Moxi, which is all about increased speed, confidence, and control for our customers,” he told analysts. “This is a step change to the customer experience from performance and ease-of-use perspective. Moxi will begin rolling out in the third quarter, and we are excited to bring you more updates in the coming quarters.”

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