You can, too, go home again. Scott and Addison Webster are living proof.
The brothers grew up on a fruit farm in the beautiful Hood River Valley of Oregon. The farm was a family operation started by their Grandfather Roy and his partner Murray Albertson in 1942. Roy and his son Wayne managed the orchard and grew the business from a 20-acre affair to a sprawling 600-acre producer of fine apples and pears. As the years went by, the farm shipped fruit all over the world through the normal farm and market channels.
Scott and Addison left the farm, as did many youngsters of the 60s and 70s, to pursue education and careers in the “real world,” as Scott refers to it. Even away from the farm the boys and their father shared the dream of better times for the farm and the family. They had a vision of their farm and others in the area delivering the “best tasting pears in the world directly to the consumer’s door step, ripe and ready to eat.”
SCOTT: My brother and I are third generation farmers. Even while we were away working in the real world we always thought of ourselves as farmers. We always wanted to come back. But, you know the last 10 or 15 years haven’t been that kind to agriculture. So we decided that the way to come home was to develop a better market for our farm products. We decided to take some of the expertise we had gathered out in the world and start an online ecommerce business through which we could sell our fruits, packaged as high-end gifts, to customers all over the country (and the world).
We started with Webster Orchards, which is the parent company, doing business as The Fruit Company. We did that in 1999 and then in 2001 we spun The Fruit Company off as its own entity and now the two operate as separate companies even though they are very much integrated. One of the companies grows the fruit and the other one sells and ships it. Actually they are both production companies since Thefruitcompany.com also produces the gift baskets as well as sells and ships them. We decided to go after the high-end gift market. We designed baskets with the best tasting fresh fruits and other gourmet items. Our best baskets even have an original watercolor painting in them—they’re very special (and memorable). You could ship them to your grandma in Iowa or a high level executive in New York City and they would both love them.
The Webster brothers, Addison, the bean counter in the family, and Scott, the marketer/production man, are a good team. In the late 20th century they developed the Internet business model aimed at expanding the market for their farm, beyond the fruit stand and standard food chain sales. In fact, they even sell fruit from other orchards to ensure they have the best quality possible for their baskets. The new model, The Fruit Company, was an online business first.
SCOTT: We actually started on the Internet. In 1999, November 1, 10 o’clock in the morning we launched TheFruitCompany.com. We had our first order in 15 minutes. The very first order we ever got was on the Internet. Then we sort of backed into mail order and catalog sales. But that is not where the majority of our sales come from. We are pretty Internet savvy; that is our focus, our niche. We want to be well-branded on the Internet.
From that early winter day at the end of an old century two brothers gave new life to an old family business with a 21st century approach. They had spent years planning and developing the concept of selling special fruit baskets, unlike anything anyone else was selling and doing on the Internet. While that first order got there in a quarter of an hour the path had been cleared by their preparation and dedication.
SCOTT: I can tell you today is totally different than what it was five years ago. Five years ago our main competition didn’t even have a website. (Harry and David’s site went up a year later.) The Internet was so new when we first got in and the pay for performance (pay per click) model was so new—we used GoTo, which later became Overture. We got into the game with very little competition, not only in the fruit gifting market but also in the gift market in general. There just weren’t a lot of people up on the screen yet. And so sheer timing is what I attribute a lot of our initial growth to.
There just wasn’t that much competition back in ’99. Which is all-good because we were so limited in resources. If we were to do the same startup today, it would be a lot more difficult. In those days I was doing all the web marketing. I was sitting on there every minute changing the pay-for-click words and copy every day. I even built the shopping cart from Filemaker Pro, although we’re changing that to a new custom Microsoft.net system that launches in October.
Even though the entry was easier, staying up with the burgeoning competition on the Internet is now a fulltime job. Those competitors who were not online when they started are there now, and so the job of growing their company has taken on new dimensions. Search engine optimization of the sites on a daily basis, more pay-per-click advertising and deep customer service drives the incredible growth of the Webster enterprise.
SCOTT: We still do pay-per-click marketing. This holiday season we’ll spend over $100,000 in pay-per-click advertising. We use Google and Yahoo! Search Marketing extensively and sometimes we use Microsoft. We do a lot of search engine optimization and we managed to get some pretty high rankings. We also do some rich media (web casting). We do some mail order, we have a list of about 150,000 in our database and we work with that. We also do some other lists. We’re moving toward affiliate marketing.
We did the pay-for-performance thing early on and it worked, but it was so rudimentary, that if we did it the same way now, we would be losing money hand over fist. It’s such an art now and you have to always be changing.
You know the Internet side of marketing is something you don’t go to school for. If you go to school for it you are going to out of date (by the time you get out of school). The only way to learn this stuff is do it, the good employees we find are good because of their experience– what they have learned doing it. One of our challenges is getting good Internet marketing employees. The good ones cost a lot of money and many of them don’t want to come to a small town like Hood River.
Of the TheFruitCompany.com’s annual sales, 63 percent come from the Internet directly. Of the other 37 percent, a large number are Internet driven but are people who would rather call in an order because they don’t feel comfortable using their credit card or buying products on the ‘net. Of those who order a product, about 20 percent come from referral, word of mouth—that’s a nice bit of feedback on the quality of their product and service. It gives Scott reason to think they can attain their goals.
SCOTT:_ In the next five years we should become the largest employer in the region. We’re already the largest shipper—everybody wants our shipping business, which gives us a certain advantage in holding down our shipping costs. That’s a big issue. Right now we’re on track to do $6 million. I think we’ll hit $25 million in three years and in 12 years we’ll hit $100 million._ Thefruitcompany.com finds itself in a unique position with the shipping carriers. Being in a rural area they find the carriers willing to be very competitive in order to get their business. It’s about something called backfill.
SCOTT: Rural areas like the Hood River Valley get a lot of packages delivered, but they don’t ship a lot of packages. That means the trucks are going back to the hub empty. Even a small shipper who can offset those empty trucks—fill the truck going back– becomes a sought after customer for people like Fedex or UPS. So with our growth and the number of units we ship, even in slow times of the year, we can demand some pretty competitive rates on shipping. We use Fedex almost exclusively, although we do use others when needed.
Scott and Addison are in their middle 30s. They are among the oldest employees in the administrative complement. A lack of hard-core business experience may be the biggest challenge facing two men who have a company with a seven-figure revenue and hundreds of employees.
SCOTT: My biggest challenge personally is, here I am trying to lead the company and I have only ten years work experience—the first three in sales and the last seven in starting the family business. I have to rely on trusted mentors and consultants for some answers. As we grow to $25 or $100 million, nobody is going to give it more care than us, but we don’t know all the answers yet. I, for example, am looking at doing a Masters of Business program at Duke where I can keep working fulltime here but really try to get some more management education. I’m not a 40-year-old who has ten years of experience in a “C” level position in a big American company. One of the challenges right now, even though we’re not that big, is that I have to get out of my little creative roles of in the corner and get out and deal with people and other issues.