When Fast Company first picked the brains of Streamline Chairman and CEO Tom DeMello in mid-1998, his innovative home-delivery service was still struggling to explain and validate its nontraditional business plan. “We are in the lifestyle-solutions business,” DeMello told Fast Company more than a year ago. “We’re not a product business, and we’re not a service business. We’re a relationship business.”
One year later, the Boston-area Streamline Inc. no longer needs to substantiate or translate its mission statement. People are finally getting it. They are also getting it, literally … and loving it.
Initial investments of money, technology, and clout by companies such as Intel, SAP, and GE Capital are paying off tenfold for the three-year-old company. Last year, Streamline told Fast Company that it intended to have eight operating regions and serve customers in 12 metropolitan areas by 2004. Today, DeMello scoffs at those pre-IPO numbers. Streamline will settle for nothing less than 50 centers in 20 U.S. markets in the U.S. within the next five years.
Read on to learn how the leaders of Streamline have carefully and cleverly grown their business to such impressive proportions.
Within the last year, what specific accomplishments have been crucial to the growth of Streamline?
The whole world has been changed since the last time we spoke.
We went public on June 18, so we just recently did our public offering of Streamline.com stock and raised about $46 million. We are now a public company, compared to being a private company back then. In some ways, it’s very different — in other ways, not different at all.
Prior to that, we entered into a strategic partnering relationship with Nordstrom. Nordstrom invested back in September 1998. They invested $23 million in Streamline and also began working with us on marketing the Streamline service as we began our national rollout to the top 20 markets in the United States.
The relationship came about because Nordstrom really understands the consumer as an asset, and the service of the relationship rather than what you sell into it. Nordstrom looked at us as a whole new form of retailing on the Internet, and serving the consumer at the home.
Basically, as the consumer has wanted us to do more and more for them, we have added more and more partners to the mix. So, we’ve added Legal Sea Foods, Starbucks Coffee, Blockbuster, and more. We recently introduced a weekly flower service and we’ve entered into agreements with companies like e-Toys and Siberian Outpost, so you can use our site to link to other site every week when you place orders.
We’ve also announced our second market in Washington, D.C., which we will open up this October. We are being a little more aggressive. We announced plans to open 50 centers in 20 markets in the U.S. by the year 2004. There are no sights on the overseas market quite yet.
How have the vision and objectives of Streamline shifted or expanded since you last spoke with Fast Company?
The original vision of being a single source to meet multiple customer needs just continues. We feel very comfortable that Streamline is about the customer’s move to simplification. We know they really want to simply lives, find convenience. We see our role as aggregating a solution for them. I think we have just intensified that. The original vision, at its core, really is reflected in our brand: Simpler, easier. Life has a lot of complexity and the consumer really needs a single weekly solution to handle multiple needs.
The consumer is getting more and more comfortable with Internet retail. They are going out and buying books, trading online, etc. Also, the consumer is more and more time starved. You put those two things together, and you see what really creates our opportunity.
How has your competitive market changed?
The industry is starting to happen. There’s probably three other major players in the industry: Peapod out of Chicago, Home Grocer out of Seattle, and Web Van out of Oakland, California. These are the companies that seem to be able to attract financing, have a good model, and are serving the customer. We think the industry is going to happen quickly, but it’s going to be consolidated by four companies.
All of them are looking to be national players. Initially, that competition is very positive because you want to be participating in an industry, you don’t want to be a sole company. The more exposure an industry gets, that suggests to the customer that this a viable industry and viable solution for them. You really want the consumer choosing between the companies, not choosing whether this is viable for them at all.
What is your current strategy for the future?
We want to continue to open up markets, whether it’s Atlanta, the New York/New Jersey/Connecticut market, the Seattle market, or the Southern California market. We are looking at taking what we do, constantly improving it, and replicating it in major markets across the United States.
Initially, our challenges had a lot to do with capital raising. That has become less of an issue now. Now, it’s trying to continue to develop a service culture in the company, and to improve upon it and operate it in many markets. Service is really the big difference here.
Previously featured in issue 16, page 154