US Foods sees its digital commerce strategy playing a key role in the company’s plan to grow its market share beyond the current 10% level. It forecasts its share will become $430 billion in the next few years.
Central to US Foods’ ecommerce strategy is digital innovation. That includes the use of artificial intelligence to improve the customer experience, the company told stock analysts at its annual Investor Day presentation earlier this week.
US Foods posted net sales of $8.9 billion during the first quarter of 2024. That’s a 4.8% increase over the same period a year ago.
The three pillars of US Foods’ ecommerce strategy
- To use digital innovation to retain its position as an ecommerce market leader and partner of choice.
- Increase the use of its ecommerce and business management platform.
- Leverage artificial intelligence to improve operating efficiencies and the customer experience, John Tonnison, executive vice president and chief information and digital officer told analysts.
At the heart of US Foods’ digital strategy is MOXē, the company’s ecommerce portal, which launched in late 2022. The company says that 84% of US Foods’ customers use MOXē to place orders and manage their business.
What differentiates MOXē from competing platforms is that it was built to be a business management application, versus a marketplace that simply enables ordering.
Tools in US Foods digital suite
Business management tools embedded in MOXē include cost management, labor and staff planning, and retail performance.
Another tool is Menu Profit Pro, which:
- Calculates the cost and margins for each item on a restaurant’s menu.
- Keeps recipe costs in line with menu prices.
- Determines if food service providers are making money on high-volume items.
- Provides recommendations on how to improve the sales mix to generate more profits.
“We created MOXē to be a tool that allows our customers to run and rely on the supply chain,” Tonnison said. “MOXē is at the core of our digital commerce suite.”
Since the launch of MOXē, US Foods has seen increased order sizes of more than 1.5 cases per order, on average. Tonnison attributes the increase to the digital merchandising and marketing tools embedded within MOXē. They include customer alerts, reminders, and product suggestions.
“We also use the data we gather around customer behavior and ordering preferences to create more personalized merchandising experiences,” Tonnison said. “These are all tools that allow us to interact with customers far more frequently than we could face-to-face. With every interaction, we learn more about our customers, which helps us fine-tune those [interactions].”
The increase in average order size proves that US Foods digital marketing and merchandising strategy is working, Tonnison said.
Digital-first customers change the game for US Foods
In addition, customers using MOXē interact 8x more with US Foods than non-digital customers. MOXē users also generate 120 million annual product searches, each of which creates a merchandising and marketing opportunity.
US Foods has also seen a 5% increase in customer retention since MOXē launched. Tonnison attributed the increase in customer retention to the perceived value US Foods’ customers see in the platform.
In addition to bolstering order sizes and customer loyalty, MOXē has reduced the US Foods sales team’s daily workload by 30% through the automation of such tasks as:
- Fulfillment
- Order tracking
- Sending customer alerts
- Exception management
“This has allowed our sales reps to double down on consultative and gross selling,” Tonninson said.
Features that US Foods customers like about MOXē include real-time inventory, detailed product descriptions and product titles, simple navigation, and ease of use. Ordering on MOXē takes about half the time of other apps, Patrice Myer, culinary director of Blackberry Market, a fast-casual cafe and bakery in Glen Ellyn, said in a taped testimonial.
US Foods powers up its AI technology
Looking ahead, US Foods plans to enhance MOXē using artificial intelligence. The company has created its own AI lab. It’s using AI to translate foreign language content, improve delivery tracking and exception management, and streamline customer onboarding and account creation.
Using AI to help with language translation will pave the way for deeper penetration of the platform among customers that operate multi-language kitchens, according to Tonnison.
US Foods also uses AI to make more intelligent menu recommendations for customers and provide deeper insights into customer behavior and interaction. “AI will enable us to do these things because we know this mousetrap works,” Tonnison said.
The company is also in what Tonnison describes as two-week product enhancement sprints, in which 1.5 new product features are developed in a week and then taken live a week later.
Independent research has shown MOXē to be the preferred digital commerce platform among 53% of independent restaurants. The next closest competing platform is preferred by 36% of independent restaurants, the company says.
Given the enhancements planned for MOXē, US Foods forecasts that 95% of its customers will be using the platform in 2027, which will generate an estimated $1.5. billion in incremental sales, the company says.
“MOXē makes customers stickier and [more profitable],” Tonnison says. “Our goal is to make MOXē a compelling tool our customers can’t live without and use digital [innovation] to drive new value for customers and new heights for the company.”
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