Wholesale revolution Independent stores' reliance on cash and carries could be challenged by the launch of a new internet delivery service says Ed Bedington Blueheath's co-founder Douglas Gurr is keen to emphasise that his online wholesale venture is not just another internet start-up. "We are a million miles away from the kind of organisation that says, here's an internet business, but we've no idea how it will work or how to make money from it'." In the world of wholesale, Blueheath is the young upstart on the block. Barely a year old, the company is already set to make waves by offering independent retailers an innovative way to stock their shelves. Co-founded by Gurr and Chris Philp, both former McKinsey colleagues, and staffed by ex-Tesco, Safeway and P&G employees, the company is the UK's first delivered wholesale business with online ordering. Philp says: "We've effectively taken what the multiples do and scaled it down for the little guys. We take a small independent and bring them the infrastructure they would have if they ran a big supermarket." Technology enables costs to be kept to a minimum, allowing them to offer competitive prices, with the benefit of delivery. Blueheath provides computers free for retailers to use to place their order over the internet. The information is collated and bulk orders placed with suppliers. These are delivered to a main distribution centre and picked down to individual store orders. They are then sent out to local distribution partners, typically fresh food suppliers who can deliver the orders to the stores. Gurr says delivery partners keep costs down: "We are taking advantage of their spare capacity. The companies we are involved with are generally busy in the morning but their fleets aren't being used in the afternoon." Retailers are able to order as much or as little as they want, with only a small delivery charge for orders under £500. Philp points out a retailer can give it a try at no cost. "We supply the equipment, there are no limits on what customers order or how often, and we make no demands for exclusivity." Blueheath supplies around 200 retailers and says numbers are growing. Gurr says: "It's still in the early stages. We ran a successful pilot in the Thames Valley that proved the system worked and showed us where we could improve." The company operates mainly in the south and south east, but a rollout is planned for much of the UK by the end of the year. Blueheath is certainly attracting support, not least from the National Federation of Retail Newsagents, which has signed an exclusive favoured wholesaler agreement. As NFRN head of commercial operations Rod Stevens says: "Blueheath will revolutionise the federation and any retailers who jump on the bandwagon. It hasn't got the costs that other operators have and the possibility for retailers is one to relish." Stevens says that he hasn't been able to detect a flaw in the company's operation or strategy. The arrangement is mutually beneficial. He points out that the federation's weak point has always been lack of involvement in the supply chain. "Blueheath offered us an opportunity to get involved, and we can supply them with customers." And with a membership of more than 22,000, the federation offers considerable potential for Blueheath. Janet Iveson, who runs Bisley Post Office Stores in Woking, is one customer impressed by the service she's received. "Their prices are competitive and the service is good. I started with a small order and if they keep things going, I can see there might be a time when I use them solely." And Blueheath has great potential for suppliers, according to Gurr. "They see us as a new route to market and, more importantly, we provide a direct channel to small independents at the point of order, something they haven't had before." So what does the future hold for Blueheath? Philp says the company is taking on board customer feedback and improving the systems, with the possibility of linking in till equipment." And the NFRN's Stevens is upbeat about its competitive advantage: "Blueheath has the potential to change the distribution industry radically," he says. {{FEAT. GENERAL }}

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