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Food for Thought: Why Go to the Grocery Store When It Can Come to You?

by Don Hamilton


Not that there was any doubt, but here's more proof that the Web has hit the mainstream: Web-based grocery shopping. Just a couple of years ago only a few visionaries would have thought such a service would become commonplace anytime soon. On the other hand, when I was a kid milk was delivered to your doorstep. The question now is can you profitably deliver door to door and will enough customers line up to make it work.

Today if you live in Orange County, Calif.,you see the  trucks everywhere, scurrying about making deliveries. Webvanand  are the stores of choice in the Bay Area and Silicon Valley. Peapod's current local delivery areas are in San Francisco, Silicon Valley, the East Bay area, Austin, Boston, Chicago, Columbus, Ohio, Dallas/Fort Worth, Houston and Long Island. Peapod also delivers its 7,000 available products anywhere in the United States for a flat fee of $7.95 through its partner United Parcel Service. Peapod, the oldest of the home-delivery companies, has been at it for 10 years. Last year Peapod did $69 million in sales with 100,000 customers.

Now Peapod has been joined by two well-financed competitors: Webvan and HomeGrocer. This seems like an idea whose time has come, but what is the experience like for the consumer? WWWiz, as always, is here to help. We gave HomeGrocer, the service available in our Southern California headquarters, a shot and liked what we discovered.

The online ordering system is easy to use with drop-down boxes in each category, from beverages and baby food to lobster tail and lunchmeat.  When you click on bread, for example, the box opens with more choices; then click on muffins at which point more options open. At this point you see pictures of the various products with the price and price per unit. Click on any individual product and you will get more information on the product, including nutritional value.

The second time you order you can click on your past order and a list of previous purchases comes up. It is divided nicely into subcategories such as drinks or breads and you can go through your list and add items to your current shopping list. This is a very helpful tool because it helps you remember things you use regularly. In my case after selecting items for my new list, I went back to the old list and realized that I had forgotten several things and that I had purchased the wrong laundry detergent.

On my return trip I was also able to use a $10 discount coupon given to me after the first purchase. The prices are very competitive with those in the market down the street. Some of the loss-leader products are not as cheap but on average they are very competitive. I also got a bag of free vegetables with my first order. They were beautiful and flawless and so was the fruit that I ordered. I have heard that the reason for the perfection is that fewer hands touch the produce than do in a normal market. According to Webvan you pay less than at the supermarket. Peapod promises weekly specials and manufacturers' coupons accepted and friendly drivers. HomeGrocer lists all its drivers on the Web site with a little story about each.

            Setting up and accepting delivery was easy. I chose a time that was convenient for me, which was the next day, at 3 p.m. on a Tuesday. At precisely 3 the driver arrived with my groceries in special boxes used to carry them from the truck to the house. He asked where I would like the groceries and I said in the cupboards. He said no problem and started to unpack.

I was joking, of course, and had to stop him. If he put the groceries away I would never be able to find them. The countertop would be fine for this trip. He unloaded everything and asked if I had questions or needed anything else. I said no and he offered an 800 number in case I had any problems. On the back of my receipt, which was a list of everything I had ordered, was the discount coupon. It was a very good experience overall.

I have heard good things about HomeGrocer from others. A friend of mine who had just had a baby used the service and was excited because she did not have to fight her way through store crowds with two kids, one a newborn. She was very happy with the service and loved the vegetables but was not happy with the filet mignon. I guess some grocery items you want to be able to select in person.

Online grocery shopping is great convenience for people who are sick, challenged in any way or want to stay at home for whatever reason. Remember that you can have food delivered to a boat or picnic location and save the effort and space required in your car. If you are having a party at a remote club or up several flights of stairs this is the perfect solution because they can arrive just in time. If you eat fast enough, you may not even require refrigeration. If you are headed for Mammoth for a weekend of skiing you can order Peapod's UPS delivery of non-perishables and have a well-stocked cabin simultaneous with your arrival.

What if two people want to collaborate on a dinner. Peapod is prepared for this. For example, you might start the order at home and have your friend or spouse complete the order at work. And with their ``buddy email" feature, you can have your order confirmation sent to two email addresses. People often order while on trips or before going so that the food will arrive the day they return. 

HomeGrocer customers can order until 11 p.m. for next-day delivery. You select a 90-minute window convenient to you. When you are online there will be time slots that are available to you; you simply select the one that fits your needs and click. Deliveries can be arranged seven days a week, Monday through Friday from 1:30-9:30 p.m., Saturday from 9:30 a.m.-3:30 p.m. and Sunday 2-6:30 p.m. There is no delivery charge on purchases of $75 or more.

Webvan claims to have lower prices than the local supermarket. Here's a quote from its Web site: ``Webvan offers high-quality products generally at or less than the prices you will find at your local grocery chains. We pass along the savings we achieve from our highly efficient procedures and lower overhead expenses. Because our prices are so low, we do not issue buying cards or accept coupons."

            Webvan delivery times are six days a week but have longer hours than HomeGrocer, from 7 a.m. to 10 p.m. Monday through Friday and 9 a.m. to 5 p.m. on Saturday. Delivery is free for orders of $50 or more and $4.95 for orders under $50. The company has had some problems with college students ordering one pack of gum, but the average order is in the $70 range.

            In most of its local service areas, Peapod delivers seven days a week, from morning to evening. To see when it delivers in your neighborhood, log in to the store and click Reserve Delivery Time in My Peapod.

HomeGrocer is at the beginning on an explosive-growth phase with around 1,000 employees and 20 markets coming online in the near future.  It is currently the fastest growing virtual grocer and serves Seattle, Portland and Orange County.

Who is it that puts something like HomeGrocer together successfully? Obviously a strong management team, but it also has some high-profile names as investors or on the board of directors: James Barksdale (Netscape), Jonathan Lazarus (Microsoft), Chuck Barbo (Shugard Storage) and Phil Schlein (U.S. Venture Partners) among others.

Terry Drayton, Ken Deering and Mike Donald were among the company's original partners. The idea for the enterprise was sparked by a simple request. One day when Drayton was celebrating a new sales record for his bottled water company, his wife talked about the challenge of raising two small children. If he really wanted to help, he would find a way to deliver groceries directly to their home. Terry accepted the challenge.

In November HomeGrocer received $100 million in a strategic fourth round of financing that will support its growth into 20 new locations this year. The lead investors included, Kleriner Parkins Caufield & Byers, Hummer Winblad Venture Partners and the Barksdale Group; even Martha Stewart invested in this round. `` improves people's daily lives, obsesses over customers and has a great management team," said Jeff Bezos, founder and CEO of

Between now and the end of 2000 the company plans to lease 2 million square feet of warehouse space and add more than 1,000 new temperature-controlled trucks and 7,000 more employees. The effort will be augmented by a new multimillion-dollar advertising campaign.

            All the home grocery delivery companies seem to have impressive investors involved, which means the best and the brightest of the venture organizations believe it is not a question of whether it will work but how many markets can be controlled before someone else stakes a claim.



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