Groceries To Go - online grocers with delivery services - Industry Overview

Kiplinger's Personal Finance Magazine,  August, 2001  by Kimberly Lankford

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Last year Peapod sold a majority stake to Royal Ahold, the Dutch company that owns several big U.S. grocery-store chains (including Giant and Stop & Shop), which has improved its service. Distribution centers were built onto--but are separate from--Ahold's retail stores, so the company can keep better track of inventory.

GroceryWorks. Serves several cities in Texas. It's now the exclusive online grocery channel for the Safeway grocery chain, which invested $40 million in GroceryWorks. GroceryWorks got a boost when Webvan pulled out of Dallas.

Albertson's, The nation's second-biggest grocery chain offers online delivery services in Seattle. The company is experimenting with free pickups, in which people place orders of more than $5 online, drive up to the store, and have the groceries loaded directly into their cars the same day, saving the time and expense of home delivery (although delivery to the door is still more popular).

Piggly Wiggly. The Memphis-based grocery company--which developed the first self-service grocery store in 1916--just started making the technology available to any of its 600 franchisees who want to offer online ordering. It expects more of its stores to offer speedy pickup rather than home delivery.

Other services

PEOPLE WHO DON'T live in a city with a major next-day grocery-delivery service still have a few options. More small stores are launching Web sites where people can order their groceries online and either have them delivered or, more common, drive through and pick them up. "They realize that they want a piece of this pie," says Bob Kaye, client-services manager for the Grocery Shopping Network, which helps small grocery stores and pharmacies with their Web sites and distribution (see www.groceryshopping.net for a list of smaller stores with Web sites).

Two companies also deliver nationally: Netgrocer and Groceronline. Both services lack local distribution centers, so they deliver through FedEx and UPS, which raises the price and delivery time ($15.99 per order and three days for Groceronline). And because of the longer lead time, they focus on frozen foods, canned goods and meat, and not fresh produce.

But Netgrocer and Groceronline are still an option for people without another choice. "I don't have a car and I was looking for ways to get groceries delivered to my door," says Cynthia Triplett, who lives about a mile from the French Quarter in New Orleans. "When I went shopping, I could only get a couple of bags at most and walk home, or I had to pay $15 to take a Cab." She uses Groceronline and Netgrocer--they each have different specialties--placing big orders only about once a month because of the delivery cost, then walking to the local store to get her fresh produce (which is much lighter to carry than cans). --Reporter: ERIN BURT

HOW TO GET THE BEST DEAL

To make the most of these services, you can't just shop for odds and ends at the last minute. Here are some strategies for getting the best deal.

Make fewer but bigger orders. Now that most services are charging delivery fees (typically about $5 for a small order), it's most cost-effective to order big. With Webvan selling CDs and drugstore items, it's easier to pass the threshold--$75 to $100, depending on location--for free delivery.