A click fills the cupboard

Old Mother Hubbard went to the cupboard to fetch her poor dog a bone. But when she got there the cupboard ware bare...so she went online and had a dozen delivered.

September 01, 2004|By Kate Shatzkin | Kate Shatzkin,SUN STAFF

Alyson Nachman's boys couldn't wait for the man in the green and white grocery truck to pull up to their Owings Mills house - and neither could she.

Among the first in the Baltimore area to order her groceries over the Internet from a company called Peapod by Giant, Nachman stood by as the driver brought red peppers, milk and other everyday supplies to her kitchen counter.

Instead of tearing through the aisles of a local Giant, sons Jason, 4, and Alex, 2, quietly ogled the truck and the neat green totes full of groceries.

For Nachman, the new service, which started here Aug. 17, couldn't get to the Baltimore area fast enough. "I have two active boys who love to run around the grocery store," she said, "and I do not get my grocery shopping done."

A couple of days after Nachman received her order, she said she was so pleased that she had already scheduled her next delivery. The milk had been cold, even a few minutes after arriving. The peppers were fresh enough to serve to guests.

"Everything was terrific when I unpacked it," said Nachman, 37. "I was really surprised."

Peapod is hoping there are many more customers like her. Having watched other online grocery vendors expand and then fail, the 15-year-old Chicago-based company has been growing slowly. After delivering groceries in conjunction with sister corporation Giant in the Washington, D.C., area for the last three years, it has ventured into 22 Baltimore-area ZIP codes with more than 240,000 households.

In the first week, there were 432 orders placed. Mike Brennan, Peapod's senior vice president for marketing and customer service, said 80 customers took delivery the first day, triple the amount he expected. "That's much higher than we've had in the past," he said. "There seems to be a lot of interest, a lot of energy."

So far, only a few ZIP codes in the city - including Mount Washington, Roland Park, Federal Hill, Morrell Park and Homeland - are receiving delivery. The service extends around the Baltimore Beltway to communities including Towson, Catonsville, Linthicum and White Marsh.

Brennan said Peapod chooses to go into neighborhoods with "the highest Internet penetration" first. "The goal is to start in an area and then build density," he said.

The Baltimore-area orders are filled at a Gaithersburg warehouse that Peapod has used to serve its customers around Washington. Customers have until 6 p.m. the night before a morning delivery - and until midnight for an afternoon or evening order - to submit their lists.

Shoppers trained to look for quality produce, meat and other items assemble the orders, Brennan said, and keep them in special containers according to temperature. Drivers use trucks - and the insulated green containers - to deliver the groceries around Baltimore.

Despite recent inroads, online grocery shopping remains a sliver of the nationwide grocery market. Patti Freeman Evans, an analyst with Jupiter Research, said online sales this year will amount to about $2.4 billion, just 0.4 percent of the grocery market nationwide. That number is expected to grow to $6.5 billion, or 1 percent of the market, by 2008.

"It's a good idea," said Evans, who was expecting a delivery from a New York City service, FreshDirect, that very night. "It's just a huge behavior change, because consumers don't have a history of buying groceries direct."

Plans to expand Internet shopping have fizzled before. Webvan Group Inc. planned to launch the area's first major Internet-based grocery operation from a distribution center in Pasadena, but went bankrupt in 2001.

Still, Peapod isn't the first service to offer online groceries in Baltimore. Santoni's Super Market, a 74-year-old independent grocery in Highlandtown, has been taking Internet orders since 2001.

The orders now make up about 1 percent of the market's about $20 million in annual sales, triple the first year's volume. Eighty-five percent of the 150 regular online customers live outside Highlandtown, said Robert N. Santoni Jr., the store's chief financial officer.

Some are much farther away. Bonnie Hagy of Stephens City, Va., orders from Santoni's for her 76-year-old mother in Essex, who has health problems that make it hard to shop.

Hagy says the key to good online service is quality - and personal attention. "They've got a place where you can add your little notes," she said of Santoni's. When ordering chicken, "I ask them to make sure there's not blood in the pack. Her size of her tomatoes, she likes them large."

Santoni, who offers same-day service, said he isn't worried about the competition from Peapod.

"I believe in the next 10 years, every store is going to offer it," he said. "It'll be viewed no differently than having lottery in your store."

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