Web Grocery –

A Comeback?

I’ve never used a Web Grocer – I enjoy walking grocery aisles too much to miss out on the chance to get up close and personal with all those products and brands, but several recent events have had me thinking about this sector more than usual.

In June, Amazon began to sell over 10,000 grocery lines but with no perishables, and a top 10 items list comprised only of baby wipes and diapers its not what I call grocery. Time I felt to consider what does constitute web grocery and clearly the start point has to be the end point – of WebVan. Was this the greatest of all the Dot Gones burning over $1 billion before its spectacular collapse?

If WebVan was too large and complicated then The Home Grocer with 300 or so items may be spot on, at least the shopping shouldn’t take too long. The wonderfully named SPUD - Small Potato Urban Delivery - is twice as big – all of 600 items which it delivers on a weekly schedule. To be fair to SPUD I think that their model is closer to the organic vegetable box scheme than a full web grocer. If, however, delivery once a week is too slow for you, and if you live in LA, Yummy may be more appropriate. They promise delivery within 30 minutes of order – more of a taxi than a web grocer I think.

Peapod looks like a real on-line grocer, offering 8000 lines, including perishables and frozen foods, and given that they are owned by an extremely large grocer, the Dutch Royal Ahold group, it’s no surprise that they now operate in eight states, working from a mix of warehouse/rooms and retail outlets. They claim almost 250,000 customers.

Internet groceries grew by some 36% last year to about $3.3 billion nationally, so would it be a surprise to show that in the UK, a country with less than a quarter the population of the US, one company turned over nearly $2 billion in on-line grocery sales last year? Tesco, the UK grocery market leader, has been quietly growing its net expertise. It never invested billions, never offered tiny selections and never promised 30 minute deliveries but, like Peapod, it has developed from its national store base.

Last November and December, it claimed I million customers purchasing on-line and now claims to be the world’s largest e-grocer. Yesterday, Tesco declared their 6 month profit up 10.3% to just over £1 billion. That’s almost $2 billion. The on-line profit grew by 43%. Tesco has nearly 1000 stores outside the UK. They are in the process of launching in California. One to watch I think.