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London Caterers

Food Online

First Published: November 1999
Last Update: October 2002
Author: Computer Partners

Whether you want to buy take out food, order groceries or find that special recipe, there is no end to the amount of food action that can be found online. Unfortunately a lot of what you can get delivered from grocery and restaurants online is really determined by where you live.

Most regions in the US are able to get grocery delivery service, but there are fewer cities in Canada that are able to get the service. The reason for this is that the online grocery store has been a difficult business to master.

In his article in Business 2.0, Dale D. Buss reported that "the obstacles in the online grocery store industry remain as big as the entrepreneurs' dreams." Companies like Information Neighborhood and Oncart already have bailed out. His research indicated that although Americans hate going to the supermarket, few are willing to pay the extra $10 average fee for a delivery from an online service. The profit margins in the online supermarket industry have been typically only 1.2 percent.

Buss reported that NetGrocer one of the first to make the online plunge has been struggling to survive. Founded in 1995, NetGrocer began delivery in 1997. Initially the company used Federal Express to deliver grocery items with a long shelf life. Delivery was guaranteed within a week. The company also had an exclusive placement with America Online to become the biggest company offering nationwide delivery of dry groceries. Last fall the company had to lay off more than half its staff of 80 people. It has raised delivery prices twice in the last six months.

Buss interviewed Fred Horowitz, the interim president and CEO of North Brunswick, N.J.-based NetGrocer, who said that recent changes have been made. Horowitz now works at arranging volume price discounts with manufacturers like Procter & Gamble and Frito-Lay. The company's New Jersey warehouse gets orders to nearly all customers in the Northeast within a day and the rest of the country in two to four days. NetGrocer is also planning to open a warehouse somewhere on the West Coast this year to help get items to other areas of the country faster.

He quoted Horowitz as saying that 'consumers don't mind waiting for non-perishable, especially in quantity, and don't balk at paying the typical fee of 10 percent of the total merchandise price. "If on a $100 order you pay $9 or $10 to have it delivered, and you've saved yourself an hour and a half of your time-customers can calculate based on what income they make per hour how far ahead they are," he says.'

Buss also talked about another early player, Information Neighborhood, which created a grocery-delivery service with electronic ordering, in Tampa, Fla in 1996. Working with Publix, the giant supermarket chain, the company acquired a phone-and-fax ordering service to gain 3,000 customers. It then stalled because there were a lot of retirees in the area who were not computer users. The company then moved to Jersey City, N.J., there was an ample base of potential customers-but retail partner A&P didn't offer adequate marketing support.

According to Buss one of the problems is that some of the big grocery retailing players like A&P aren't committing to the online venture.

One of the more successful online grocers is Peapod. Business Wire reported in September that in 1998, Peapod had revenues of $69 million, and currently provides service in eight metropolitan markets in the United States translating into 100,000 households.

In his article Buss said that from the start, Peapod's approach had been vastly different from NetGrocer's plan to create a national presence. Peapod only focused on distinct local markets. The company began business in 1990, accepting call-in and faxed orders, as well as electronic ordering. After filing the order electronically, a Peapod employee stationed in the local Jewel supermarket in metro Chicago would pick the stuff off the shelves. Peapod paid the supermarket for the order and the shopper paid Peapod for the groceries and a $16 service fee per order.

Peapod has since changed its strategy. According to Buss, the company found that consumer demand made it difficult to provide quality service and it needed to come up with a new model. It built a central warehouse in each market, cutting 20 to 30 percent off the cost of filling orders from supermarkets

Streamline-a Westwood, Mass.-based service- provides a unique approach to the delivery of online groceries. The company installs a refrigerator-freezer and dry goods bins in the customer's garage. The driver enters the door-opener code on his keypad, cutting delivery stops to just three to four minutes.

Buss reported that so far, the model was working: Streamline customers pay a $30 monthly fee and spend an average of $105 a week on more than 100,000 items. The typical household places orders 45 weeks out of the year.

If you live in Canada you may find fewer online grocery store services available to you. According to Bob MacKalski of Peachtree Network, the company provides online grocery shopping in 13 markets in the USA and Canada. It was the first in Washington DC at Neams Market. It also provides online grocery shopping in Okahaoma (Buchanans Foods), Pennsylvania (McGinnisSisters), Ottawa (Country Grocer) and Vancouver (Stong's Markets).

He said that in conjunction with Foodfare Foods, the Peachtree Network has also been providing Web based online grocery shopping longer than any other company. The site hosting for the company is based in the US in Lynn, MA and the production is based in Canada in Montreal, Quebec. IGA also has an intricate working of online supermarkets in the province of Quebec.

Online groceries are trying different strategies to get a head. In late September, Business Wire reported that Peapod and Food.com were joining forces to take advantage of each other's customer base.

Food.com is one of the better known restaurant meal take-out and delivery services on the Internet. It was founded in December of 1996 in San Francisco, Calif. It has over 12,000 restaurants and over 650,000 members nationwide using its services.

It is also the exclusive takeout and delivery partner of America Online. The company focuses on organizing the fragmented restaurant industry to provide consumers with a one-stop shopping site on the Web for food takeout and delivery ordering. The partnership with Peapod enables both companies to reach those audiences already actively purchasing food over the Internet.

Partnering with different Internet businesses seems to be a trend of Food.com. Business wire reported in August that YouthStream had announced an agreement with Food.com to provide online restaurant take out and delivery ordering to millions of students via mybytes.com. Under the terms of the agreement, Food.com was to pay YouthStream $100,000 for an integrated online/offline advertising campaign targeting the 15 million college students who returned to campus this fall. Additionally, as part of the agreement, YouthStream was to earn a flat fee for every order from members of mybytes.com.

According to the Business Wire article, 'College students are among the largest users of food delivery services. Fifty-two percent of college students order take-out or delivery service at least once a week, resulting in over 7 million transactions per week. Food.com's services will allow students to choose from a list of local restaurants in their city or neighborhood, browse menus, view the specials of the day, order food and have it delivered whenever they want - whether immediately, at a later time or at a later date. In addition, users can look up restaurant hours, find out what type of payment is accepted and get directions.'

Food is being marketed in other ways as well. Just last month PRNewswire reported that Safe Technologies International Inc., will open its first online food mall the GlobalDeli.com. Consumers will apparently be able to order various cuts of meats, multiple seafood selections, imported wines, cigars, various coffees, and imported teas. All fresh items are to be dropped-shipped, temperature controlled, within a few days of ordering.

Foodvision.com recently launched its food-related mega site including such helpful sections as recipes, "ask the wine expert and "ask the chef". Consumers cans also purchase specialty foods and products related to food such as microwaves, the latest in kitchenware, top-industry chef's cook books, and even walk in coolers.

Infoseek Corporation, home of GO Network, launched its new food and drink center in August. On the site Go network users are offered cooking, restaurant and beverage information. At food.go.com there is also a recipe finder and a restaurant locator on the main homepage. Users can exchange recipes, trade cooking tips or talk about food and wine on GO Network message boards and chat rooms.

Other food related links that you may find interesting include this vegetarian magazine at VegetarianTimes This Gourmet Food site specializes in everything about gourmet food. This recipe link gives you recipes from top restaurants from around the world.

Here are some more food related links.

Below are some Books You May Find Interesting.