- The Washington Times - Monday, July 16, 2001

Peapod by Giant is expecting monumental growth now that HomeRuns.com its biggest rival in the Washington market, is no longer in business.
"We were ready for their demise," says Marc van Gelder, chief executive of Chicago-based Peapod Inc. "We're reaching out to HomeRuns customers. From a capacity stand point, we can handle it."
HomeRuns.com, which served 90,000 customers in Boston and Washington, ceased operation last Thursday just a month after it expanded its service to five more areas in Washington. Webvan Group Inc., the largest on-line grocer, shut down three days before.
The online grocery industry is expected to bring in about $780 million to $800 million in revenue in 2001 and will increase to $1.3 billion in 2002, about 20 percent lower than previous projections, according to Jupiter Media Metrix, an Internet research firm.
About 2 percent of Internet users in the United States bought groceries online in the past 12 months, according to a Jupiter survey.
Mr. Van Gelder says the demise of these companies does not mean there isn't a market for this kind of service, especially since Peapod sales increased 46 percent in the first quarter.
He says these companies' Internet-only business models were their downfall.
"This is confirmation that our the bricks-and-click model is working," says Mr. Van Gelder, whose company is majority owned by Royal Ahold, the parent company of Landover-based Giant Food.
Area shoppers can order most of the same products available in the Giant stores, including Giant brand and national brand products. The grocer uses a 97,000-square-foot facility in Gaithersburg to fill the orders.
Other online grocers, like HomeRuns and Webvan, did not have a physical presence in the markets they serviced.
The lack of money seems to be the biggest problem for an industry that's had its share of failing companies including ShopLink.com and Streamline.com, which both closed last year.
A spokeswoman for Burlington, Mass.-based HomeRuns says the company could not raise enough capital to continue to run the business.
Foster City, Calif.-based Webvan used up more than $830 million to try to keep the operation running. The delivery service, which never turned a profit, had 750,000 customers in Orange County, Calif., San Francisco, Los Angeles, San Diego, Seattle, Chicago and Portland, Ore.
Peapod, which services five markets, has turned a profit in Chicago and expects to have company-wide profitability in 2003, Mr. Van Gelder says. The company has more than 120,000 customers.

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