RealTime IT News

Peapod to go National

Online grocery firm Peapod Inc. said it plans to have a nationwide presence with a new specialty grocery service called "Peapod Packages," available from its Peapod.com Web site.

Peapod Packages will be targeted at niche occasions in which consumers find value in bundles of pre-selected products, such as new baby packages, college care packages and specific recipes or meal solutions in a box, the company said.

Over time, Peapod Packages intends to add specialty and gourmet foods, menu and recipe fulfillment, gift services and food-related information, the company said.

Products offered on Peapod Packages will be priced competitively with conventional grocery stores and specialty or gourmet retailers, and drop- shipped on a national basis direct from a Peapod warehouse or third party supplier. Because Peapod Packages will leverage the warehouse facilities that support Peapod's local services, it will be introduced soon after Peapod's first warehouse becomes operational, which is likely in the fourth calendar quarter this year, the company said.

Peapod Packages will be designed to assist Peapod in building national brand awareness, particularly in advance of Peapod's entry into major metropolitan markets with its traditional local service. It will be complementary to Peapod's local service, which is targeted to replace consumers' routine visits to the grocery store by offering a broad selection of grocery and drugstore products, including fresh produce and other perishables, for same or next day delivery.

Peapod's national rival, NetGrocer, which recently announced plans for an IPO, already ships nationwide, via FedEx.

"While we still believe, on the basis of extensive consumer research and experience, that consumers strongly prefer the convenience and full product selection of our local service, we also recognize that there is an interesting niche market for special occasion packages, bundled meal solutions and mail order specialty food products," said John C. Walden, Peapod's chief operating officer. "Peapod Packages will help us grow our national brand identity, and develop a customer base in advance of the market entry for our local service."

He added, "We have considered a national service for some time, including a possible broad-line grocery store aimed at consumers' stocking requirements for dry goods. However, not only have consumers expressed little interest in such a service, but we do not believe that such a service can be operated on a profitable basis without charging consumers prohibitive fees."

NetGrocer offers FedEx delivery for $2.99 for orders up to $50 and $4.99 for any order over $50. Peapod did not detail its shipping charges.

Peapod, which recently said it plans to expand local service to the New York City area using its new warehouse model, currently serves eight other metropolitan regions: Chicago, San Jose, San Francisco, Houston, Dallas, Austin, Boston and Columbus, OH.