WEB-BASED GROCERY SET TO LAUNCH THIS SUMMER

FOSTER CITY, Calif. -- Borders Books & Music co-founder Louis Borders is gearing up for an on-line food fight in the San Francisco Bay market with the launch of a consumer-direct Internet grocery service in early summer.Unlike other on-line grocery merchants, such as Peapod, Skokie, Ill., www.peapod.com, and NetGrocer, North Brunswick, N.J., www.netgrocer.com, the Webvan site, www.webvan.com, will

FOSTER CITY, Calif. -- Borders Books & Music co-founder Louis Borders is gearing up for an on-line food fight in the San Francisco Bay market with the launch of a consumer-direct Internet grocery service in early summer.

Unlike other on-line grocery merchants, such as Peapod, Skokie, Ill., www.peapod.com, and NetGrocer, North Brunswick, N.J., www.netgrocer.com, the Webvan site, www.webvan.com, will not initially use local retailers to fulfill orders. Instead, it has heavily invested in technology in its 333,000-square-foot warehouse in Oakland, Calif., which has 5 miles of conveyor belts and requires very little human intervention. Company officials declined to elaborate further on the fulfillment technology.

Chris Mannella, vice president of marketing for Webvan, based here, said the on-line retailer will initially begin fulfilling orders in the San Francisco Bay area, including the Oakland and San Jose, Calif., markets. "[San Francisco Bay] is a great test market for the services, where there's a high Internet usage," he said. "It's an ideal location to build a prototype for future markets."

Along with perishable, dry-grocery and cosmetic items, the on-line retailer will offer home-meal replacements, serviced by a kitchen in the Oakland warehouse, according to Mannella.

With investments from two San Francisco Bay-area venture capital companies and Softbank of Japan, the Internet retailer has already attracted somewhere in the area of $120 million in funds, according to a company spokesman.

Borders, the founder and chief executive officer of Webvan, has not been involved with the book retailer since it was sold to Kmart Corp., Troy, Mich., in 1992. Since then, Borders Books & Music has been spun off from Kmart Corp.

Webvan also plans on opening an additional 15 to 20 warehouses in other major metropolitan areas by year-end 2000, according to the spokesman. Although Webvan officials would not indicate which markets might be next on Webvan's list, Mannella confirmed that the company is looking into any market "that has a major league sports team."

Initially, Webvan plans to offer approximately 25,000 stockkeeping units -- including dry-grocery, perishable and cosmetic items -- fulfilled through the Oakland warehouse. The retailer plans to increase the number of SKUs to 35,000 by October or November this year, according to the spokesman.

The deliveries will be completed through a fleet of vans and trucks that will run from the Oakland warehouse and deliver directly to consumers' homes. On-line customers will be able to choose a half-hour window when they want their delivery to arrive at their homes, according to Mannella. "If the order exceeds $50, it's free. If it's less than that, there's a nominal $4.95 fee."