Some big pieces in the on-line shopping puzzle fell into place this year and the food industry was watching closely.
New ventures were formed with new concepts and alliances, and getting capital to fund projects was the name of the game. There were also signs that on-line pricing claims will be increasingly scrutinized -- in the courts if necessary.
One of the hottest launches was for Webvan, a Foster City, Calif.-based consumer-direct company founded by Louis Borders, chief executive, who was a co-founder of Borders Books & Music. The company relies heavily on technology in its warehouse fulfillment and has plans for a major rollout even though it currently serves only the San Francisco market. It intends to build as many as 26 distribution centers across the country in a two-year period.
Its plans have caught the attention of investors, who ran up the stock price following Webvan's initial public offering in November. Other sources of funding include San Francisco Bay-area venture capital companies and Softbank of Japan.
Also entering the on-line grocery business was auctioneer Priceline.com, the Internet company that first made its mark in e-commerce sectors such as airline tickets by enabling Web surfers to name their own prices. Priceline entered the grocery arena through an alliance with more than 600 supermarkets in the New York metropolitan area. It plans to extend its program nationwide over the next 15 months. Shoppers name prices for an item and agree to accept one of two brands before they are told if their bid is accepted. They pay by credit card and are guaranteed they won't be charged more than prices posted in the store or through frequent shopper programs.
Bricks and mortar grocery retailers did not stay on the home shopping sidelines in 1999. Among the most innovative was Albertson's, Boise, Idaho, which opened its first Albertson's.com Store and Fulfillment Site in Bellevue, Washington, a Seattle suburb. The facility focuses on "multiple points of contact." Shoppers can place orders at in-store computer terminals, order from home over the Internet or shop the conventional way. They can choose between home delivery or in-store pickup.
Whole Foods, Austin, Texas, unveiled a new Web site last March that it has been gradually updating. The e-commerce component, an on-line mail order program using United Parcel Service, began with 6,000 natural-food items and nutritional supplements. The retailer also formed an e-commerce subsidiary to create an on-line "healthy living" community on the Internet, partly through its on-line monthly publication Whole Living magazine.
The importance of financing for home shopping ventures, which are generally money-losing at this point, was played up in high-profile announcements. In one example last May, Amazon.com, Seattle, took a 35% stake in HomeGrocer, which was to help enable an expansion into California for the Bellevue, Wash.-based on-line grocer. Last May Hannaford Bros., Scarborough, Maine said it was seeking a partner for its Internet-based home-delivery grocery service to shield shareholders from the costs of upgrading technology and growing services.
A warning sign for the industry came last October when Peapod, the growing home-shopping service based in Skokie, Ill., and Stop & Shop, Boston, were named in a class action lawsuit. Stop & Shop uses Peapod for home deliveries, and the companies were accused of fraud, negligent misrepresentation and breach of contract in a suit filed by three Stop & Shop on-line customers in the Watertown, Mass, area. They claimed that Peapod's Web site for Stop & Shop was charging higher prices than it listed.