November 26, 1999 4:05 PM PST

Online grocers don't deliver the goods

The fledgling online grocer industry faced its most crucial test of the year--the traditional gastronomic excess of the Thanksgiving holiday--but did not deliver the goods, literally, on at least some occasions..

In a spot test by CNET News.com in San Francisco, where the competition between online grocers Webvan and Peapod is fierce, the selection was poor, damaged goods were shipped and, in one case, an item was not delivered at all. Both companies appeared overwhelmed by the holiday shopping blitz.

The good news was that each company delivered on time Click or miss and was represented by courteous deliverymen. But overall, initial reviews of these industry leaders left little to be thankful for.

"We discovered some areas that we need to improve," said Patrick Graham, a manager of a Webvan delivery stations. "This has never been done before. We're pioneers in this field and were constantly refining our methods and operations in order to get better...Yes, we still have a ways to go."

With analysts forecasting massive online shopping this holiday season, Web grocers were hoping to make a good impression on customers that would encourage loyalty at this critical early juncture. Jupiter Communications projects that online grocers will take in $350 million this year, about 1 percent of the total U.S. market, and could earn as much as $3.5 billion by 2002.

News.com's informal competition was judged on Web sites, selection, price, delivery and customer service. Shopping at the Webvan and Peapod sites was simple: Their sites were well organized, and checking out was a breeze.

But their selection of goods, especially holiday-related products, appeared to show that both companies were underprepared. On Peapod's site, clicking on some Thanksgiving staples such as pumpkin pie or turkey products, shoppers found the message: "Image Coming Later." You had to guess from a written description on the products' appearance.

Chicago-based Peapod shoppers could only choose one brand of turkey, a 10-pound smoked "Willie Bird." Executives at Peapod were not available today for comment.

San Francisco-based Webvan customers who wanted pumpkin pie would have to buy one spiked with amaretto. Those who tried ordering a non-alcoholic version were informed that the pie would be available on November 26. (Note to Webvan: Too late.)

To its credit, Webvan, which this year spent $1 billion for a automated distribution system, did offer four brands of fresh turkeys at a variety of sizes.

Orders were placed Sunday with each grocer for one turkey, a pumpkin pie (one with amaretto) and a bottle of wine. Customers had large blocks of time to choose to have their groceries, but neither company offered delivery on Thanksgiving Day.

Both delivered on time the night before Thanksgiving and did not charge delivery fees. But at $3.99 a pound, Peapod's smoked Willie Bird weighed in at a hefty $47.68 for almost 12 pounds. By contrast, Webvan's Willie Bird, non-smoked, was $1.87 per pound. The pies cost about the same.

As for the wine, deliveryman Andre Smith said Peapod was out of Turning Leaf California Chardonnay. Peapod never informed News.com of that fact at the time the purchase was made online, nor did it phone or email any warning that no wine would be delivered. Smith, who was pleasant, apologized repeatedly and said the charge for the wine had been taken off the bill and promptly left.

Webvan also stumbled in its delivery, literally. When Webvan deliveryman Jason Neri opened the crate that housed the order, he found that the turkey had pulverized the pie. He too was apologetic, but instead of simply leaving, he phoned his manager, Graham, and informed him of the problem. Graham arrived 20 minutes later with a new pie in hand.

While both companies received good marks for personal interaction, it is difficult to declare a clear winner. But in the end, if such problems are inevitable in this perishable business, the customer may eventually be swayed by the grocer that's willing to go the extra mile.

"We know these problems will occur," Graham said. "While they do, we want to make sure to do everything we can to make it up to the customer. We want them to trust us with their business."

 

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