February 22, 2000 1:10 PM PST

Webvan adds bookshelves to grocery site

Webvan is giving its online grocery store the look of a local supermarket by adding popular fiction and other books to its virtual aisles.

The online grocer, based in Foster City, Calif., has added cookbooks and best sellers, among other books, to its Specialty Shop, where it sells nontraditional supermarket goods such as flowers and office supplies. Webvan said that by offering a wider range of products that can be delivered to customers' doors within a designated time slot, the company is offering more convenience than its competitors.

"We're talking about the ultimate convenience," said Amy Nobile, a Webvan spokeswoman. "It's a whole different proposition for our customers."

The product expansion comes as Webvan extends its reach. The company, which operates only in the San Francisco Bay area, plans to open service in Atlanta, Boston, Chicago, Dallas, Denver, northern New Jersey, Philadelphia, Seattle, Washington, D.C., and five other U.S. markets by the end of next year.

The new product offerings also pit Webvan against some of the most well-known companies operating on the Web, including book retailers Amazon.com and Barnesandnoble.com. Although Webvan did not say that it has plans to expand its book offerings to the size of a bookstore such as Amazon, the company threatens to take a small share of the online book business through customers looking for quick and easy delivery with their groceries.

Alan Mak, an Internet analyst with Argus Research, said Webvan's new offering is a good way for the company to raise its average purchase amount, something it needs to do to absorb delivery costs.

"If Webvan is sending (vans) out to deliver a quart of milk, then they will bleed money all over the place," he said. "But if they can sell $103 worth of products (Webvan's target sale), then they can absorb the amount of the ticket...I can see these companies expanding their offerings to include all kinds of things, even dry cleaning."

But the online home-delivery business is quickly filling up with competitors, including companies such as HomeGrocer.com and Kozmo.com. New York-based Kozmo, which sells videos, CDs and nonprescription drugs, delivers goods to a customer's home in less than an hour. Mak said the convenience these companies offer is what's most attractive to consumers.

"I think we'll see that these companies are the real competitors to Amazon," Mak said. "That's why Amazon has taken a stake in both HomeGrocer and Kozmo.com."

Within its new bookstore, Webvan is selling hardcover and paperback books and a selection of children's and local interest books.

News.com's Stefanie Olsen contributed to this report.

 

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