Grocery Site Launched
Furr’s Supermarkets Inc., a 70-store chain based in Albuquerque, N.M., has started selling online, one of the first efforts by a traditional supermarket to sell the full range of groceries over the Internet.
The site, at https://www.furrs.com, is hosted by Newport Beach-based I-Way Corp. and offers every product carried by the Furr’s stores, including perishables such as meat and vegetables. Online-only grocery stores such as Peapod Inc. have been selling for nearly nine years, with limited success, and traditional supermarkets have generally been taking a wait-and-see approach.
“The industry is starting to realize that they’re threatened by this virtual marketplace and they need to protect their own turf, and they see this as a pretty cost-effective way of expanding their marketplace at the expense of their competitors,” said David Isaacs, president of I-Way.
Currently, the Furr’s online service is available only to people in the Albuquerque area. But the company plans to expand the service throughout New Mexico and western Texas.
When a customer orders groceries over the Web site, Furr’s chooses the products and the customer can either pick them up from the store or have them delivered. Furr’s charges 5% of the net purchase order to select and package the groceries and another $6.95 for delivery.
In April, Albertson’s Food & Drug began testing an online grocery service in the Dallas-Fort Worth area that is limited to nonperishables. Hannaford Bros. Co. has sold all types of groceries online in Boston since 1996.
I-Way, a 10-employee start-up, hopes to resell the technology it developed for the Furr’s online store to other grocery stores. Under the deal with Furr’s, it gets a flat fee for every transaction over the Web site, Isaacs said.
While I-Way developed the technology to integrate the system with Furr’s current inventory and pricing systems and runs the online store, BankAmerica Corp. subsidiary BA Merchant Services Inc. manages the credit card payments, for which it receives a fee.
Despite the recent surge of interest in electronic commerce, it’s unclear whether the grocery segment is ready, particularly when it comes to perishables such as meat and produce. Even Isaacs concedes, “It’s still very, very new.”
Jupiter Communications, a market research firm, estimates that online grocery sales will hit $3.5 billion in 2002, but that’s less than 1% of the $400-billion retail grocery industry.
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Jonathan Gaw covers technology and electronic commerce for The Times. He can be reached at (714) 966-7818 and at jonathan.gaw@latimes.com.
