Ralphs, Priceline to Invite Online Bids for Groceries

Beginning next month, Ralphs Grocery Co. will allow shoppers to bid for their groceries online using Internet retailer Priceline.com.

On Priceline’s Webhouse Club site, customers of both Ralphs and sister chain Food 4 Less will be able to name their own price for 1,000 brand-name products and earn average savings of 15% to 35% starting Sept. 7.

But they’ll have to work for the savings. Unlike online rivals Webvan Group and HomeGrocer.com, customers must not only bid for their products online, they have to charge the purchase and then head out to the store to pick the items off the shelves.

Ralph’s other 20,000 products not listed on the Web, such as meat or produce, must be purchased separately.

Sound like a hassle?

Ralphs spokesman Terry O’Neil insists it’s no different than coupon clipping. “You may spend a little time, but the result is that you save a significant amount of money on your grocery bill,” he said.

The deal with Ralphs marks Priceline’s first food service in California. Ralphs’ parent, Kroger Co., said in June it would begin expanding Priceline’s Webhouse service to its 2,300 stores across the country. Priceline had already cut deals with other supermarket chains such as Albertson’s and Ahold USA in the Northeast, Southeast and the Midwest.

The savings aren’t paid for by Ralphs or any of the participating merchants, but by the manufacturers themselves, who trade a discount in exchange for the opportunity to showcase their product and reach new customers.

Ralphs has to train its cashiers only to process the sales. Like a supermarket loyalty card, customers must first swipe their Webhouse card, and then hand over their prepaid list, which will be matched against the items in their cart.

Anything not on the list will be rung up and paid for separately.

So what if a customer doesn’t drive a hard-enough bargain and finds a better price on the shelf? He has to go back to his computer, where Priceline will electronically refund the difference.

“They are asking people to go through a lot of hoops to save 20 cents to a buck [on each item], but there are people out there who will,” said Jonathan Gaw, an e-commerce analyst with Mountain View-based IDC.