Web Isn’t Only Battleground for E-Grocers

HomeGrocer.com Inc. expected a stiff battle in cyberspace when it rolled into Orange County, but some of its toughest challenges so far have been on the real streets.

A quirk in California’s liquor law, for instance, is forcing HomeGrocer to open a mini-store in its warehouses in Irvine, Fullerton and Azusa so that it can sell liquor online. The state law says that anyone who wants to sell liquor must have a tangible site where the public can see and buy the product.

The company also has encountered some rough bumps running its fleet of peach-emblazoned trucks. HomeGrocer already has been hit with a personal injury lawsuit stemming from a collision involving one its trucks in Orange County. And drivers are finding it can be tricky navigating some of the narrow, winding streets in some of its busiest markets--affluent beach and hillside communities.

“That’s pretty much the hardest challenge,” said Keola Moku, “being in unfamiliar territory and not knowing if you’re going to have enough room to turn around.”

HomeGrocer has had headaches indoors as well. When the company’s inventory mysteriously began evaporating recently at its Irvine distribution center, HomeGrocer installed a video camera and nabbed an employee who allegedly had stolen $6,000 worth of groceries, said Irvine police Sgt. Rick Handfield. He declined to name the employee, who quit.

HomeGrocer won’t comment on these problems, but some have clearly become annoyances.

Barry Katz, a West Los Angeles attorney who has represented HomeGrocer, said of the mini-store liquor requirement: “I’ll be frank with you, HomeGrocer didn’t want it,” he said. “They’re protesting informally.”

That law has been on the books for years.

The peculiarity of applying the law to an Internet company came to light this month when the Irvine Planning Commission had to decide whether HomeGrocer should be able to sell liquor in its warehouse, which is in a section of that city that already had exceeded the allowed number of liquor-selling stores.

The commission voted 4-0 to give HomeGrocer the go-ahead to open a public counter for liquor sales, while acknowledging the folly of the action.

“It’s really a very different situation,” said Peggy Schneble, manager of planning and development. “It’s something where as time changes you need to take a look at regulations and say, ‘Is this a smart way to be doing it?’ ”

The issue has so riled the chief executive at Pink Dot, another online grocer, that he plans to recruit other businesses leaders to lobby state legislators to change the law. The company has opened “convenience stores” in its warehouses so that it can sell liquor online.

“Unfortunately . . . the legislation has not kept up with the change in the marketplace,” Dan Frederickson said. “What we really need is a type of liquor license for warehouse delivery services.”

Indeed, some Pink Dot customers use that service largely to buy liquor.

“I probably most commonly call them for alcohol,” said Peter Dollinger, a computer engineering student at UCLA, who has beer, rum and yogurt brought to his dorm across the street from the campus. “It’s really convenient that they deliver right to you.”

While it waits for the opportunity to sell booze, HomeGrocer is grappling with the delivery process itself.

Just getting the trucks to the house can be a trial in hilly communities, such as parts of Laguna Beach or Tustin’s Cowan Heights neighborhood. Moku, the driver, says that sometimes vans have to be used because trucks don’t fit on the narrow streets.

Drivers for online grocers must also grapple with the demands of delivery schedules that require them to get the food to the customer within a promised amount of time. Pink Dot tries to get its products to the home within 30 minutes. HomeGrocer generally schedules its deliveries within a 90-minute time frame on the day after the order is placed.

Time urgency may have been a factor in a crash involving a HomeGrocer Mercedes delivery truck that allegedly cut in front of a Fountain Valley family’s 1987 Buick Century in an intersection Dec. 12, said Mark Peacock, the family’s attorney.

“The truck driver was apparently on his last run of the day,” the Newport Beach lawyer said. “We’ve got a driver who’s got to deliver the goods on the last run [and] don’t know if the driver’s feeling the pressure to get the job done quickly or what.”.

HomeGrocer declined to comment on the lawsuit, but said no other lawsuits have been filed.