PDQuick Delivery Service Is Shifting Into High Gear

Thirteen years ago, Pink Dot was a West Hollywood liquor store that took telephone orders and delivered drinks, deli foods and a few grocery items in half an hour.

Now, Pink Dot has morphed into PDQuick and moved its headquarters to Camarillo, where it hopes to become a nationwide Internet powerhouse that sells hot meals, groceries and music to people who don’t want to leave their homes.

“Our product is for the time-starved consumer,” said Dan Frederickson, president and chief executive of PDQuick. “Normally, our customers buy from us because time is of such value to them.”

Just how many of these customers exist is the ultimate question for PDQuick and other Internet-based services, such as Webvan, Homegrocer.com and Kozmo.com. All have hitched their futures to the bumpy carriage ride of e-commerce.

“They are filling a certain need in a community like ours where people have little time,” said Jamshid Damooei, a business analyst and California Lutheran University professor of economics. “Retail shopping on the Internet is definitely growing. The faster the pace of life becomes, the greater need for these kind of services to exist.”

Three important factors come into play for PDQuick, Damooei said.

“First, the large market for food retailing--all of us need to do our grocery shopping, that’s not going to die out,” Damooei said. “Second, there is a need for home delivery. And third, there is an increase in Internet shopping. So when you put these three things together you see a picture of a growth industry.”

PDQuick has certainly grown. First, it expanded to Santa Monica, then south to Orange County and later to the San Fernando Valley and Pasadena. It now has 17 stores in California. The newest--stocked with more than 2,000 types of grocery products and prepared foods--will open Oct. 21 in Camarillo.

It also plans to open three locations in the Washington, D.C., area by the end of this year and to move into San Francisco and Chicago.

The stores are open from 9 a.m. to 3 a.m., and customer service areas are determined by the time it takes to travel 30 minutes. Customers place orders by phone at (888) PDQuick or on the Internet at https://www.pdquick.com.

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Delivery speed is the company’s main customer offering, said Frederickson, who joined PDQuick in December 1999 after 12 years as president of Ventura-based Kinkos Inc.

PDQuick hits its delivery goals 85% of the time, but “if we’re late, we’re late,” Frederickson said. “We do the best job we can. If it’s raining or there’s traffic, we don’t want to put our co-workers at risk.”

The company has about 800 employees, almost twice as many as a year ago. It also has about 175,000 active customers, Frederickson said. Each day, it makes about 4,000 deliveries--almost 1.5 million a year. He wouldn’t say what the exact amount of an average bill was, calling it a “highly guarded secret,” but he did say it was similar to the average expenditure in a grocery store, which is in the mid-$20 range.

For some customers, it provides the kind of service they need.

“I hate going to the store and I don’t cook,” said Jennifer Davis, 25, an aspiring actress and waitress in Reseda. “I can get it all in one place; it’s a huge time saver.”

She spends about $40 each weekend on sandwiches, groceries and coffee. And she uses the service to refill her stock between trips to the grocery store. Before she moved to Reseda two months ago, she ordered for four years from the Santa Monica store near her home.

“Their prices are competitive,” she said. “I don’t notice any difference between them and Ralphs.”

But Ralphs has an established distribution system and business, something PDQuick is building from scratch.

With no minimum order and a $2.99 delivery fee, PDQuick faces a tough challenge in making a profit.

“We’re definitely making money at the operating or unit level,” Frederickson said. “The service charge recaptures our costs.”

Just as Amazon.com branched out from books to music and other items, so too is PDQuick. It’s developing new products and preparing more foods at its fulfillment centers to pump up profits. Besides baking bread daily, it is adding products such as oven-baked chicken to its menu.

In addition, Virgin Megastores and Virginmega.com have recently formed a partnership with PDQuick to provide express home delivery of widely anticipated music releases.

On Sept. 18, fans could order “Music,” Madonna’s newest CD, a smoked turkey sandwich and wine for a late-night delivery.

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Those deliveries come with drivers using their own cars or the company’s orange-and-white Volkswagens or Daewoos. But higher gasoline prices have hurt PDQuick’s bottom line.

“That has cut into our profits,” Frederickson said, although he has no exact figures yet. If gas prices keep increasing, PDQuick will have to raise its prices, he said. In new locations, such as Washington, D.C., the company plans to use mopeds for some deliveries.

Shannon Weisenberger, a 24-year-old writer in the Baltimore area, said she spends about $60 a week on groceries from the newly opened PDQuick in Towson, Md. “If it’s a rainy night or it’s been getting chilly, it’s a lot easier than getting in my car. It’s not something I want to go out into.”

It’s probably something a delivery person doesn’t want to go into, either, and finding reliable deliverers has been a big challenge for PDQuick.

Frederickson said the company has had difficulty finding reliable employees. Workers rely on minimum wage or better and customer tips, which are based on generosity, not a percentage of the bill.

Good help, or the lack of it, can determine PDQuick’s survival or failure, Damooei said.

“The critical issue for this company is how efficient they remain in terms of cost and quality of service,” he said. Competitors are plunging into the market, and customers have to remain satisfied, or they can turn to a growing variety of alternatives.

Frederickson knows the competition lurks in the market, be it from pizza places, restaurants, liquor stores, supermarkets and Homegrocer.com. But he hopes the company’s service, selection of foods and convenience will hold PDQuick in good stead.

So far, it has the financial backing to keep going. One major investor is GE Equity, the investment arm of the industrial giant.

PDQuick’s latest round of venture capital funding brought in $35 million--$20 million came from TH Lee.Putnam Internet Partners and $15 million from other investors.

And, unlike many Internet-based companies that went public only to plummet in value once Wall Street realized they weren’t making profits, PDQuick has no immediate plans to go public.