Amazon boosts online groceries; Meijer debuts specialty site. - The Food Institute Report

Amazon.com expanded its grocery business to 14,000 non-perishable food and household items. More than half of the items are 'organic, natural or green,' pointed out Amazon spokeswoman Tracy Ogden.

The Seattle-based internet retailer says that more than 200,000 customers visited the grocery store site during the two months of its launch, reported the Seattle Post-Intelligencer (July 18).

The store, created due to customer requests, is offering shoppers a $10 instant rebate on purchases of $49 or more. Amazon is also offering free shipping through its 'super saver shipping' and Amazon Prime programs.

While Amazon's book and DVD stores offer discounts, food products are not that cheap. However, one of the company's priorities is to make the prices more competitive, according Ms. Ogden.

Bill Bishop of WILLARD BISHOP CONSULTING noted the supermarket business is at least a $500 billion industry and online sales are at least $10 billion. Mr. Bishop believes Amazon can make a run at other companies because it already has a strong brand and Amazon can leverage its shipping system to integrate groceries with books, DVDs and CDs.

For prior story on Amazon's online grocery store see FOOD INSTITUTE REPORT May 22, pg. 3.

Grand Rapids, MI-based MEIJER, INC. launched a specialty foods website where customers can find items such as Emeril Lagasse's meat rub, Earth's Best organic whole grain oatmeal cereal for infants and a variety of caviar. MEIJER.COM features 40,000 food-related items under kosher, organic, international, celebrity-sponsored, diet, health and wellness categories. The site does not offer meats or perishable goods.

'We're doing this for customers looking for specialty foods they can't find in Meijer stores,' said Stacie Behler, Meijer spokeswoman. 'Now they can go online, order and have it UPS-shipped right to their door.'

Meijer's site enables customers to make requests for items they can't find, for which Meijer will search and respond in approximately five days. Thus far, it has had more than 100 requests for products Meijer was able to find and ship, noted Ms. Behler.

Payment is by credit card at the time the order is placed. Groceries are received within two to five days.

As online grocery shopping continues to grow, so are the options as online companies vie for consumers' dollars. The list of pros and cons are also being reshuffled as issues such as rising gasoline prices and aging demographics surface. A cost-benefit analysis is featured in The Wall Street Journal (July 22). Among the highlights:

For consumers with children or overloaded schedules, spending $5 to $10 on the average delivery cost may be a small price to avoid the supermarket experience, outlined The Wall Street Journal. It is also advantageous for seniors, disabled persons or others who might have trouble lugging groceries around.

However, be present for delivery, or there could be an additional fee. For instance, FRESHDIRECT will try to deliver an order again that day for an added charge of $4.95. But if that cannot be done, the customer pays restocking fees of 100% of the value of perishable foods and 25% of the cost of packaged goods.

If the online customer is receiving shipment via mail, familiarity with shipping costs is important. A $200 purchase at NETGROCER will set a Colorado resident back $88.99 in shipping fees, according to The Wall Street Journal.

If shopping at PEAPOD.COM, the customer has the opportunity to sort items by calories, fat and other nutritional measures. FRESHDIRECT.COM groups products into helpful usage charts and makes suggestions such as grape tomatoes are better in kabobs than in sandwiches. Also, FreshDirect just introduced FreshDirect One-ClickRecipes , a web-based service which allows customers to choose from over 400 recipes, purchase the ingredients and receive delivery.