business monday

March 24, 2008

Groceries at the click of a mouse

By Dan McLean

Rich Tarrant Jr. is hoping more and more Americans become comfortable grocery shopping with a few keystrokes and some clicks of the mouse.

Tarrant started MyWebGrocer in 1999 to offer supermarkets the option of having customers shop online, instead of pushing a cart through their aisles. The CEO of MyWebGrocer is the 40-year-old son of the founder of IDX Systems Corp.

Shoppers, who pay a $5 to $10 fee for the service, would pick up their pre-bagged groceries at the store. Some supermarkets may opt to offer delivery as an added option, Tarrant said.

Tarrant is under no illusion that online grocery shopping is something that will appeal to everyone. But, he said, a growing number of people are more comfortable on the Internet and online grocery shopping will develop a larger audience.

MyWebGrocer builds the online shopping feature that a supermarket hosts on its own Web page.

No Vermont supermarkets have signed up for MyWebGrocer's services, Tarrant said, but he is not deterred. "We're working on them, but they haven't done it yet," he said.

As high-speed Internet service expands throughout Vermont, Tarrant expects people to demand the ability to shop for more products online.

The Colchester business is growing quickly; Tarrant said hiring is "fairly robust."

MyWebGrocer LLC had 24 employees last year, employs 45 people and expects to have a 60-person work force by the end of 2008, Tarrant said.

The company generates revenue several ways: a transaction fee on each shopper's purchase, typically $4, and monthly service fees paid by supermarkets for generating online advertising circulars, Internet marketing and advertising.

The transaction fee constitutes about 60 percent of the company's revenues, Tarrant said.

Stores pass along the surcharge to customers and add costs associated with having staff collect the ordered items, bringing the customer's total cost to use the online shopping service to $5 to $10.

The time-saving feature is geared toward the "busy mother" who doesn't have an hour to spend meandering through supermarket aisles, Tarrant said. The average online order is 40 items; most of the customers shopping for groceries on the Internet do so between 9 and 11 p.m. and are picked up the next day, he said.

Large stores benefit by offering online shopping, he said.

The average online order, $140, is four times the typical in-store shop, Tarrant said, noting "It's the nature of shopping this way. It makes it easier to do big orders."

MyWebGrocer, which has been profitable for the last few years, tallied more than $5 million in revenue in 2007 and is poised to generate "just under $10 million" in revenues for 2008, Tarrant said.

MyWebGrocer's largest client is ShopRite, which has more than 200 storesm mostly throughout the Middle Atlantic States.

Tarrant said the company, which has satellite offices in Colorado, Connecticut, Minnesota and North Carolina, is landing clients at an "accelerating rate."

"Consumer demand is putting pressure on the grocers and they are coming to us to help with their Web site," Tarrant said.

Some of MyWebGrocer's clients have as much as 10 percent of sales coming through online shopping, Tarrant said; he expects the number of online purchases to grow at 40 percent a year.

The idea

"We were sitting around a table discussing the Internet, and the power of the Internet," Tarrant said, recalling a conversation with his brothers and sister-in-law. "And then someone asked: 'Why can't I order my groceries from the Shaw's down the road?"

The basic idea for MyWebGrocer was born.

MyWebGrocer does have some competition. Amazon.com Inc. offers more than 22,000 non-perishable grocery products through Amazon Grocery on its Web site with free shipping.

"Competition in this business is fierce and it comes from all directions," said Hannaford Bros. Co. spokesman Michael Norton.

Hannaford launched a Web-based home delivery program several years ago, dubbed Hannaford's Homeruns, Norton said. The supermarket chain, which has 14 Vermont stores, ultimately sold the effort and no longer offers online shopping, he said.

"Our focus is really on the in-store experience," said Shaw's spokeswoman Judy Chong, "but we are always looking for ways to make our customers' lives easier."

Jim Harrison, president of the Vermont Grocers Association, said online shopping is a nice service, and something that will likely gain in popularity over time.

Vermonters may be willing to pay a $10 surcharge if it saves 45 minutes of shopping, he said; but, for now, online grocery shopping will likely be offered only in urban areas because those markets have the volume to justify the added expense, he said.

Harrison said he is not aware of any Vermont stores that have online grocery shopping. Some smaller community markets, though, will take phone orders for longtime customers.

Grocery shopping on the Web is not for everybody, Harrison said.

"When you get into meats or other produce or bakery, people often like to pick out what they are shopping for," Harrison said.

Contact Dan McLean at 651-4877 or dmclean@bfp.burlingtonfreepress.com

BOX: MyWebGrocer file

COMPANY NAME: MyWebGrocer LLC

CEO: Rich Tarrant Jr.

EMPLOYEES: 45

HEADQUARTERS: Colchester

PRODUCTS: Online grocery shopping platform for supermarkets.

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