WESTWOOD, Mass. -- Streamline here, perhaps the only company that delivers groceries when the consumer is not at home, will step up the efficiency of its order-receiving process in June when it begins accepting orders via the Internet.
Currently, a pilot test group of 60 households in this Boston suburb place orders by telephone, fax or computer and collect their groceries from temperature-controlled storage units installed in their garages.
In late June, the company plans to begin accepting orders across the Internet and expand the test group to 100 households, according to Tim DeMello, Streamline chairman.
Unlike other home shopping and delivery providers, the company does not fill orders through stores. Orders are assembled at a 56,000-square-foot warehouse here supplied by the wholesale division of Star Market, Cambridge, Mass., and delivered to homes in a 15-mile radius.
"As a 'retailer,' so to speak -- a 'virtual retailer' nonetheless -- we make about a 28% gross profit margin on what we sell and 23% of that is in the grocery category," DeMello said. The test has been under way for one year, over which time the average customer spent $6,000, he noted.
In addition to home shopping, which represents 73% of sales, the company offers such services as pickup and delivery for dry cleaning, film processing, bottled water, video rental and package service.
Retailers in the area said the service, if it is successful, may chip away at their business, but not on a large scale.
"Looks like more competition for us down the road," said Ralph Melchionda, general manager of Atlantic Food Mart, Reading, Mass. He said the service will likely capture a niche, but does not pose a serious threat.
"We have spent a lot of time looking at this whole arena and we think there is a threat to the retailer channel," said one chain executive who was familiar with the project but requested anonymity. "It's a very sexy proposition, but to do it and make money is very, very difficult."
Industry observers pointed out that Streamline's delivery model, a route-based system, is far more cost-effective than other company's demand-based systems, in which deliveries are made according to shopper-specified time frames.
"They're going to skim off an affluent portion of the population: the time-starved, two-income families. But the problem I see is that a lot of the affluent customers are inner-city and their model is focused on suburban communities, so they miss a great deal of the population density," one observer said.
DeMello said he hopes to capture a shopper base of 3,000 to 4,000 in the next 18 months. Streamline spends about $400 per customer location for setup and charges the customer a one-time $39 fee plus a $30 monthly service charge. Setup includes installation of a refrigerated-freezer-dry storage unit, a security keypad to control access to the garage and scanning of products in the home to establish an order template.
Shoppers place their orders from two lists, a household-specific "A" list and a broader-based "B" list containing 15,000 stockkeeping units, DeMello said. Streamline recently added prepared meals to its offering.
The "A list," which contains many of the items the household purchases regularly, is based on in-home scanning of Uniform Product Codes.
Household demographics are also fed into the data base.
The company intends to use that information and work with manufacturers to offer new services, such as product sampling in the home, DeMello noted.
