EVANSTON, Ill. -- Peapod here will be the exclusive on-line grocery service advertised on three high-traffic Internet services when it partners with Excite, Redwood, Calif., this month. Peapod expects this exposure to increase its marketing reach to current and potential customers.
In addition, Peapod has updated its Web site functionality and ease of use by eliminating the need to download software to place orders. The updated service reportedly went live last month.
Peapod is entering into a three-year agreement with Excite with the expectation of boosting its customer base and "making our brand name more recognized as we expand our service into the Top 40 metropolitan markets within the next five years," said John Walden, chief operating officer for Peapod. "This partnership will allow us to exclusively promote our service on a national basis for the first time."
"The additional exposure will drive visitors to our site who want to learn more about the service we provide through our retail partners," said Mary Wade-Kiscaden, spokeswoman for Peapod.
Edwards Super Food Stores, part of Giant Food Stores, Carlisle, Pa., a division of Ahold USA, Atlanta, is the newest retail partner Peapod will add to its list, as of the fourth quarter of this year. Peapod declined to comment on which future markets it will be expanding into.
Currently, Peapod is working with retailers including Jewel Food Stores, Melrose Park, Ill., a subsidiary of American Stores Co., Salt Lake City; the Columbus, Ohio, division of Kroger Co., Cincinnati; Randalls Food Markets, Houston; Tom Thumb Food & Pharmacy, Dallas, a subsidiary of Randalls; Safeway, Pleasanton, Calif.; and Stop & Shop Cos., Quincy, Mass., a division of Ahold USA. The on-line grocery-service provider currently serves more than 104,000 members.
Peapod's agreement is similar to the one established between NetGrocer, New York, and America Online, Dulles, Va., in July. According to that agreement, America Online will exclusively advertise NetGrocer through its specific channels for a three-year period. Unlike NetGrocer, however, Peapod's partnership will allow it to pursue targeted marketing initiatives to connect with its customers.
Through the agreement, Peapod will be the primary on-line grocery service promoted on three diverse electronic portals delivered by Excite. Excite provides navigation services and products for the Internet and World Wide Web that enable customers and advertisers to access information and interact more efficiently on-line.
"We will be promoted on Netscape's Netcenter, which is a consumer portal; on Webcrawler, which is Excite's family service; and on the Quicken Personal Finance area on AOL.com, which acts as a small business channel," Walden explained.
In addition, Excite's subsidiary MatchLogic is providing Peapod with the ability to do targeted marketing to specific customers in local markets. "This service delivers cost-effective tools that will allow us to reach consumers in our local markets via the Internet," said Walden. Peapod declined to comment on what the cost of the partnership will be.
Peapod will be pursuing two types of on-line promotions. One encourages potential customers to sign up for its service. The other targets existing customers with incentives based on their historical purchases through Peapod.
The on-line grocery service will also gauge the number of orders it is receiving, as well as track the effectiveness of its promotions, said Walden. "We will be tracking those consumers visiting our sites, and those that are converting to membership," he said. "Acquiring new members and increasing our order volume will allow us to build our business and our brand name."
Typically, Peapod picks orders directly from its retail partners' store shelves. However, Peapod is in the process of converting to dedicated fulfillment centers. Stop & Shop has a fulfillment center on the second floor of its Watertown, Mass., store. Three new depots are expected to open in New York, Chicago and San Francisco, but Peapod executives declined to comment when the facilities would go live.
In preparation for managing an increasing membership and order volume, Peapod reportedly launched a broad-access Web site and shopping application last month.
"In the past our service allowed our consumers to select products over the Internet through the use of additional software, which they received either in the mail or downloaded from our Web site," Walden explained.
Through the new application, "customers have access to us directly through the Internet, eliminating the need to download and install additional software," he said. "Customers now can enter our site, shop and leave. The process of placing orders is now simplified."
