BAL HARBOUR, Fla. -- Peapod, the online shopping service acquired in total by Dutch-based Royal Ahold last year, is experiencing a 35% growth rate and generating "incremental sales for Ahold," rather than drawing from brick-and-mortar stores.
Marc C. van Gelder, Peapod's president and chief executive officer, gave that assessment in a speech here last week at the I/T Leadership Forum 2002, sponsored by the Food Marketing Institute, Washington.
Van Gelder said that Ahold's total online sales in the United States and the Netherlands is about $100 million annually, putting it second in world online grocery market to Tesco, which does about $320 million. He added that four out of Peapod's five online markets (Chicago, Boston, southern Connecticut, Long Island and Washington) are profitable. Average order size is $135.
With the exception of Chicago, Peapod is affiliated with Ahold's East Coast grocery divisions, such as Stop & Shop, Quincy, Mass., and Giant Food, Landover, Md. Peapod has headquarters in Skokie, Ill.
The key to profitability in an online business is managing the delivery piece, van Gelder said. Peapod offers next-day delivery with two-hour and six-hour "attended" time slots as well as "unattended" slots. Using an "airline model," it drives orders to certain time slots, such as 11 a.m. to 1:00 p.m. by offering a $1-off delivery cost.