GREATFOOD IS EXPANDING ON-LINE FOOD OPERATIONS

COLE CORBIN

SEATTLE -- As new players in the on-line grocery retailing arena struggle to carve out a niche, Greatfood.com, a national on-line specialty food retailer, is adding wholesale operations to its consumer-direct business.

In addition to launching wholesale services, Greatfood plans to expand its reach through a partnership with Skokie, Ill.-based Peapod.

The on-line retailer, which offers more than 1,400 specialty food items on its consumer web site, www.greatfood.com, launched the wholesale operation last month. Currently, the wholesale operation, which can be accessed at www.greatfoodwholesale.com, is working with a limited number of supplier-partners, "so we can monitor the program closely and see how it will work," said Ben Nourse, president and co-founder of Greatfood. "We want to get the kinks out of the system and make it run smoothly."

The on-line provider is targeting its wholesale services to "small grocery stores and chains that provide specialty items and products," Nourse said.

"There is a collection of suppliers that are not able to connect with [these] retailers too well," he explained. As a result, "some retailers started contacting us, and wanted to purchase items from this product line."

To use the wholesale service, Greatfood requires that retailers register for membership. Upon approval, retailers are issued a password that provides access to the site. "We do not want the general public to have access to wholesale purchasing and pricing," he explained. "By having retailers register with us, we can confirm the users are bona fide retailers."

As customers order items from Greatfood, products are shipped directly from the manufacturers or supplier-partners, via Federal Express and UPS, he said. Nourse noted that orders are delivered within four to six business days. Although the on-line provider would not disclose the shipping cost it charges through the wholesale operation, Nourse noted that delivery charges are based on the weight of each order.

Though Greatfood is in the early stages of its wholesale operation, the on-line retailer has already seen significant growth in its consumer service. Greatfood, which began in 1996, reported its orders jumped to more than 13,000 in 1998, from 2,231 in 1997. According to Nourse, he expects to see similar growth in 1999.

The company's consumer operation is supported by more than 60 suppliers. "Our goal by the end of 1999 is to have more than 160 suppliers," Nourse said.

Consumer delivery fees and shipping charges differ from the wholesaler charges, as they are applied based on the cost of orders. For example, delivery charges can range from $4.95 for an order totaling less than $16, to $22 for orders that total $200 or more.

Looking ahead, Greatfood plans to increase its exposure on-line through a partnership with Peapod. Peapod is an Internet home-delivery grocery service that partners with retailers in major metropolitan markets.

Through the upcoming allegiance, Peapod will offer Greatfood's specialty items through Peapod Packages -- a new on-line ordering service that will offer consumers a variety of food and household items, including bundles of specialty and gourmet products. The service is expected to launch during the second quarter of 1999, according to Nourse.