NETGROCER IN EXCLUSIVE PARTNERSHIP WITH AOL

DEENA AMATO-McCOY

NEW YORK -- NetGrocer here is expanding its exposure to potential on-line customers through a recent agreement with America Online, Dulles, Va. The on-line service provider will exclusively advertise and promote the consumer-direct delivery service through its specific channels.

"NetGrocer is our exclusive on-line supermarket vendor, and we will provide customers with direct access to the home-shopping vendor via our channels and Web access," said Tom Ziemba, spokesman for AOL. "While we will not be blocking access to other home-shopping services, our agreement with NetGrocer provides that we will not enter into further partnerships with its competitors."

As part of the agreement, NetGrocer will make a minimum payment of $15 million to AOL over the next three years, according to Ziemba.

NetGrocer, a nationwide shopping service that provides non-perishable items to on-line consumers at competitive prices, declined to comment on the partnership, which went live on aol.com July 16, and was launched through the Internet provider's proprietary service July 23.

The partnership will give NetGrocer exposure to more than 12 million AOL members in the United States.

"Once NetGrocer reaches certain [revenue] thresholds, AOL is also entitled to a share of advertising and transaction revenues," Ziemba said, noting that AOL may also purchase shares in NetGrocer.

"We are always looking for partners that will help us bring more convenience and value to our members," explained Ziemba.

"We want our members to have another way to take care of the necessary tasks in their everyday lives, in a faster, more accessible method," he added. "NetGrocer will let them do their supermarket shopping in a fast, hassle-free way."

AOL declined to share specific results it expects to gain through the partnership. The company believes, however, that it can provide benefits to NetGrocer. "They can expect an increase in traffic," he said. "AOL is a place people come to when they are serious about doing business. Our service will give them the ability to tap into a mass market."

NetGrocer, located at www.netgrocer.com, buys non-perishable products, such as canned goods, dry grocery, pet care items, health and beauty aids and housewares, directly from wholesalers. The on-line grocer picks these products from a dedicated warehouse facility. By using Federal Express, Memphis, Tenn., as a delivery vehicle, the on-line grocer can supply orders to customers nationwide.

NetGrocer charges a delivery fee of $2.99 for orders under $50, and $4.99 for orders exceeding $50.

AOL is positioning NetGrocer in places where members expect to find them.

Among the channels and areas that are the most convenient ways to access NetGrocer are Shopping, Interests, Lifestyle, Personal Finance, and Health.