PEACHTREE PLANS TO BRANCH OUT

JON SPRINGER

MONTREAL -- Internet grocer Peachtree Network here is planning to ramp up expansion in the United States, but the company isn't in the market for delivery trucks or sizing up warehouse space.

"We're more of a facilitator of e-commerce for regional grocers," Gregory Kalinin, founder and chief executive officer of Peachtree, told SN. "We do the hosting, marketing and promoting of the network. The grocers do the picking, packing and delivery. It's an arrangement that lets us both do what we do best."

Kalinin said the strategy of using local partners to facilitate grocery delivery, though rejected by warehouse-based systems such as Webvan and HomeGrocer, makes sense for regional supermarkets and specialty stores that compete on customer service. Peachtree offers such businesses technical capabilities and on-line marketing in exchange for a small percentage of sales. Peachtree also gleans revenue from advertisements sold on the site.

Peachtree, which was launched five years ago as an extension of Kalinin's McGill University MBA project, partners with retailers in eight Canadian cities as well as with independents in Pittsburgh (McGinnis Sisters), Oklahoma City (Buchanan's IGA) and Chicago (Marketplace Food Store). A deal with a New York City-based store will be announced soon, Kalinin said.

"I like it because they're very knowledgeable people. They have a very attractive site and they've hooked into our system so all our price changes can be updated daily," said Nick Smith, manager of the Buchanan's IGA store in Oklahoma City that serves all three of that chain's store areas.

Peachtree last week officially launched its operation with Sun Valley Fine Foods, a two-store specialty chain in greater Toronto. Peter Vazirtzoglou, manager of a Sun Valley store, said the operation appealed to him mainly because it cost nothing to join.

"I was skeptical at the beginning, but as long as they didn't rush me into it I was willing to give it a shot," Vazirtzoglou said. "We have a Web site already, but we couldn't offer shopping on there unless we had someone to keep the site updated and input the price changes, especially for produce, which changes every day."

Peachtree (available at www.peachtreenetwork.com or through the domain names of participating retailers) recently raised money for further expansion into the United States with a successful offering on the Canadian Venture Exchange. "We see what we've done in Canada as sort of a warmup for the United States," Kalinin said. Among the plans are an Atlanta headquarters and more deals with regional grocers and specialty stores.