PINK DOT SETS PLOT TO SPREAD A LOT -- A 35-SPOT EXPANSION

MARTY SONNENFELD

CAMARILLO, Calif. -- A small Los Angeles-area on-line delivery service is aggressively growing by focusing on fresh foods and fill-in niche items.

Pink Dot, based here, opened a new "fulfillment center" in Culver City, Calif., late last month. The site, where customer orders are processed and packed for delivery, followed the January launch of Pink Dot's Costa Mesa fulfillment center. The company now operates a total of 12 such centers, and says plans are in high gear to set up shop in more than 35 new locations by the end of the year.

Pink Dot originally opened a 4,500-square-foot convenience-type store on Sunset Boulevard in West Hollywood in 1987. The company's chief executive officer, Dan Frederickson, said, "Even though our overall operation has taken a lot of new directions since then, that location is still open to the public and remains our [highest-volume] center." It is also the only one that is set up as a store.

According to Frederickson, each of the centers is about the same size, and each maintains more than 2,000 stockkeeping units. The relatively small processing stations neatly fit the company's folksy, informal image. Rather than promising hard-and-fast delivery time guarantees, Pink Dot instead offers its customers delivery in "about 30 minutes."

Frederickson suggested that the familiarity of the Pink Dot brand puts the service in a different position than more recently launched Web-based grocers. "Long before the term 'e-commerce' was commonly used, Pink Dot was well situated to be a major contender in the rapidly evolving e-tailing business," he said, describing Pink Dot's current expansion as the result of a very organic progression.

"Before anyone really even heard of the Internet, customers got to know Pink Dot as a store. Then we added a call and fax center about eight years ago." Customers became comfortable faxing orders or calling the toll-free number (1-800-PINK DOT) for deliveries, he said. "When we began offering Internet ordering, it was really just a natural extension."

Most deliveries are made by a fleet of cars adorned with the familiar Pink Dot logo -- dubbed "Pinkiemobiles." Although its Internet-based ordering was launched two years ago, Frederickson said that Pink Dot has "just recently started to really focus on the Web."

An important part of that focus entailed a comprehensive revamping of its Web site (www.pinkdot.com). Unveiled in March, with intuitive interface and clear, hierarchical menus, "the Web site is very customer friendly," Frederickson said.

A visit to Pink Dot's Web site provides a stark contrast to most Web-based grocers. For example, companies such as Peapod, Netgrocer and others offer extensive selections of canned and frozen foods -- often allowing customers to select between multiple brands and package sizes of the same item. Most of them offer only a few, if any, selections of freshly prepared foods.

Pink Dot goes after a different kind of customer, and offers a substantially smaller selection of grocery and traditional supermarket items. According to Karen Sophiea, chief marketing officer, Pink Dot focuses more on fill-in items.

"We are not a full-service grocery. What we do is provide a combination of prepared food, groceries, beer, wine, spirits and staples."

Indeed, the range of selections posted on Pink Dot's Web site resembles a 7-Eleven with a modest wine list. In addition to such standard headings as "Grocery," "Dairy/Deli/Meats" and "Drug and Household," www.pinkdot.com features a link called "Pink Dot Cafe," which leads to menus featuring soups, salads, sandwiches, pastas and potatoes. Frederickson pointed out that about 10% of the overall sales are for these items.

The site allows customers to choose from a variety of typical deli sandwiches, as well as numerous "signature" specialties. Choices include the "Dagwood Delight," priced at $5.99, which is described as "salami, roast beef, turkey and ham piled high with Dijon mayo, lettuce, tomatoes, bell peppers, red onions, pepper rings, Swiss and cheddar cheeses on a sourdough baguette." Pink Dot's "Misto Veggie" sandwich ($4.99) is listed as "tomatoes, roasted peppers, artichokes, chopped onions, cucumbers, mushrooms and lettuce with basil pesto mayo drizzled with red wine vinaigrette on a wheat baguette."

If those creations are not quite to a customer's appetite, the "Deli Bar" section in the Pink Dot Cafe enables customers to build their own sandwiches, offering any combination of bread, fillings, cheeses, toppings and condiments. The sandwich price is updated as each component is selected.

Another unique service provided by Pink Dot is "Breakfast All Day." All Pink Dot locations provide service from 6 a.m. to 3 a.m.

"People have an impression that in a cafe, you generally get good food fast," said Frederickson. "We try to offer a combination of both quality and convenience."

Pink Dot's approach to convenience has led them to offer amenities beyond groceries, household goods and freshly prepared foods. On the Web site, customers can also order their favorite magazines, daily newspapers (including both the Los Angeles Times and New York Times) or a pack of cigarettes. Another contrast to Web grocers is that Pink Dot sells alcoholic beverages. A vast selection of beers (including micro brews), spirits, champagne and red and white wines is presented. While a 750ml bottle of Dom Perignon is available at $129.99, most selections are more affordable: 750ml Cabernet wines, for example, range from Vendange ($5.99) to Kendall Jackson ($19.99).

Apart from Web grocers, Pink Dot is facing competition from e-tailers who specialize in fast delivery, like kozmo.com and urbanfetch.com, already fully operational in many cities throughout the United States. Both kozmo and urbanfetch offer selections of sandwiches, other prepared foods and ice cream. But the bulk of listings currently on their Web sites focuses on books, videos, electronic games and other items. And though Pink Dot specifically pledges delivery in "about 30 minutes" rather than an absolute period, the other quick delivery companies promise one-hour delivery.

Like most other Internet vendors, Pink Dot accepts most major credit cards. But in a radical departure, Pink Dot also allows customers to pay by check or cash. There is no minimum order. Its standard delivery fee is $2.99 per order, but the fee is being waived through May 31 during the Web site promotion, Frederickson said.

In the coming weeks, Pink Dot will also soon begin offering business-meal service. Selections will remain the same, but Pink Dot will deliver fresh meals for up to 50 people at a time. "Sometimes meetings happen very quickly. We can provide a full lunch for a meeting that's just set up at 11 o'clock," he noted.

Frederickson came to Pink Dot two years ago, after serving as president of Kinko's copy center chain. Last December, Pink Dot secured $20 million in capital funding from a team of six investment firms to facilitate its expansion. The company recently added three new vice presidents to its seven-member management team, and also appointed Allan Huston, a 25-year Pepsico veteran and retired CEO of Pizza Hut, to the board of directors. Thus far, Pink Dot has been operating in Los Angeles and Orange County, California, claiming more than 120,000 customers.

"It's worked well for us, because we have the ability to reach a million households within about 30 minutes," said Frederickson, adding that the service area will soon expand.

While declining to cite specifics, he said that one would be in the East, and the others in the West and Central United States.