STREAMLINE SEES ITSELF AS A LIFESTYLE SOLUTION

JON SPRINGER

Streamline.com chief executive officer Tim DeMello describes his company not as an on-line grocery but a "full-service lifestyle solution." It's that distinction that will separate Streamline from its fledgling on-line competitors, DeMello said.

"We're about the simplification of life, not about ordering groceries," said DeMello, speaking at the Donaldson, Lufkin & Jenrette Food and Drug Retailing Conference last week in New York. "We use groceries to enhance our relationship with our customers and to encourage frequency."

Streamline, founded by DeMello in Westwood, Mass., in 1993, offers groceries, prepared foods and a variety of services ranging from film processing to shoe repair, ordered over the Internet and delivered to customers in the Boston, Washington and Chicago areas. The service will be available in northern New Jersey this spring and eventually will expand to other suburban markets, DeMello said.

In fourth-quarter financial results also released last week, Streamline.com reported a net loss of $6.9 million on revenues of $5.1 million. Revenues were up 113% over the same period in 1998. For the fiscal year ended Jan. 1, Streamline reported revenues of $15.4 million, a 123% increase over 1998. Net loss was $19.5 million, up from $11.4 million.

Of Streamline's 1999 revenues, $13.2 million came from product sales and service. Subscription fees accounted for $1 million and marketing fees totaled $1.2 million.

Streamline targets an estimated 30 million "busy suburban families," or BSFs, in the United States, DeMello said. Customers pay a $30 monthly charge for the service and receive goods from a variety of suppliers in a single weekly delivery. Unattended delivery is available since Streamline provides its customers a refrigerator/dry-storage unit in customers' garages, accessed with a keypad entry system.

Scheduled delivery -- Streamline customers receive orders on the same day each week, according to preplanned delivery routes -- helps retain customers and encourages regular orders, DeMello said. It is also easier to manage and less expensive from a management perspective.

"We think that on-demand delivery is two or three times more expensive than a routed delivery business," he said. "We will serve the most profitable customer who will accept scheduled delivery. We'll let others serve the rest."

The company has retained 98% of its customers. They average 42 orders per year and the average weekly order exceeds $100, DeMello said.

Streamline also drives revenues through advertising, research and marketing fees. Thirteen consumer product companies, including Gillette, Campbell's Soup, Kraft, Ralston-Purina and Pillsbury, participate in marketing studies run through Streamline.

Streamline will be focusing on attracting new customers and working to achieve profitable fulfillment centers this year, DeMello said. The company will rely on partnerships with various companies, including upscale department store Nordstrom, for promoting its service in new markets. Driving down the cost at its fulfillment centers will speed expansion of the service, DeMello said. The company currently operates 93,000- to 100,000-square-foot warehouses in Westwood; Landover, Md.; and Lake Zurich, Ill.

"We need to show our CRCs [customer resource centers] can be profitable, and I think we can do that in 16 to 18 months," DeMello said. "Then, the pace of the rollout can be intensified."