YOUR GROCER IS BULKING UP OTC LINES IN DATABASE

CHAPIN CLARK

PORT CHESTER, N.Y. -- YourGrocer.com here is adding a slew of over-the-counter health care products to its database, the company announced earlier this month.

The on-line bulk discount supermarket, which last December began servicing consumers in the New York metropolitan area, is doubling the number of nonprescription medicines and personal-care products it offers, from 150 to 300 stockkeeping units, said Allen MacCannell, chief operating officer.

New items primarily include more vitamins and cold remedies, MacCannell said.

YourGrocer's inventory expansion comes amid two high-profile Internet pharmacy launches, Seattle-based Soma.com last month, and Drugstore.com, Redmond, Wash., later this quarter. Those companies will offer prescription drugs as well as OTC and beauty care products.

YourGrocer currently sells between 1,500 and 2,000 SKUs total, food and nonfood, via its Web site. In contrast, Drugstore.com reportedly will have 24,000 products for sale once its Web site is up and running. Soma.com, as part of a distribution agreement it signed earlier this month with McKessonHBOC, San Francisco, will be able to fill 5,000 prescriptions and 5,000 OTC orders per day using automation technology.

MacCannell acknowledged his fledgling company, which has about $1 million in private financing, is fighting to stand out in a fast-growing crowd. "Drugstore.com will be getting a lot of press, but we want people to understand that this is nothing new. We don't want to be ignored."

MacCannell said YourGrocer also plans to fill prescriptions but won't be ready to implement a pharmacy program anytime soon.

YourGrocer's hook for consumers is its low prices. It sells only in bulk -- the minimum order is $50, plus a $5 shipping fee -- uses its own vans for deliveries and sources directly from wholesalers and manufacturers to keep costs down. The company claims to offer major brands at prices 15% to 30% below traditional supermarket and drug-store prices.

"Sometimes the prices are four times less than Manhattan prices. You're getting suburban discount-warehouse pricing," MacCannell said.

MacCannell said 500 people in YourGrocer's operating area of New York City and Westchester and Rockland counties in New York and Fairfield county in Connecticut have ordered products from its Web site at least once, 200 more than once.

Another product category YourGrocer plans to expand in 1999 is baby care, MacCannell said, noting that most of the retailer's customers have young children. "That's a real strong Internet market."

YourGrocer is currently running ads in the New York area on CBS news radio. The company is considering an initial public stock offering and expansion to other cities with a high concentration of Internet users, such as San Francisco and Seattle, MacCannell said.