High demand and significant willingness to pay was not enough to save online grocer Homeruns.com from ceasing operations on July 12th. The closing of the privately-held company comes in the wake of a rash of online grocer failures that have included Webvan (with over $1 billion of capital invested), ShopLink.com and Streamline.com. The rise and fall of the online grocery `industry’ has all the brouhaha and emotion needed for an award-winning HBS case, and perhaps even a Hollywood movie.
While food retailing experts the world over are analyzing the failed business plans of online grocers, the many consumers who used the service are traumatized by the prospect of digging out their Shaw’s Rewards Card (FYI online shoppers-Star Market now equals Shaw’s) and stepping into the grocery store for the first time in several years. For these consumers, a return to large grocery stores, long checkout lines, and parking lot fender benders is a return to a once forgotten, primitive world.
The loss is being felt across the area, and the HBS campus is no exception. DY Lin, NJ says, “I will probably never eat fresh fruit at regular prices ever again. I do not have a car, and so rarely have the opportunity to go grocery shopping, plus Spangler charges a fortune.” Lin, like many students, has become dependent on Homeruns.com and would be willing to pay a higher service fee for the delivery.
Lou Brenner, NJ is also distraught at the closing. “We miss Homeruns.com. It was great-convenient, good service, and comparably priced to the grocery store. I think it was smart when they increased prices for delivery, but it was just too late.”
So what are online shoppers to do? There are still several options available, although none perhaps as good as Homeruns.com. Naturally, the companies that offered the best service, the lowest pricing, the most products, and were willing to deliver directly into your kitchen are the companies that ran out of money and closed the fastest.
It appears the only well-established option in the Boston area is Skokie, Illinois- based online grocer Peapod.com (which accepted a $2.15 per share buy-out offer from Dutch food retailer Royal Ahold NV on July 17th). Peapod.com is already partnered with Ahold owned local grocer Stop & Shop and will deliver in this area, although the increased demand from Homeruns.com customers may make access difficult.
If you think the sun is setting on online grocers, look again, it is a rising sun-where there is a willingness to pay and committed food retailers like Ahold exist, you can be sure that there will be plenty of material for a B case to this saga.
