Click and order e-tailing is the latest fad, but will it survive?
Alan Deans
New York View
When you share an island measuring 20 kilometres by 3 kilometres with 1.5 million others, nothing is very far from your door. Space is at a premium, but convenience is in abundance.
Five supermarkets lie within easy walk of my apartment, along with four liquor stores, a gourmet deli next door, and a plethora of restaurants. There are schools, parks, museums, shrinks, plastic surgeons and dry cleaners everywhere. Taxis speed down the avenues and trains rattle along the subways every few minutes, making car ownership redundant.
Now, adding to this buzz of instant gratification, is e-tailing. Bright-eyed young internet entrepreneurs are overlaying their point and click technology on a place where everything already exists at the mere click of the fingers. It begs the question of whether new age online hype can better time-proven service?
One such upstart is Kozmo.com, an ambitious online convenience store that has yet to find its way on to the stockmarket. One suspects, however, that it will easily transform its founders into multi-millionaires when it does.
Kozmo essentially has a warehouse stocked with the latest videos, DVDs, books and magazines. It will even supply Krispy Kreme doughnuts for junk-food freaks. A fleet of motor scooter riders then promise to deliver the orders within an hour, for no charge - believe it or not, even refusing tips.
Such delivery businesses have come and gone in the Big Apple ever since time began, but trust the internet to deliver a bit of extra hype. While Kozmo plans to spread its not-so-unique service to many other American cities, chances are that it will soon be forgotten.
Higher up the convenience chain are the grocery and pharmacy operators. Peapod.com, Webvan Group and Planetrx.com are among the best known in this field, although Priceline.com also is trying to bust in. Each has already issued shares to the public, which are trading between 38 and 70 per cent below their 52-week peaks.
Peapod and Webvan are competitors, offering groceries and fresh produce. They tart up their image with gourmet packages, wine and recipes for people with more than a microwave. Planetrx touts medicines, personal products, vitamins and prescriptions. It also satisfies hypochondriacs with advice on common ailments.
These three emphasis the range and quality of products and ease of delivery, not necessarily price. Whether shoppers trust a company employee to pick the juiciest steak, a bunch of bruise-free apples or milk that has not passed the use-by-date, however, is another matter. Priceline, however, has a novel approach.
It is known for auctioning air travel and hotel rooms. Now it is extending the idea to groceries, cars and home loans. Getting rock-bottom prices on big-ticket items is appealing to most people, although travellers get little say in which airline they use or the time they fly. But extending the model to groceries is pushing the limit, even if it is using Star Trek's William Shatner as front man.
Get your grocery list and log-on. Say you want instant coffee, Priceline offers a choice of three brands and gives an indicative price range. Make your bid, and repeat the process until the shopping list is exhausted. Click on an icon, and Priceline calculates which choices are fulfilled. Those that miss out can be resubmitted, at a higher offer. The goods are paid for online by credit card, and a print out made of the approved list. At this stage, you see that instead of getting your favourite Maxwell House coffee, you have bought another brand.
The system is nuts. It adds levels of complication and frustration to a chore that sane people already loathe. Armed with the list, shoppers have to go to their participating supermarket. They get a trolley and roam the aisles in search of the items they have "bought". Then they go to the checkout, present their print out, swipe their Priceline card and lug the groceries home.
It might offer lower prices, but there are important failings. Anyone who has navigated the narrow aisles of a New York supermarket knows that fellow shoppers are all crazy and rude. Favoured goods are sometimes out of stock, and the sales assistants are trained to chew gum, listen to their portable music players and be unhelpful all at the one time. Present them with a print-out for some groceries you are supposed to have bought, and the best you could hope for is a shrug.
Online home delivery services have a use, especially when you have sprained your ankle skiing or there is an ice storm. But New York streets are no longer so dangerous that an average citizen cowers in his or her home while everything is delivered.
It's just another fad, like the velvet jackets and flared jeans so lavishly revived by Austin Powers.
* Alan Deans is New York correspondent for the Australian Financial Review.
