Albertson's Switches Online Fulfillment Strategies in Seattle

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Supermarket firm Albertson's Inc. next month will shutter its store in Bellevue, WA, which houses both its bricks-and-mortar retail location for the Seattle suburb and its online distribution center for the greater metropolitan area.

The company opened the building, approximately the size of a large supermarket, in 1999 to take advantage of the dot-com boom that has since waned. The facility is split down the middle, with online operations on one side and the retail store on the other. The building is set to close May 3.

Albertson's, which has Internet operations in one other market, Dallas, is unsure what it will do with the Seattle facility. Five Seattle stores that were selected based on where most customers live will now fulfill Internet orders.

The altered strategy should not be taken as a sign that the grocer has cut back its Web initiative, said Jenny Enochson, spokeswoman for Albertson's, Boise, ID.

"We were due for a remodel [in Seattle]," she said. "As a whole, we are pleased with our dot-com business. But we do believe and expect that our e-commerce model will continue to evolve."

Each store involved in the new fulfillment strategy will employ five or six order pickers, dubbed "e-shoppers." The employees will pick Web orders off the store shelves and then will deliver them in company vehicles.

Moreover, the employees are part of the company's new marketing focus on making its customers feel more comfortable about online order fulfillment.

"The e-shoppers are going to be out there in the aisles interacting with our customers," Enochson said. "Our customers are going to be able to see that their groceries are coming straight from a store and not from some fulfillment center they've never seen."

Albertson's would not divulge expenses for the facility shutdown. The firm said it does not expect the fulfillment implementation in the individual stores to be costly, although it would not provide specific numbers.

"There will have to be some space logistics worked out and there will be some employee training involved, but it won't be anywhere similar to the expenses you can get with [warehouses]," said Matt Muta, vice president of e-commerce.

Albertson's online operation in Dallas includes a 100,000-square-foot fulfillment center. Enochson said her firm expects its e-commerce strategy in that market to hold up, even though Webvan recently bailed out of Dallas because of expenses from its large fulfillment center.

There are other recent examples of the online grocery industry shifting away from operating fulfillment centers. As one example, Peapod Inc. effectively abandoned its Internet stand-alone model in the past year as it began fulfilling its grocery orders via various East Coast supermarket chains owned by its major shareholder, Dutch food giant Royal Ahold.


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