Publix Wades Into Troubled E-Grocery Waters
The supermarket chain, which has 650 stores in Florida, Alabama, Georgia and South Carolina, has opened a distribution center in Pompano, FL, for the initiative. The Web site offers 9,000 items, including baked goods, produce, meat, canned goods, laundry detergent and beauty supplies.
Publix started sending e-mails this week to past customers in the area who had asked to be notified when the service began. Direct mail to 5,000 households in the trial ZIP codes was sent the next day.
Viewers must place $50 minimum orders and select delivery times, which are available every day but Friday. To attract customers, PublixDirect is waiving its $8 delivery fee for the first 30 days.
Numerous bankruptcies in the online grocery industry -- most notably Webvan -- have left analysts certain that the expenses of customer acquisition and fulfillment along with industrywide tight margins make turning a profit in this sector nearly impossible.
"Clearly, we're in a testing mode," Tom O'Connor, president of PublixDirect, told the Miami Herald. "We're taking it day by day. We've been surprised we've gotten as many orders as we did."
PublixDirect does have advantages that Internet-born firms like Webvan never did, namely an entrenched brand in the Miami area that could relieve it of high customer acquisition costs. PublixDirect also can offer lower prices than Webvan because of long-standing relationships with food wholesalers.
However, the company still will have to balance the cost of operating its fulfillment warehouse to turn a profit.
A Publix spokeswoman said her firm would hold a press-only tour Oct. 4 at the fulfillment center.