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SHOPPING ONLINE: A STICKY BUSINESS BUYING GROCERIES ON AOL IS SLOW GOING, BUT POTENTIAL IS STRONG

By Published on .

Grocery shopping via computer may someday be as easy as popping dinner in the microwave, but a test service on America Online shows the concept is still operating on low power.

For the past five months, AOL has been testing Shoppers Express, an online grocery and drug store shopping service, in conjunction with Winn-Dixie Stores, Vons Co., Safeway, Kroger Co., Eckerd Drug Co., Kmart Corp. and others.

AOL subscribers in 200 U.S. markets can shop from a list of about 10,000 items, pay by credit card or check and have everything delivered to their home. Delivery fee ranges from free to $12 in some markets.

Early results have been spotty, however.

Neither AOL nor Shoppers Express will say how many of AOL's 2 million subscribers have used the service. AOL hasn't promoted it much, and Shoppers Express executives call the early users a "focus group" that will help refine the service before the partners launch a marketing campaign to attract new users.

`We analyzed what people saw, what they shopped for and what they like and don't like about the application. That's the stage we're in now," said Elan Blutinger, president of Shoppers Express, a Bethesda, Md., company that has offered telephone and fax grocery ordering services for several years.

One of the planned improvements is a more complex search engine to enable comparison shopping and speed the process of finding items. Currently, shoppers must wade through several layers of menus to find items they want, then must return to a main menu to shop in a different product category.

Another major drawback: Prices aren't listed. Consumers are promised the lowest available price on each item but don't learn the total cost until the order is delivered.

Shoppers Express also may be hampered by the lack of graphics. Shoppers see textual descriptions of products but no pictures. (The company is working on a more graphically appealing system with its sister company, ShopperVision, Norcross, Ga.)

"They want features they would ordinarily find if they were pushing a cart down the aisle itself. They expect it to be that way," Mr. Blutinger said.

Judging by the success of a similar service called Peapod, however, there is a future in online grocery shopping.

Peapod, based in Evanston, Ill., offers computer-based shopping in Chicago, San Francisco and, soon, Boston. Peapod maintains its own links to supermarkets, and its own employees fill orders and deliver them, rather than supermarket workers. It's also able to show pricing.

Supermarkets participating in Shoppers Express on AOL view the test as an extension of phone or fax ordering, which several already offer.

"The consumer has always been limited by the size and location of the store. Electronic shopping opens new options for items without concerns over inventory and store display space," said Anthony Cuti, president of Pathmark Stores, Woodbridge, N.J.

Mr. Cuti said he's bullish on the possibilities for extending Pathmark's brand name, as long as there is sufficient long-term value.

"In the end, we sell commodities. And unless you can sell your name and the services along with that name, you become like a farmer selling commodities," he said.

So far there is no coordinated marketing effort or co-op system to promote Shoppers Express on AOL, but Mr. Blutinger said he expects retailers to more actively market the service once the interface changes are in place later this year.

"This is more about trying to break the code on how people shop rather than finding new hours for AOL," said Ted Leonsis, president of AOL Services Co. "We're determining things like price points, what kinds of merchandise they want and whether this will be a habitual way of buying things."

Shoppers Express' Mr. Blutinger admits the incentive for retailers to participate in the online service may be small at first: modest incremental sales and the experience of being among the first in their market to go online.

"Today it's incremental business; tomorrow it will be a substantial source of business. We're in a business of building transactions and we're going to do that. We're not going to be a learning lab for the next five years," Mr. Blutinger said.

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