MARTIN SLOANE \ Supermarket Shopper What's status of online shopping?

To the surprise of many shoppers, the sale of food on the Internet is rapidly growing. In 2000, sales were approximately $1 billion. This year they are expected to grow to about $3.7 billion. While supermarkets are slowing their expansion of online ordering, the greatest part of this dramatic growth is coming from specialty food retailers and catalog retailers like the Cheesecake Factory and Omaha Steaks.
The path of online grocery ordering services has been a rocky road. In the Dallas/Forth Worth area, six different services made promises, raised expectations and then went out of business.
The ordering services included pure Internet companies such as Homegrocer.com, Webvan.com and Peapod as well as services operated by some of the largest chains, such as Albertsons, Kroger and Safeway.
New business
Can a young couple in Plano, Texas, picking customer orders in their local supermarket, make good in a business with a tumultuous past? Jon and Sandy Fielder say their service, Melon Seed, is doing just that. Jon, a former commercial pilot, opened Melon Seed in July 2002 and the service now has 200 regular customers.
& quot;We'll succeed where the others failed," promises Sandy, "because, we cater to customers who really need home delivery such as the homebound and the elderly. Many of them do not have computers for online ordering so we take telephone orders."
Sandy has their shopping lists on her computer, which makes taking phone orders easier and faster.
What does she do when an ordered item is out-of-stock? "We know our customers and what they would want us to do. We usually select a substitute because our customers need the product. If someone has a problem with an item, we gladly take it back."
Melon Seed gets most of its meats from Hirsch's Specialty Meats in Plano, Texas. Fish comes from Captain Dave's Seafood Market. "Our customers get top quality meat and fish as well as the weekly sale prices offered by both suppliers." Sandy told me that Melon Seed prices are comparable to the major chains in the Dallas area.
Week in and week out, the Fielders try to maintain one level of pricing so their customers know what to expect. Melon Seed also redeems manufacturer coupons for its customers. The minimum order is $50 and there is a service charge of $9.95. The young company's biggest expense is gasoline for the GMC Tahoe and Ford Ranger they use to make deliveries. Melon Seed makes sense and Sandy says the business is turning a profit.
At the same time that Sandy and Jon started their service in Texas, Joe Fedele began FreshDirect, picking orders in a 300,000-square-foot warehouse in Queens and delivering them to customers in Manhattan. The warehouse has 12 climates zones, 7 of them for keeping produce fresh. FreshDirect cooks prepare meals in separate hot and cold kitchens.
& quot;We even have one of the city's few humidity-controlled aging rooms where we dry-age prime beef to juicy perfection," boasts Fedele. Products travel along miles of conveyors to the sorting area. A computerized system (with a little human help) divides items and assembles them into complete orders.
Fedele says FreshDirect cuts out all the middlemen and is able to offer savings of 10 to 35 percent compared with Manhattan supermarket prices.
"Our food comes directly from farms, dairies, and fisheries, so it's several days fresher and a lot less expensive when it gets to your table. We roast our own coffees, bake breads and pastries from scratch, and cut each piece of seafood and meat to order, so none of the freshness is wasted sitting around on a shelf. All this helps keep quality high and costs low, so our FreshDirect customers can count on the best food at the best price every day."
Over the last two years, FreshDirect has rolled out its service block-by-block in densely populated Manhattan and has expanded into Brooklyn. There is a $40 minimum per order and a delivery cost of $3.95. Orders must be placed one day in advance. In Manhattan, where you can't carry a week's worth of groceries home with you, FreshDirect looks like a winner.
Closings
While new grocery ordering services are springing up, others have recently closed. In 2001, Publix Supermarkets, the market leader in Florida, opened its PublixDirect online grocery ordering service. Picking grocery orders from a modern warehouse in Pompano Beach, Fla., it reportedly delivered 5,000 orders each week in Broward and Palm Beach counties. It charged $7.95 on orders of $50 or more.
I used PublixDirect and I found it was excellent. The fresh food was up to my standards and when I really did not have the time to shop, it was convenient and dependable. The first hint the service was not doing well came late last year when plans to open PublixDirect in Orlando and Atlanta were put on hold. The shoe dropped in August when Publix announced it was closing the service.
"Despite many loyal customers and dedicated associates, PublixDirect simply did not have enough volume to continue this service," said Charlie Jenkins Jr., the chief executive officer of Publix. Earlier this year, Marsh Supermarkets closed its Fresh Express grocery ordering service in Indianapolis for the same reason -- not enough customers.
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United Feature Syndicate