Online grocers, once some of the brightest stars in the dot.com firmament, have fallen to earth in the US, decimated by a wave of mergers and closures.
Kurt Barnard, president of the Barnard Retail Monitor, said: "No one has really been able to evolve a model that is capable of producing profits." He believes that even fewer consumers will be prepared to pay extra for their groceries to be bagged and delivered now that the US economy has slowed down.
Ken Cassar, e-commerce analyst at online research group Jupiter Communications, says that even in areas where local deliveries made sense - wealthy, urban neighbourhoods - the services have suffered from serious traffic congestion during the busiest times.
But some analysts remain optimistic. Jupiter forecasts the US online grocery market will increase from an estimated $700m (£485m) this year to $18.5bn in 2005. At these levels, online deliveries would represent just 3% of the total grocery market.
Among the companies that have tried to make online grocery business pay is Webvan. Perhaps the best known of online grocers, it has big problems. In the last quarter it annnounced a loss of $109m with full-year losses of $413 - almost double the previous year.
The company, which hired George Shaheen, the former head of managment consulting group Anderson Consulting, as its chief executive, has closed some operations and cut jobs to slow the pace at which it is consuming the $200m cash it has left in the bank. Shares of the company have dropped from a 52-week high of $18.50 to a low of 21 cents a share and it faces relegation from the Nasdaq stock market. It delivers more than 15,000 items in 10 US cities and had planned to move into 26 more cities by 2002.
Peapod was founded by brothers Andrew and Thomas Parkinson in 1989 after they read that consumers would rather not shop for groceries. Investors pulled the plug last year but Royal Ahold, the Dutch supermarket group, stepped in and now owns 51%. Some 100,000-plus members -largely working mothers - pay monthly dues of $5 plus order and delivery fees.
"No carts, no lines, no hassle" is the Netgrocer slogan. It may also be close to having no money. The New Jersey-based company uses Federal Express to post its goods. With a promise of delivery to 48 US states within three to four days, the company cannot offer staples such as dairy, meat or frozen foods.
Streamline.com, the company which installed refrigerators in customers' garages, closed in November. It had been unable to find any investor willing to continue to stem losses that added up to $56.4m by the beginning of this year.
Kozmo and Urbanfetch, two Manhattan delivery services set up within months of each other, took each other to court on alleged espionage charges. Kozmo expanded into several US cities and Urbanfetch into London. Both started to retrench as the downturn kicked in and last year started merger talks which were aborted.
