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The Portland Business Journal reports that the e-grocery business has taken on new dimensions and fresh vitality since the demise of Webvan and HomeGrocer, and the decisions by both Safeway and Albertsons to invest in the dot-come grocery business.

According to Albertsons, the average order size being placed in its California and Oregon markets is $115, in part because the company is charging $9.95 for delivery and $4.95 for pickup -- charges that help it cover costs and persuade consumers to place large orders. In addition, Albertsons is finding that more and more people are having their groceries delivered to the office because it is easier to find a delivery window.

Safeway, on the other hand, has been promoting price, cutting delivery fees to $6.95 and sometimes even as low as $4.95.

The chief difference, according to the piece, is that Safeway plans to expand usage of its e-grocery service in markets where it already is operating, while Albertsons plans to expand into new markets.
KC's View:
Tough to say which approach makes the more sense, though our instincts tell us that the Albertsons view works better for the long-term.

The problem, of course, is that a lot of dot-coms overexpanded, never getting past the short-term…, which is why the Safeway approach might seem more prudent.

Still, we think that for Albertsons to expand its e-grocery service into markets where it already has brick-and-mortar operations makes a ton of sense…especially if it can capture those markets before any other dot-com grocery arrives.