The PublixDirect home-delivery service that never turned a profit shuts down today.
By MARK ALBRIGHT
Published August 23, 2003
[Times photos: Bill Serne (2002)]
Bundled against the cold in one of PublixDirect's cooler units in Pompano Beach, employee Tami Joseph used an electronic device to check the milk and cheese she picked up for sorting and bagging before delivery.
Joseph Lisa and a collegue deliver packed bags to the kitchen table of a home in Coconut Creek.
Publix Super Markets Inc. logs off for good today from its online grocery service.
Word of the shutdown stunned thousands of PublixDirect regulars in South Florida who didn't blink at paying $7.95 an order for the convenience of ordering their groceries over the Internet and having them delivered.
"Oh no, that's terrible," said Durant Williams, a Boynton Beach guidance counselor whose wife, Pamela, is a teacher. "The service has been great. I guess we're going to have to go back to the grocery store."
The home-delivery service never got beyond its first stage, operating in South Florida from a distribution center in Pompano Beach with 55 shiny, freezer-equipped delivery trucks. Because the experiment never turned a profit, the state's dominant supermarket chain also scotched repeatedly-delayed plans to expand its Web shopping service into Atlanta and Orlando, and after that into markets such as the Tampa Bay area.
"We decided not to continue investing in something we did not think would become profitable in the foreseeable future," said Lee Brunson, spokesman for the Lakeland chain.
Publix declined to say how many weekly deliveries it was making in the service area that included a swath of South Florida from Palm Beach south to Key Biscayne. But a year ago, when the service area was expanded to 92 ZIP codes, Publix executives told the St. Petersburg Times that weekly deliveries had hit 4,200 of the facility's capacity of 14,000. That gives a hint of how far the venture was from profitable: It boiled down to 10 grocery orders a day for each PublixDirect employee.
Publix committed $50-million to get PublixDirect rolling. The company will take a $30-million pretax charge against third-quarter earnings as a result of the decision to pull the plug. That will drag down earnings at the employee-owned supermarket chain by 10 cents a share.
Publix is trying to find jobs within the company for the 440 PublixDirect employees. Those who won't be placed are being given job counseling and up to nine weeks' paid leave to search for work elsewhere. Most of the employees worked at the Pompano Beach center; 56 worked at PublixDirect headquarters in Alpharetta, Ga. The president of the venture, Tom O'Connor, is retiring after 35 years with Publix.
After most of the online-only supermarkets tanked in the dot-com bust of 2001, supermarket chains decided to try their luck. The demise of PublixDirect narrows the field to three big players: Albertsons Inc., Royal Ahold's Peapod and Safeway Inc. Their services, which cover only select major metro areas, are not profitable either. A British supermarket chain, Tesco, has developed a profitable online grocery service. But experts say it's doubtful any place in the United States has the population density and enough customers willing to pay a premium for delivered groceries to support one.
"The bottom line is if you cannot get the volume, you'll never be profitable," said Jeff Wissman, a vice president at Retail Forward in Columbus, Ohio, who follows the e-commerce industry. "In my mind, nobody has come up with a business model for an online supermarket that works in the United States."
PublixDirect had its shortcomings. While produce, custom-cut fresh cut meats and frozen foods were stocked, only 10,000 of the 30,000 items in a typical Publix grocery were available online. About half the customers used slow dial-up Internet service, so filling out an order was time-consuming. Delivery time and day had to be booked in advance, and someone had to be home to meet the delivery truck.
Publix was frequently surprised by customer behavior: The Fort Lauderdale veterinarian who ordered a truckload of kitty litter every week. That bananas were the most-ordered item online. And that the average order included 22 frozen food items.
- Times researcher Caryn Baird contributed to this report. Mark Albright can be reached at albright@sptimes.com or 727 893-8252.
