I. Before you read, answer the question:

• If you were going to start up an online business, what kind of products or services would you sell? What wouldn’t you sell? Why?

II. Reading

Read this article and fulfill the tasks below.

GROCERIES BY THE VANLOAD

1 When Andrew Parkinson started his career in online groceries 15 years ago, he was very much an outsider. He and his brother Thomas persuaded Jewel Stores, a Chicago grocer, to take the revolutionary step of allowing some of its customers to place delivery orders via their computers with their start-up, Peapod. But while Peapod’s early computer system could take and deliver orders, Andrew and Thomas were not allowed to work from the supermarket that served as their base. Instead, they were confined to a van in the car park. ‘By February, it was minus 25 degrees Fahrenheit,’ says Andrew. ‘They had said they would be surprised if we did more than than $ 1,000 a week in sales, ever. But by then we were doing something like $ 5,000 - $ 6,000 a week. So they let us inside their store.’

2 Fifteen years and one Internet bubble later, Andrew is still selling online groceries. Peapod is a wholly owned subsidiary of Ahold, the Dutch retail giant. It operates under its own name in the Chicago area, and works with Ahold’s Stop & Shop and Giant chains on the east coast, using two distribution warehouses and smaller ‘warerooms’ at existing store sites. Today, Peapod’s service claims about 2000,000 regular customers, with an average order of about $145. While Ahold does not produce separate figures, Peapod’s sales were estimated to be about $200m last year, making it the biggest online operator in terms of revenue in what is still the comparatively small US market.

3 Peapod’s online operation is no longer run from a single Dell computer. But elements of the strategy developed by the brothers remain. Andrew says, starting with the central relationship with a bricks-and-mortar grocer, which now also happens to own them, and its emphasis on software development and customer service. ‘We didn’t want to be the grocer. So we’ve always partnered with a retailer. They know how to merchandise.’

4 Peapod’s early focus on forming partnerships with supermarkets contrasted with the ‘pure play’ approach of other Internet bubble-era competitors, Peapod was also guilty of expanding too quickly after the company went public, says Andrew, but formed distribution partnerships with leading supermarket chains. Then, when the company’s funding crisis hit in 2000, with the sudden collapse of a $120m financing package, Andrew found himself calling retailers in an attempt to sell his company.

5 The takeover by Ahold dramatically reduced Peapod’s sourcing costs. But both Parkinson brothers stayed on, with Andrew becoming chief financial officer. Ahold also kept Peapod’s separate identity, he says. ‘From the very beginning, we had “the Peapod way”, which was to “amaze and delight” the customer, make sure you enjoy your job and don’t forget about your family.’ Peapod claims that it has achieved far lower turnover of staff than would be usual in a business that combines logistics and retailing, and where the van driver can be the principle point of contact for a customer. It still runs regular employee awards and its ‘Broken Promises Index’ that monitors its performance in 14 key areas, such as lateness and incomplete orders.

6 Peapod has also continued to draw on its strong background in software. Thomas Parkinson remains chief technology officer and heads web development. The company has developed its own search technology for site users, as well as customised software for planning the routes of its vans, and innovations such as allowing customers to sort products by nutritional content. ‘People still want to shop quickly. That’s what it comes down to,’ he says. ‘There area lot of things we don’t even do yet that I hope to do. We can sort, but we can’t filter - so if you’re a diabetic, in the future you might be able to filter everything out that isn’t low sugar.’

7 Despite the transformation under Ahold, Andrew still sees himself as an entrepreneur, saying he still gets to do ‘creative things’. But he also faces some distinctly non-entrepreneurial challenges. Competition looms with other big supermarket chains that are active online. ‘We have competitive plans already in place if they come, and we expect them to come.’

8 Looking back, Andrew sees things he would do differently now. He would not expand so fast, or bring in an outside chief executive to win the confidence of investors, as he did in 2000. He also advises would-be entrepreneurs against listening too closely to their mother’s advice. ‘We said to her after we developed our business model, what should we start up in ... books or groceries?’ Mrs. Parkinson, he says, recommended groceries. Jeff Bezos (the founder of amazon.com) chose books.