H-E-B Launches Online Shopping Service in Austin

SAN ANTONIO—As part of its revamping of its Web presence, conventional supermarket chain H-E-B, owner of natural and specialty Central Market foods stores, announced in September plans to launch an online shopping service for its Austin, TX, H-E-B customers.

Customers will soon have the option of placing orders online at HEB.com and having them delivered to their homes or a nearby store for pick-up. The service is scheduled for testing this fall and for a full launch in early 2001, says John Sturm, director and GM of HEB.com, the grocer’s Web division, which was formed in July 1999 after seven months of planning.

H-E-B’s goal is to make more than 20,000 of the items offered in its stores available online, said Hal Collett, VP and GM of H-E-B’s central TX region, in a statement. Although Sturm would not comment on the exact number of SKUs that will be available at launch, he did say there would be a broad assortment similar to what is carried in H-E-B bricks-and-mortar stores.

“The goal of the initial launch is to create such a broad offering that customers won’t have to go to the stores if they don’t want to,” Sturm says, adding that virtually everything available in an H-E-B store could eventually be available online and that expansion of the service to markets other than Austin is possible.

Regarding the issue of customer hesitation to purchase produce online, Sturm says that while he expects some resistance from customers who don’t want someone else to choose their produce, H-E-B’s focus-group research indicates that there is also a number of customers who prefer having a trusted produce person pick produce for them.

Although H-E-B originally planned to

offer some Central Market ready-to-heat and seafood items at launch of the new service, Sturm says this is no longer the case. The

company decided to change from a central warehouse distribution model to a store-

picking model, he says.

“When we made that change, we decided to focus on the H-E-B products for our launch,” Sturm says. “We’re going to evaluate Central Market as a possible next opportunity for us. One of the categories we’ll need to move

quickly on is chilled prepared meals [because] it’s not a category in which we have a big

offering in our core stores, and Central Market is very deep in that category.”

The largest target market for H-E-B’s online service is the “busy mom” with little time for shopping, followed by technologically savvy young professionals and people who may not have the physical ability to go to H-E-B stores. Despite Internet grocer Peapod’s (PPOD) recent abandonment of Kroger Co. (KR) home delivery in Columbus, OH, Sturm says the timing is right for this type of service in Austin.

“Things have changed rapidly in the last year,” says Sturm. “Austin is now the No. 1 market in the U.S. for people who access the Internet from home. We think this is the emerging channel. A lot of pure plays got into the business and some proved that there is a market for this. We would rather lose customers to ourselves than to somebody else.”