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    Giant Food to Start Second Online Service

    New venture to supplement Peapod, offer hard-to-find items, company says.

    WASHINGTON -- Giant Foods Inc., the Ahold subsidiary that has been pushing online grocery sales as a substitute to grocery and fill-in shopping, plans to launch an online service in Washington next week that offers 30,000 nonperishable items not available at its area stores.

    Through a link on its Web site, the company plans to sell limited-distribution items starting June 22. The service is expected to supplement, not supplant, Peapod, Giant's existing online grocery service. Peapod only delivers products offered in Giant stores, The Washington Post reported.

    While online grocery shopping has never taken off in the mass market, the idea behind this operation is to help Giant differentiate itself from rivals by offering a niche service, perceived to add convenience and variety, industry analysts said.

    Giant will be the only company in the Washington region to offer the service, but it's one of 13 grocery chains nationwide that will do so. The service will be operated by NeXpansion Inc. of North Brunswick, N.J.

    Lisa Kent, NeXpansion's chief executive, said Giant gets a cut of the royalties. Customers will not be charged a premium for the product, she said. But they will be expected to pay delivery costs, which range from $4.99 to $11.99 for typical orders, Giant officials said.

    Jamie Miller, a spokesman for Giant, said that if certain items offered by NeXpansion are a hit with customers, "we might consider adding them to our store shelves."

    Phil Lempert, founder of Supermarketguru.com, a consumer Web site that tracks the supermarket world, does not expect Giant to attract new customers with this operation. Only 2 to 4 percent of food shoppers buy groceries online, Lempert said.

    Peapod has never turned a profit, and the Food Marketing Institute (FMI) reports that even as the number of shoppers with Internet access has increased, interest in purchasing groceries online has waned. Only 18 percent of shoppers say ordering groceries online is important to them, this year's FMI survey found.

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