Jul 15, 2008 11:11 pm US/Central
SimonDelivers To Shut Down, Competitor Steps Up
NEW HOPE, Minn. (WCCO) ―
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The company president, Liwanag Ojala, writes in a letter to customers on Tuesday that economic conditions forced the company to make a very difficult decision. (File)
CBS
Fuel and food prices have forced a popular Minnesota company to close. SimonDelivers, an online grocer, announced Tuesday they would be stopping deliveries in two weeks.
In an e-mail to 19,000 active customers, SimonDelivers President Liwanag Ojala wrote, "Today's economic conditions, including the spike in food and fuel costs, have forced us to make this very difficult decision."
The company started in 1999 as one of the first in the country to deliver groceries from a central warehouse location. In Feb. 2008, Ojala told the Minneapolis/St. Paul Business Journal she expected to turn a profit within 12 months.
In the article she said, "I would characterize our business as healthy and turning a corner right now."
SimonDelivers has a loyal base of customers. It was a weekly tradition for Susan Evans to place her order online every Friday night. By Saturday morning, her groceries were there for a $7.95 delivery fee.
"There are other things that we'd rather be doing. We can run other errands or we can relax and don't have to go grocery shopping," she said.
In 2006, Simon Delivers got some competition when Byerly's and online grocer, Gopher Grocery, entered the market.
For about $7, Byerly's trucks will deliver orders put together by employees from food in their stores. While the company wouldn't release numbers, it said Tuesday its delivery service has grown since it started and performed above expectations.
Gopher Grocery was started in 2006 near the University of Minnesota. For $2, customers can get next-day delivery. Gopher Grocery serves about 3,000 people in Minneapolis and St. Paul. They do not store food in warehouses, but rather buy from wholesalers. To keep costs down, they use more fuel-efficient trucks.
In the past year, Gopher Grocery has grown 134 percent.
"Quite honestly, I think high gas prices have made grocery delivery the smart choice," said William Orkin, Gopher Grocery President. "We're now looking for grow even quicker."
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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