Walmart.com says not in online grocery delivery

NEW YORK Tue Nov 6, 2007 6:23pm EST

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NEW YORK (Reuters) - Walmart.com has not entered the online grocery delivery business, the CEO of the retailer's Web site said on Tuesday.

"We're not offering it," said Walmart.com CEO Raul Vazquez in an interview.

A media report last month said that Wal-Mart Stores Inc was dipping its toes into online grocery sales with the expansion of a home delivery service for grocery items sold at its Sam's Club warehouse division.

A spokeswoman for Sam's Club, the warehouse division of Wal-Mart, also said the retailer is not in the home grocery delivery business.

She said Sam's Club members, who pay an annual fee to shop at the warehouse chain, can order certain food items though its Web site, like water, coffee and chocolate, and have those items delivered to their business or home.

But she said those items tend to come in bulk and are typically geared toward small businesses, which make up a substantial portion of Sam's Club's members.

"There are some specialty items that are food-related that can be delivered, but it's not geared for your weekly shopping trip," she said.

The online grocery business has proven to be a difficult one to succeed in given the perishability of fresh food and the industry's small profit margins.

During the height of the dot-com frenzy, numerous companies tried to break in to the online grocery delivery business, but many, like Webvan, ultimately failed, finding it hard to run the business profitably.

This summer, Amazon.com confirmed it had launched a pilot program, called AmazonFresh, to test online grocery delivery to certain neighborhoods in Seattle.

Vazquez said online grocery delivery interests the retailer. Wal-Mart is the largest seller of groceries in the United States, and it has an extensive distribution network that could be used to help support online grocery sales and deliveries.

"We want to keep an eye on it because if you look at the trends, in all likelihood, it is going to be a significant business online in a few years," he said.

But he said that before the retailer enters the online grocery business, it would have to understand the economics of the business, who uses the service and what value Wal-Mart could add.

"Any business that we get in to, we want to get into it knowing that we can make it work from a financial point of view," he said.

(Reporting by Nicole Maestri; Editing by Tim Dobbyn)

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