Toronto-based e-tailer Grocery Gateway is looking to partner with a bricks and mortar supermarket giant within the next year and a half in a bid to expand its operations.

President and CEO Al Sellery explained that a deal that would turn Grocery Gateway into the online arm of one of Canada's supermarket giants, such as Loblaw, Sobeys, or Great Atlantic & Pacific, and would enable the e-tailer to reduce its costs while simultaneously increasing the efficiency of its distribution and logistics infrastructure.

Furthermore, its flexibility would mean that it could potential adopt the corporate branding of its partner.

Analyst Jordan Kendall, from Forrester Research Inc., explained to the National Post that logically the best partner would be Stellarton, NS-based Sobeys. Not only have the two companies already worked together on Sobeys' Serca Foodservice unit, but the bricks and mortar retailer already has a well-defined technology strategy. Meanwhile, Loblaw's online strategy is unclear and home delivery will not be offered until the end of next year, according to a research report authored by Kendall.

Grocery Gateway will become cash flow positive within the next 18 months, according to Sellery, a state that will equate to annual sales of C$90m to C$100m (US$56.9-63.3m). For the next full year to 30 June, the company expects to post sales of between C$60m and C$70m, up from C$28m for its fiscal 2001.