HomeRuns.com has closed down its operations. The US online grocer has announced that it has ended its online shopping services in Massachusetts and Washington DC with immediate effect. The announcement, which came just two days after Webvan filed for bankruptcy, is further proof that in-store picking services are, for now at least, the only way to make money from grocery home delivery services.

The demise of HomeRuns.com so soon after Webvan’s ignominious end could be seen as a black day for eCommerce in the US. The truth is however is that it marks a new dawn – one from which established retailers will drive the development of online shopping. With any new technology there are normally several competitors initially, but one system soon emerges as an industry standard. In this case, it is the in-store picking system and not the much vaunted warehouse model that for now at least, offers retailers a chance to make money from groceries online.

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Webvan, Homeruns and GroceryWorks all tried to build home delivery services from scratch. All were new companies, sensing an opportunity and trying to build a new service that would sweep the grocery market by storm. And that’s what they needed to do for their business plans to work, as each built large automated warehouses that depended on high volumes of regular orders to generate income. The trouble has been that consumers have been reluctant to trust unknown companies with their groceries. Those that have used the services have often found them to be unreliable, with variable delivery times and plagued by out-of-stock items.


The two surviving eGrocery services, Peapod and GroceryWorks, have both been rescued by European supermarket chains. Their saviors, Ahold and Tesco, have both opted for a lower technology system using in-store staff to collect customer orders and dispatch them from their local store. The system is far simpler and cheaper to establish and can be scaled up relatively effortlessly as the trade builds. Using an existing supermarket makes sense as a distribution hub, instead of building large warehouses that need such a vast catchment area that orders have to be transported long distances. In the long term, once a solid customer base has been built up, warehouses should be an efficient solution, but for the time-being in-store systems have the upper hand.


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