Massachusetts-based Streamline.com revealed today that “the interests of its employees, customers and creditors would be best served by the company’s prompt and orderly cessation of operations,” making it the latest in a long line of Internet grocery delivery stores to admit defeat.
The pioneering business model of Streamline.com was developed in 1993 with high hopes of investors, who laid out US$10 per share when the operation went ‘live’ on 18 June last year. By the beginning of 2000 however, accumulated losses reached US$56.4m. In April stock value had fallen to just below US$1, and advisors were appointed in May to review the company’s financial options.
The company hit major problems when the funding for consumer e-commerce companies simply dried up. The sale of its Chicago and Washington operations to Peapod in September bought a little time, and renewed funds of US$11.6m, but to potential investors the company’s rush to cut “all nonessential” expenditures, implement a hiring freeze and reduce the marketing budget were not profitable augurs.
Streamline.com’s founder and chairman, Tim DeMello, resigned himself to the 22 November closure after the company last traded at 0.1562 cents per share, on 10 November: “After months of extensive discussions with potential strategic and financial partners, we believe we have thoroughly exhausted all possible options and must discontinue our service. Unfortunately, this is an extremely difficult market for raising the capital needed to finance Internet retailing businesses.”
The remaining assets of Streamline.com are to be sold, and company will settle with creditors.
It seems that there is no guaranteed formula for success within the e-commerce market for consumer groceries. Streamline.com had even installed refrigerators in the garages of customers to which deliveries could be made, and WebHouse.com ceased operation weeks ago after their offer of an apparently competitive name-your-own-price strategy got the thumbs down in the grocery arena. Urbanfetch.com could not cope with the costs of guaranteeing swift city delivery in New York, Paris and London, and its direct rival Kozmo.com also revealed financial insecurity.
It was later entrants into the sector who attracted more funding. Peapod was saved from closure when Dutch food company Royal Ahold offered a US$73m investment in April. Likewise, NetGrocer was pulled back in March by Italian dairy giant Parmalat Finanziari, which provided a US$30m investment. Webvan.com, which has merged with HomeGrocer.com, is showing positive signs which CEO George Shaheen believes will see it through without further investment until the Q3 of next year, however it did begin last week to charge customers for delivery on orders less than US$75.