As your humble listmaster predicted, it was only a matter of waiting until dot com euphoria subsided before the big boys would move into the market. They just waited out the tide as the valuations of these grocers dwindled to nothing and swooped in to take HUGE chunks of the company for chump change.
GroceryWorks Gets $35M, to Relaunch as Safeway Service Â DALLAS (VENTUREWIRE) — GroceryWorks.com, an online grocery delivery firm, announced it has raised $35 million in funding from U.K. food retailer Tesco and existing investors. The company also said it will temporarily suspend operations starting Tuesday and re-launch under the Safeway name. GroceryWorks has been Safeway’s exclusive online grocery channel since June 2000.
Tesco, which invested $22 million to lead the round, has also formed a strategic relationship the company. Tesco is the leading food retailer in the U.K. and operates an online grocery operation with annualized sales at a rate of $420 million. Tesco also contributed intellectual property and other technical resources for a 35% stake in GroveryWorks. The remainder of the funding came from existing investors, including Safeway, which maintains a 50% stake in GroceryWorks.
Previous investors in GroceryWorks also include Accel-KKR, the Sprout Group, Enterprise Partners, J.P. Morgan Investment Bank, Blue Rock Capital Partners, and individuals.
GroceryWorks did not say when it would re-open for business. It had previously operated only in Texas, but when it re-launches, it will use Tesco technology to deliver groceries from Safeway stores, rather that the warehouses it uses at present. Tesco uses a store-based system for its online service.
Safeway will record a charge in the second quarter of $30 million against its investment in GroceryWorks. In addition, beginning in the third quarter, Safeway’s income statement will reflect 50% of GroceryWorks’ results of operations.