Blast From The Past: Online Groceries & IPO? (OPEN, PG, AMZN)

By Douglas A. McIntyre Updated Apr 27, 5:47PM EDT · Published Jun 17, 8:25AM EDT

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money-stack-image Does the Webvan IPO seem like a million years ago? Or what about Peapod? We may get an IPO from a similar company in the U.K. called Ocado, an online grocery retailer. The Times Online reported that management is changing its anti-IPO stance of last year and that the OpenTable, Inc. (NASDAQ: OPEN) IPO now has the company considering a share float in 2010. In a way, this could be a positive for Procter & Gamble (NYSE: PG) and even Amazon.com Inc. (NASDAQ: AMZN).

Jason Gissing, a former Goldman Sachs banker, is the head of the company and he is causing a stir because this report he was so adamant just last yearabout not pursuing any initial public offering. It seems that the pressure of quarterly earnings accountability and having to answer to meager shareholders may be less of a concern if the valuations can be that high.

Ocado is still not profitable and its main customer and shareholder is the U.K.-based supermarket chain Waitrose. But Procter & Gamble (NYSE: PG) took a stake earlier this year that was based upon a valuation of 500 million Pounds (about $810 million today). The obvious benefit, other than the instant wealth of course, is the ability for it to expand internationally.

This will be interesting to see how it all plays out. In the U.S. there are operations such as NetGrocer, FreshDirect, Peapod and Webvan (both are still around), and others. Even Amazon.com (NASDAQ: AMZN) is in the game.

One of the biggest challenges here is the trust factor for those who are picky over which selection they buy. Grocery store margins are already very low compared with most industries, so the key here is managing waste, returns, and more. Another issue is the perishable factor since many online delivery services today only deliver frozen goods and non-perishable groceries.

Let’s just say that this U.K. IPO is one to watch. Online grocery shopping is available at a few dozen online outlets, and is not any longer uncommon at all in several major metro areas. When Webvan and Peapod were public there was a much smaller Internet user population in the U.S. There was also an aversion to making any online transactions. This is commonplace today.

Maybe we are about to see a resurgence of the milk man.

JON C.OGG

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.