Despite the widely reported collapse of earlier grocery home delivery efforts, this segment of the industry is alive, well and growing - rapidly. In a preliminary finding from a three-year, $250,000 study sponsored by the National Science Foundation titled "ITR: Internet Disintermediation of Food Delivery - Spanning the Last Mile," Broad School associate professors Kenneth K. Boyer and Tomas Hult have found that, while overall grocery sales have been flat, online sales have grown at a 40 percent annual rate since 2000.

The study includes surveys of 4,000 online customers of seven different grocers and interviews with key executives. According to Boyer, "Levels of service quality clearly differ from company to company, but the best performing companies use home delivery or store pickup as a means to offer customers a service that is valued and feels much more personal than in-store shopping." As a result, customers rate the service quality for online ordering much higher than for in-store shopping.

Boyer and Hult, along with Markham T. Frohlich, associate professor at the Boston University School of Management, recently published a related book, Extending the Supply Chain: How Cutting Edge Companies Bridge the Critical Last Mile into Customers' Homes (Published by AMACOM, ISBN #0-8144-0836-2). For more information, see http://nebula.bus.msu.edu/grocerysurvey/.