PEAPOD FRAUD
Higher-priced Stop & Shop groceries spoil
Peapod's free delivery
By Patricia Wen and Bruce Mohl, 08/22/99
WATERTOWN - When Peapod pitches itself as ''smart shopping for
busy people,'' it's got to hope these busy people are very busy. So
busy they won't notice they're actually paying dearly for Peapod's ''free
delivery.''
A year ago, when we wrote about the Boston area's highly competitive
grocery-delivery industry, Peapod scored the best in terms of price. It had a
deal that was almost impossible to beat: It promised to deliver Stop & Shop
groceries at in-store prices and charge nothing for orders over $60 in
Boston and more than a dozen suburbs.
But this past week, when we did another survey of grocery prices, we found
Peapod charged the most for grocery items compared to its competitors.
What happened?
Without informing customers, Peapod in the past year has created a
separate, marked-up price list for Stop & Shop groceries delivered through
Peapod.
When we took a market basket of products total ing $60.99 from the
shelves of Stop & Shop in Watertown, we found the same groceries bought
in Watertown and delivered by Peapod would cost you $69.29. They would
claim you got a free-delivery perk, but you would actually be paying an
$8.30 premium for the service.
(Peapod's main rival in the Boston area, HomeRuns, charged $62.18 for the
same market-basket of items with no additional delivery fee for
$60-or-more orders.)
Peapod's telephone customer-service folks don't seem to know about these
inflated grocery prices, as several insisted to us that customers pay the
in-store grocery prices. Even Peapod's Web site says, ''You'll get the same
Stop & Shop prices.''
Some local shoppers weren't too happy to hear about Peapod's marketing
games.
''I'm outraged,'' said Mary Anne Gaudet, a Waltham mother of two who
was shopping at the Stop & Shop here on Wednesday evening. ''They must
figure you're so busy and you're so hassled, that you'll just trust them with
prices.''
Gaudet said she is not a Peapod customer, but she has often been tempted
by the free-delivery promotion. She said many of her friends are hooked on
the convenience. She figures most Peapod customers lead such hectic lives
that they never bother to notice their grocery prices are marked up.
In past columns, we've written about restaurant-delivery services and
pizza-delivery outfits also promoting ''free'' delivery, then hiding charges in
marked-up food prices.
When we called Peapod, Mike Brennan, its senior vice president of
marketing, acknowledged that the marked-up item prices were introduced
over the past year and began at the Watertown site. The Watertown Stop &
Shop fulfills Peapod orders placed in Watertown and in numerous nearby
communities, such as Arlington, Medford, Cambridge, and Brookline.
He said the new price structure will be true of all its local fulfillment centers in
the months to come, as part of an effort to standardize grocery prices of all
delivered goods.
If you acknowledge marked-up prices, how can you call it ''free'' delivery?
He explained that, in Watertown, for example, the Stop & Shop store has
an upstairs warehouse specifically for Peapod orders. It's like a store within
a store. ''It's a different Stop & Shop store,'' he said. Therefore, he insisted,
customers are getting Stop & Shop prices - it's just slightly elevated prices at
the elevated-floor Stop & Shop.
The only time that Peapod customers get the same main-floor Stop & Shop
prices is when an item is on sale. Then the computerized cash register kicks
in with the scan-card savings deductions, and the customer gets that lower
price.
If HomeRuns can keep its grocery prices down, that company clearly comes
out as the better bargain for those choosing between Peapod and
HomeRuns. These two companies are the only grocery-delivery services
that serve Boston, as well as numerous suburbs, and don't charge monthly
fees.
Peapod edges out HomeRuns only in its geographical reach in the suburbs
and its option of Sunday and same-day deliveries.
The other two companies in this area, ShopLink and Streamline, are
primarily suburban delivery services that charge monthly fees and offer more
frills, such as restaurant-quality food, dry cleaning, and video rentals. Drivers
drop off groceries and other items in a garage or backyard site, so
customers don't have to be home when deliveries are made.
Their grocery prices were in the range of HomeRuns's prices (ShopLink's
market basket cost $62.98 and Streamline cost $63.36), but you have to
consider the monthly fees. Streamline, the slightly more deluxe of the two
that will deliver food from Legal Sea Foods, Starbucks, and Alden Merrell,
charges $30 a month. ShopLink, which also has associations with tailors and
florists, charges $25 a month. Except for Peapod, the services all obtain
their groceries from their own central warehouses.
Shoppers such as Gaudet said she would consider trying a grocery-delivery
service, but thinks hidden-charge games would drive her crazy. She said she
is busy enough already, and does not want the aggravation of arguing with
delivery staff over inflated food costs.
''You have to have nothing better to do with your time,'' she said. |
