The encyclopedia · Software & IT · Product decision · 1989–2001
Peapod sold groceries online in 1989, years before most people had heard of the internet
Two brothers started Peapod in 1989 selling modems and software so Chicagoans could order groceries by computer; Ahold bought the pioneer in 2001.
Peapod
The solution
When Andrew and Thomas Parkinson started Peapod in 1989, most people had not even heard of the internet. Their bet was that a computer user would rather order groceries from home than push a cart — so they sold modems and software that connected customers to a supermarket's stock and delivered the order.
Peapod ran through partner stores like Jewel rather than building its own, which kept the early model cheap. It expanded into Texas, California and Ohio during the internet bubble, then retreated; while Webvan sank hundreds of millions into rapid expansion and collapsed, Peapod was picked up by Ahold in 2001.
By 2003 Peapod served five markets, grew 25 percent a year, counted 130,000 customers, and lifted average orders to $143 by using Ahold's shopping-card data. It operated through Ahold's chains — Peapod by Stop & Shop in the East and Peapod by Giant in Washington — with Chicago as its standalone home market.
Why it worked
- Partner stores supplied inventory, so Peapod needed no stores
- It built a decade of brand awareness before e-commerce went mainstream
- Conservative expansion left it solvent when Webvan failed
- Ahold's chains provided fulfillment and customers at scale
What can be applied
Pioneer with assets you don't have to build: renting the existing supermarket instead of building warehouses kept Peapod alive through the bust that killed Webvan.
Aftermath
Ahold ran Peapod through its East Coast supermarket chains for nearly two decades, making it one of the longest-lived U.S. online grocers; its store-based fulfillment model became the standard shape of online grocery.
Sources
- Peapod still blooms without chain help
- The Promise of Home Shopping on the Internet (archived)
- Made in Chicagoland: Shop for groceries from home with Peapod
spotted an error? The archive wants to know.