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E-business: Grocery Taxi

One of the most infamous stories of the dotcom bust is that of WebVan -- the California-based online grocery delivery service that promised to make wandering through the produce aisle a thing of the past. With millions in financing, a fleet of trucks and automated warehouses designed by Bechtel, WebVan operated in nine cities and went public in 1999. But within three years the enterprise was bankrupt.

Closer to home, Publix inaugurated PublixDirect in 2001 only to pull the plug on its online grocery venture in 2003.

It was amid this backdrop that Jose Alfonso, who still works as a Hialeah paramedic and firefighter, opened his own online grocery delivery service in December 2001.

"I have to admit I was a little skeptical about my own launch," said Alfonso, sitting in the windowless garage of his Pinecrest home that is also his corporate headquarters.

Yet five years on, his company www.grocerytaxi.com has outlived many of its well-funded and far more experienced rivals.

The site offers customers in Miami-Dade County the ability to shop online for more than 12,000 items -- from meat and beets to toilet paper and toothpaste -- and then have the goods delivered from GroceryTaxi's 2,200 square-foot warehouse to their home on the day and time of their choosing.

While prices at GroceryTaxi can be up to 15 percent higher than your neighborhood supermarket, delivery is free for orders over $120.

The reasonable price combined with priceless convenience has found fans. The site has about 1,000 registered users -- about a third who are active at any one time, said Alfonso.

Most customers are time-strapped professionals, but the company also has found a niche delivering everything from coffee filters to cleaning supplies to area offices.

With annual revenue of about $250,000, the company turns a small profit, said Alfonso, but falls short of his expectations.

"Quite frankly I was hoping we would be in better shape five years into it," he said. Alfonso, 50, started the company with $180,000 of savings. After buying two delivery trucks and outfitting a warehouse by Tamiami Airport, the next biggest expense was his website.

Over the years, he has put about $45,000 into developing www.grocerytaxi.com. There, clients have the ability to buy a single orange or an entire crate, choose items one by one or submit a shopping list that can be delivered automatically. They can pay by credit, debit or even use Food Stamps.

Despite being an online venture, GroceryTaxi isn't immune from real-world challenges. The profit margin on groceries is thinner than apple skin. And transportation costs have kept Alfonso from expanding his territory, he said.

To complicate matters, the demand for some of the items is so weak that he cannot afford to stock them at his warehouse and must buy them retail from local grocers.

"This business is all about volume and efficiencies," he said. But because he's small, he misses out on some of those savings, he said.

As a result, he's looking for financial backers that might help him grow the business at a time when analysts say the demand for online grocery shopping could take off.

According to a report by Forrester Research, only 2 percent of regular Web shoppers said they buy groceries online, when that number could easily be 30 percent.

"As one of the largest offline retail categories with one of the lowest online retail penetration rates, grocery stores may very well be on the verge of hitting a growth spurt online," the study found.

And while Alfonso has had the local market largely to himself for years, the isolation probably won't last for long.

Online book and music store giant Amazon.com recently began offering nonperishable goods and United Kingdom-based Tesco -- the world's leading online grocer -- has also announced its intention to begin operating in the United States this year.

But if the last five years have proved anything, it is that Alfonso has staying power.

"Initially I was biting my nails everyday hoping this would be a success," he said. ‘‘Now I am really just so excited to have come as far as I have. . . and I still believe the possibilities for this business are huge."

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