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Online Grocer Peapod Eliminates Free Deliveries in Boston, Chicago

Aug. 22--Now that it has the grocery home delivery
market to itself in the Boston area, Peapod Inc. is eliminating free deliveries in a bid to boost its

The company, which has been delivering orders of
more than $100 for free, notified Boston-area
customers yesterday on its Web site that all orders placed on or after Aug. 31 will now carry a minimum delivery charge of $4.95. Orders less than $75 will continue to carry a $9.95 fee and the order amount will remain $50.

The new charge will affect most of Peapod's Boston-area customers, since the average order size here is $122. The increase is Peapod's second this year in Boston. In February, the company boosted its cutoff for free deliveries from $60 to $100 and implemented the minimum order size of $50.

Peapod also is eliminating free delivery in Chicago, its biggest market, but is capping the delivery fee there at $2.95 for orders greater than $100.

The elimination of free deliveries in Boston and Chicago bring those markets in line with what Peapod has done in its other service territories in Washington, D.C., southern Connecticut, and Long Island, N.Y.

Paula Wheeler, a Peapod spokeswoman in Skokie, Ill., said the elimination of free delivery was needed to help the company reach its goal of profitability by the second half of 2003.

"We're making an adjustment to the fees to make sure we're viable long term," Wheeler said.

Wheeler acknowledged the company was able to eliminate free deliveries in Boston and Chicago in part because competitors in those cities have gone out of business. HomeRuns in Boston and Webvan in Chicago shut their doors last month.

Peapod has seen its business jump 40 percent in the Boston area since the demise of HomeRuns, which also charged for all deliveries.
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