Brick-and-click grocer PDQuick.com has been acquired by Web delivery venture WhyRunOut.com in an all-cash transaction, WhyRunOut chief executive officer Dan Frahm said Friday. The value of the deal was not disclosed.
Gartner Group research director Geri Spieler told the E-Commerce Times that acquiring PDQuick and its small subset of brick-and-mortar stores is potentially a smart move for Aliso Viejo, California-based WhyRunOut — but only a start.
“They still have a long way to go,” Spieler said. “This might be the last gasp, but if they listen to what the analyst community is saying, they need to have scalability, and they need a larger brick-and-mortar presence to support their online portion. Just being online is not going to give them the scalability and renewed investments they need to stay in business.”
The acquisition by WhyRunOut comes after an attempt by the struggling PDQuick to merge with the now-defunct urban delivery service Kozmo.com, which shut down shortly after talks with PDQuick broke off in April. The deal fell through when PDQuick did not find enough investors willing to make the deal with Kozmo work.
PDQuick then said it needed to find a buyer or investors to provide it with a cash infusion.
“Their model was a very expensive non-scalable business model,” said Spieler. “You have two things going against it. (Given) people’s habits in terms of grocery buying, they just aren’t going to go online to order $25 worth of groceries. Two, how do you scale when you don’t have volume. If you don’t charge for delivery you can’t be competitive.”
PDQuick began in 1987 as a traditional grocery business called Pink Dot, delivering grocery orders via Volkswagen Beetles in upscale neighborhoods of the Los Angeles area. At one time the company had 16 brick-and-mortar stores, a number that was later cut back to 11.
In September, WhyRunOut appointed the former acting chief operating officer for Pink Dot, Arthur Zonneveld, as its vice president of operations.
Pink Dot, which changed its name to PDQuick in 2000, reportedly had plans for national expansion in June, when it accumulated $20 million in capital from investors such as GE Capital Group, but the company only got as far as branches in Maryland and San Diego, California.
Spieler said that because the online grocery companies were not doing business through a brick-and-mortar wholesaler from whom they could buy in volume, they had trouble being competitive.
Spieler added that one model she believes could work for online grocers is a drive-thru model where customers place and pay for their orders online, then receive a confirmation number, which is in turn used to pick up their order via a drive-thru area at the local grocery chain store.
“A company like WhyRunOut could cover the online presence,” Spieler said.