Grocery giant Safeway Inc., Pleasanton, Calif., and Dallas-based GroceryWorks.com, an online grocery delivery service, have signed a letter of intent to form an alliance for online grocery shopping and delivery.
Under the agreement, GroceryWorks will receive $30 million in capital from a Safeway subsidiary and an additional $20 million from one or more third parties. In exchange for the capital, the Safeway subsidiary will receive 50% of the delivery company in preferred stock. In addition, GroceryWorks will become Safeway's exclusive online grocery channel and will use Safeway's products and brand names including Vons, Dominick's, Carrs, Randall's and Tom Thumb.
For Safeway, the alliance means quicker implementation of its e-commerce strategy, and for GroceryWorks, it means significant financial backing and quick entry into top markets. "This alliance will greatly accelerate our ability to offer online grocery shopping to the markets we presently serve," says Steve Burd, chairman and CEO of Safeway.
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