In early this morning, ready to watch this strange market closely -- especially after both last week and Monday's weirdness. An opportunistic, and maybe dangerous, week for tech stocks ahead (can you say "correction"?).

Then I burned some microwaved bacon. Ate a rock-hard stale bagel. And my coffee got cold during a too-long predawn call with a source. Bah, humbug.

Sure, there are some things that the Web just can't fix.

But other big pains the Web can help with, as I pointed out here the other day, when I

offered my theorem on one way of making money on the Web: Find something you hate to do, then set up a Web-based business to do it. After all, a significant number of people no doubt share your antipathy toward going to bookstores and CD shops, buying life insurance, shopping for college textbooks, etc., etc. And, oh yes, shopping for groceries.

As I said then, I think ordering groceries over the Net is going to be a very big business. It goes right to the heart of the biggest benefit of the Web, which I've long said is saving time, not saving money. What I want in life is more time, period. Time to do the stuff I really love, from playing congas to fly-fishing mountain streams, from reading time with my wife to afternoons at the ballpark with my son. What I

don't

want to do is spend an unlovely hour or two wandering the aisles of a supermarket, buying that same old, same old week after week after zzzzzz...

I think there are a lot of others like me who are going to welcome grocery-shopping sites -- make that grocery-shopping systems -- precisely because they can "buy back" a couple of hours a week, maybe more, by in effect having someone else do that for them.

As soon, that is, as someone figures out how to make grocery shopping over the Web

work

. Because right now, good answers are few and far between.

There are several problems to solve in Web grocery shopping, from offering the incredibly wide range of choices we demand in a grocery store, to handling coupons, to order-turnaround time, to the Big One: how to get perishable stuff -- produce, meat, fish, dairy -- to us while it's still fresh and wholesome.

One of the first names to emerge in Web grocery shopping was

NetGrocer

. It relies on a warehouse in New Jersey (soon to be joined by a West Coast distribution point), from which dry and canned goods -- no perishables -- are FedExed to your home.

That's right: groceries by

FedEx

(FDX) - Get Report

.

Sound expensive? It is, especially if you order much. Shipping is based on distance plus the total cost of the order. Ship a $200 order -- not that much, especially given that services such as this encourage stocking up -- anywhere west of the Mississippi, and you'll pay $35 extra for second-day FedEx. Make that $500, and the shipping runs $55.

Remember, no perishables are available through NetGrocer. (You'll still have to make those milk/veggie/steak runs to a local grocer.) And it will leave the package on your doorstep, so you needn't be there to receive them. But then your groceries are exposed to the elements ... and to the 11-year-old next door.

I think NetGrocer will have to find a new business model -- or it'll disappear.

Peapod

(PPOD)

is the other high-profile competitor and the only publicly held company in this nascent business. Peapod created partnerships with strong local and regional grocery chains, then began offering its Web service in those chains' service areas.

The Peapod model is simple: Send in your order via the Web, and a Peapod shopper personally wanders the aisles of the chain's nearest store, filling a basket with your needs. (The value of this "personal shopper" function shouldn't be underestimated: Ask for a well-trimmed beef loin in a certain weight range, and you'll get it.) A Peapod van shortly delivers the order to your home or office.

By adding perishables, Peapod goes a long way toward solving one of the biggest dilemmas in Web grocery shopping. Unfortunately, Peapod's partnership program with brick-and-mortar chains has turned out to be an extremely expensive path, and the company is now converting to a company-owned warehouse model, which should lower costs in the notoriously thin-margin grocery business.

This will also slow growth -- which has been erratic anyway. With the new requirements for additional capital, site selection, leasing, stocking, staffing and managing those warehouses, Peapod will no longer enjoy the easy, low-capital route it found working with established grocers.

Peapod's service is reliable, and its prices are competitive. But selection is a problem: The range of choices available on Peapod's Web order form is only a small fraction of the range of items found on the grocery stores in which they shop for you. And the capital requirements and delays in opening those warehouses worry me.

There's one more (of a dozen or so generally smaller) players in the game worth mentioning. If

Streamline

can find the capital, management and guts to expand nationally quickly, it can own this business. Unfortunately, so far, it serves only the western suburbs of Boston and has shown little interest in jumping across the country. That means Streamline is at great risk of serving up the right business model ... which is then grabbed by a smart, well-financed (

Kleiner Perkins

, are you listening?), well-managed competitor.

Streamline has its own warehouses and its own fleet of delivery trucks. When you sign up, Streamline sends one of their drivers to your home to install in your garage the real secret of its service: a combination refrigerator/freezer/dry goods unit, about the size of a refrigerator. And the driver loads your garage-door-opener's code into his master unit, so he can get into the garage to restock your unit without disturbing you, or if you're not home.

Bingo!

We now have a service which can deliver perishables as well as dry and canned goods; and the groceries can be conveniently delivered when you're not home.

Streamline has wisely extended the franchise by also picking up and returning dry cleaning, videocassettes, photo-developing orders, even postage stamps. Customers select a fixed day in the week for their deliveries; you can turn in your order to the Web site as late as the night before. Cost: $30 per month, plus (competitive) prices for the groceries, dry cleaning, etc., for four or five monthly deliveries. (Want a hot-shot catch-up order in between? No dice. Logistics management for Streamline's truck fleet makes additional deliveries impossible.)

Sounds great, eh? Agreed. But, unfortunately, Streamline has made only one foray outside the Boston area, opening a similar operation this year in Washington, D.C. Capital constraints are a big, big issue -- though Streamline, still a private company, has attracted such blue-chip investors as

GE Equity Capital

and

Intel

(INTC) - Get Report

-- because this is an expensive model to replicate.

But among all the choices so far, it smells like the big winner -- if it can explode out of the Northeast quickly. Why no service in Seattle, Streamline? Portland? Austin? Palo Alto? Raleigh-Durham? Services such as this, which rely on large upper-middle-class populations of Web-literate customers, are smart to cherry-pick across the country, looking for those areas with unusually high numbers of "Web actives." But Streamline hasn't yet shown the capability, vision or capital-formation skills needed to make that big leap.

Big risk, Streamline. If you don't do it, though, someone else will.

In thinking about these online grocers and the emerging market for their services, I've come up with a handful of principles:

  • You've gotta be able to deliver perishables. Otherwise, the customer still has to make those maddening trips to the supermarket -- and won't sign on.
  • Per-item pricing has to be competitive, but we'll happily pay extra for the convenience and personal service. Whether it's Peapod's $8 to $10 per delivery or Streamline's $30 per month for weekly deliveries, these services are bargains for the target audience. Wouldn't you pay $7.50 a week for Streamline's service?
  • First-mover advantages really count here. This isn't a business which can long survive the inefficiencies and myopia of locally focused, onesy-twosy operations. Whether through aggressive expansion by Streamline or a USWeb (USWB) -like rollup, this business is going to undergo fierce consolidation as soon as the market smells the right business model.
  • This is a suburban business, not one for city dwellers. Though successful Web grocers have to stick to fairly dense urban areas, for their obvious economies in advertising and logistics, it's hard to see how "we'll leave your groceries with your doorman" services -- or worse, just leaving the bags in the hall outside your apartment's door -- can overcome the complications of the urban dweller's life.
  • Selection is critical. If I can't find, say, the dry cereal I like or if your produce doesn't include eggplant and yellow bell peppers, I'm not going to sign up. I'll just keep trucking on over to UglyMart and walk the aisles.
  • Investors should make big bets -- or none. If you think Web grocery services have a bright future, keep an eye on this market, and when you believe you see a viable business model in a well-run, well-financed company, watch like a hawk for its IPO. The big winner or winners in this business are going to be huge. And the smaller players are going to get stomped. This isn't a "portfolio" industry, where putting 10% of your "Web grocery" investment into each of 10 companies is going to work.
  • Where are the logistics managers? So much of the growth potential, customer satisfaction and profitability of this business depends on classic logistics management that I keep looking, in vain, for existing Web grocers to hire some world-class logistics people from a Wal-Mart (WMT) - Get Report or a FedEx. So far: nada. Perhaps no single force will determine the big winner here as brilliant logistics work. Why don't the Web grocers see this?

Tell me what you think: Vote in the poll below, and I'll return to this subject soon.

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Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in the companies discussed in this column, although positions can change at any time. While Seymour cannot provide investment advice or recommendations, he invites your feedback at

jseymour@thestreet.com.