By Jason Straziuso
The Associated Press

After the spectacular crashes of big-name Internet grocers in the late 1990s, the dream of a grand new wave of online food stores appeared to fizzle.

But with intentionally meager fanfare, grocers have made Internet shopping available to tens of millions of consumers nationwide, and upcoming expansions will expand it to millions more.

"Our business has doubled the last two years, and we expect it to double again this year," Safeway.com head Mitch Rhodes said.

Peapod LLC says it has 150,000 active customers in its delivery range, which includes Chicago and the East Coast. By 2006, Peapod expects to almost double its reach, to areas serving 14 million potential households.

New York-based Freshdirect.com, which opened in fall 2002, now has about 100,000 active customers, a fourfold increase from a year ago.

"For the most part, the demand has been greater than our ability to supply," Freshdirect co-founder Jason Ackerman said, noting that the company once had to refuse about 1,000 orders because it was overwhelmed. "When you deliver great food, people love the convenience of it. If we delivered crappy food, people wouldn't be as excited."

Not everyone appears convinced that Internet grocery will stick. Neither Kroger Co., with 2,500 supermarkets and multi-department stores, nor Wal-Mart Stores Inc., with 1,500 stores that sell groceries, have groceries online.

The key struggle for grocers is to make their service convenient enough and the cost low enough - most charge less than $10 for delivery - to change decades of shopping habits. Online grocers also need to operate in cities with high population densities and heavy Internet use.

Online grocers are delivering nifty perks, like shopping lists that can be stored online for easy purchasing next time. Delivery can generally be arranged within a two-hour window to keep people from having to wait at home all day.

The typical Internet order of $130 is larger than the average in-store sale. In fact, online groceries will see sales of $2.4 billion in 2004, 0.4 percent of the total grocery market of $570 billion, Jupiter Research analyst Patti Freeman Evans said. By 2008, online groceries are expected to be worth $6.5 billion. That's just 1 percent of the estimated total market of $641 billion, but it amounts to an annual growth rate of 42 percent.

On a recent weekday, "e-commerce" shopper Jami Reichardt raced her specially outfitted cart and handheld computer through a Philadelphia Acme store, filling her Internet customer's order of red peppers and firm cucumbers.

"I wouldn't want to eat something bad, so why would I give someone else something bad?" Reichardt said.