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Peapod teams for logistics help

The online grocer forms a partnership with distribution logistics firm McLane Group in an effort to compete with the growing number of firms selling groceries online.

Online grocer Peapod today said it has formed a partnership with distribution logistics firm McLane Group in an effort to compete with the growing number of firms selling groceries online.

In addition to the partnership, Peapod named McLane Group chairman Drayton McLane Jr. to its board, the companies said. McLane, who also took a "significant" personal stake in Peapod, formerly served as vice chairman of Wal-Mart and was "chief architect of many of the logistics systems used at Wal-Mart today," the firms said.

McLane, who owns the Houston Astros baseball team, will be the ninth member of Peapod's board, the companies said. The amount of his personal investment in Peapod was not disclosed.

The deal comes at a time when online grocers like Peapod and competitors such as Webvan are getting a lot of attention--from analysts and investors, if not consumers. Webvan was expected to go public today, but delayed its initial public offering.

Although some analysts say there is great potential for online groceries, they note that the firms face significant hurdles in dealing with distribution and other logistics. Peapod's deal today is aimed at addressing those issues.

"I can clearly see that Peapod is a company that will continue to lead the Internet grocery revolution," McLane said in a statement. "That's why I'm making investments of my time, money, and energy in an Internet company for the first time. I plan to reach back into my 40 years of experience in the grocery distribution industry to assist Peapod in developing the best e-commerce food-distribution system in the U.S. and continue to lead the industry in customer service."

Peapod president Bill Malloy added: "Drayton is the foremost authority on food distribution and logistics, while Peapod is better than anybody in the Internet grocery business at building solid, enduring relationships with customers. This one-of-a-kind combination will continue to make us the best in the Internet industry in customer service."