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Webvan adds brand names to service

The online grocer announces it is entering into alliances with leading consumer food companies Kellogg, Nestle USA, Pillsbury and Quaker Oats.

Online grocer Webvan today announced it has entered into alliances with leading consumer food companies Kellogg, Nestle USA, Pillsbury and Quaker Oats.

The deal is designed to beef up Foster City, Calif.-based Webvan's product offerings and help draw shoppers as the company expands to more cities, strategies the company has been pursuing vigorously the last three months.

Financial terms of the deal weren't released.

The deal follows similar strides toward expansion for the online grocer. Webvan announced yesterday that it had signed agreements with Supervalu and Fleming, the nation's leading distributors of food products. Last month, the Internet grocer struck a deal with to deliver Net beauty products during the holidays. In that instance, Webvan acted only in a delivery capacity, a first for the company.

Webvan stock "The alliances signal that these forward-thinking multinational consumer product companies have confidence in Webvan's business model," George T. Shaheen, Webvan's chief executive, said in a statement.

Webvan, started by Borders Group founder Louis Borders, lets customers place online orders for meats, fresh fish and other grocery products to be delivered within a 30-minute time period specified by the customer. The company plans to expand its service from San Francisco to Atlanta, Seattle and Chicago this year.

Today's alliances will last for three years. Combined, they have the potential to be a ''multimillion dollar program'' in terms of incentives and marketing programs, said Bud Grebey, a Webvan spokesman.

''These relationships will bring Webvan trade and consumer marketing moneys that will allow it to compete nationally and deliver targeted marketing programs,'' said Maigread Martinez, vice president of strategic alliances.

Webvan said it hopes to gain knowledge in merchandising, marketing and managing its supply chain from the alliances. The food companies will be able to test and develop strategies for online merchandising and increase awareness of their brands.

The Internet retailer will get money for marketing from the food companies, which may link their own Web sites to Webvan's.

Reuters contributed to this report.