DELIVERANCE ONLINE SERVICE FINDS ITS SECOND CHANCE.

Byline: Brent Hopkins Staff Writer

NORTHRIDGE - Only last month, Bryon Smith's VillageValet.com online delivery service was in a tight spot, being driven out of business by the 800-pound gorilla of Webvan.

The entrepreneur, founder and chief executive officer of the small local grocery service had yanked his Web site and taken a vacation to visit his mother.

``I was at my mom's house licking my wounds, and she kept reassuring me,'' he recalled. ``She told me not to give up, because it would work out OK. We were just getting smoked by Webvan.''

And just as times seemed bleakest, that 800-pound gorilla choked on its own banana. The Foster City-based firm, one of the stars of the dot-com world, filed for bankruptcy and ceased operations July 9. And in its wreckage, Smith saw his opportunity, relaunching his site this month.

A marketing whiz who cut his teeth in the corporate world, working in managerial roles for Blue Cross of California and American Express, Smith knew that online grocery shopping was not a flash in the pan like many dot-com schemes were.

Much was discussed at the time of Webvan's demise, with the consensus being that its concept was too forward looking. While the demand clearly existed, the extraordinarily high overhead of operating a national grocery chain doomed the online retailer.

``They failed in the investment arena, not in the service arena,'' Smith said. ``But they created a category for us.''

And this failure makes a nice niche for VillageValet to slide into, according to marketing professor Hal Kassarjian of the University of California, Los Angeles, who expressed optimism at a small, more economically nimble company's chances to avoid the big dot-com disasters.

``I think the smaller firm has a better chance, but it's critical that they offer good service and quality merchandise,'' he said. ``If they have a couple rotten watermelons, they'd be dead, because people would stop coming.''

Rather than building its own distribution chain, Smith looked to obtain top-quality produce and meat by pairing with the small, upscale chain of Hows Markets to acquire fresh merchandise, cutting down on expenses. And instead of trying to span the nation, a concept that blew up on many online companies, he's focusing strictly on the San Fernando Valley, a radius he can cover easily for daily trips.

``I'm not trying to be a supermarket, these (Hows) guys do that great, and I'm not going to replace that,'' he said. ``Maybe one day we'll be something great, but right now we just want to serve this community.''

He makes his money on the small margins from the groceries, dry- cleaning, pet supplies and laundry pickups he offers, as well as by affixing a $6.99 surcharge for delivery. And according to those familiar with the concept, the consumers are willing to pay.

``For people from the late baby boom all the way up to the 70s, price is not so important,'' said Kassarjian said. ``They're willing to pay more for the personal touch of people handling things. Look at HomeGrocer - they had a lot of sales, all built on that personal touch with true convenience.''

And although he competes with Hows' own delivery service, the chain is happy to have him as a regular customer, according to Matt Hughes, manager of its Granada Hills location. Smith's shoppers can bring in up to $700 in additional daily business, Hughes said, and the name recognition is a valuable marketing tool.

``We wanted to get our name out there and get more sales,'' he said. ``Anything you can do to spread your name is great.''

And though he admits the business can be arduous, especially on days where he has to cruise the Valley in his own car, he remains upbeat.

``This isn't the best job I've ever had, it doesn't have all the perks of corporate life, but I love it,'' he said. ``I mean, I've got an MBA from Columbia and I'm delivering groceries - and I still love it.''

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(1 -- 2 -- color) Bryon Smith, founder and CEO of the VillageValet.com delivery service, fills an online order with produce from the Hows Market in Granada Hills. Serving a smaller area, the Valley, Smith's company has outlasted the much-larger Webvan.

Phil McCarten/Staff Photographer