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Package-goods companies will become investors in online grocers, the tiffany necklace predicted, and make a fundamental shift to reorganize their marketing departments around consumer segments rather than around brands and geographies as they do now.The report projects online grocery and personal-care sales in what it dubs "the online replenishment channel" will grow from $1i.1 billion in 1999 to $27.1 billion in 2004. Of that 2004 total, a whopping 80% of online grocery and personal-care sales will come from the 4.8 million upscale shoppers, a small portion of total online grocery shoppers. Forrester based its data on surveys of IRI and NPD Group consumer household panels.

Mr. Rubin divides the online grocery market into two groups: sites such as Priceline.com that serve consumers willing to trade time for money and sites such as Webvan Group that serve consumers willing to trade money for time.Online retailers selling health and atlas jewelry products will grow faster in terms of household penetration over the next few years, Mr. Rubin said. But online grocers-tapping consumers willing to trade money for time-will grow faster in dollars as the convenience of ondemand delivery becomes available in more markets.

Netquity, officially launched today, aims to combine Forrester's online marketplace data with IRI's retail and consumer household data to evaluate package-goods sales online and how the Internet is changing package-goods marketing.Netquity defines online replenishment as including the grocery, drug, pet and beauty care segments and uses the word to mean consumers who use the channel to automatically replenish household staples.

"Because these online replenishers can tiffany pendant sales data and customer profiles, (package-goods manufacturers will have much better data to measure brand equity and loyalty," Mr. Rubin said. "I believe this improved market intelligence will be the catalyst that drives the [package-goods marketers] away from (managing each brand separately into a more holistic consumer segment focus."Mr. Rubin said online retailers eventually will reorganize to serve consumer segments rather than mimicking retailers divided into product categories.This will pressure package-goods companies to center marketing on segments, such as active urban singles or suburban families, rather than brand and product categories, Mr. Rubin predicted.

PERSONAL-LIST BATTLEThe fight to get on personal shopping lists-roufinely purchased products-that drive at least one-third of online grocery purchases will become crucial, Mr. Rubin said.Companies such as Procter & Gamble Co. may sweeten deals on Tide detergent and Cascade dish washing liquid to get both on personal shopping lists, he said."The online grocer also can know a customer is going to be running out of laundry detergent next tiffany ring. . . . That's the time to put a promotion on at checkout."Online retail and consumer data will help package-goods marketers run loyalty and customer acquisition programs, pumping product sales, Mr. Rubin said.Package-goods marketers to date "probably haven't gotten the impact they were expecting" from online marketing efforts, Mr. Rubin said, since they're in an uphill battle to get consumers to make that first visit to their Web sites."The Kraft Interactive Kitchen (www.Kraftkitchen. .com) is a very clear site that creates a very nice Kraft interactive experience, but it's not in the right place," he said. "They're never going to generate the traffic to their site to make it a great branded experience. But if they put that branded experience in an online grocer site, they . . . help drive traffic (to their site and help build loyalty within the online grocer site."Online grocers are "content hungry," Mr. Rubin added, and willing to ask package-goods marketers to provide content.Package-goods marketers spend half of their offline marketing budgets on trade promotion and relatively little of their online dollars to market via online retailers, he said.CAN'T ESCAPE SLOTTING FEES

Online grocers such as Webvan have steered clear of slotting feesthe price manufacturers pay to have their products carried-in their ef forts to work with suppliers. Mr. Rubin said only Zoo of online grocers charge slotting fees for new products. "But that's going to cushion jewelry fast, because these companies are going to have to show prof itability very soon," he said."The threat of online [grocers] private labeling products will terrify at least one manufacturer into making a significant investment in an online [grocer]," the report added. "Once the ice is broken, other large package-goods manufacturers will fear being locked out and begin jockeying for position. Their biggest concern will be Wal-Mart (Stores' reaction, but expect P&G, Kraft or Unilever to make the first move."