AOL chief Steve Case is attacking the $1.4 billion
coupon industry by launching a deal today to give
supermarket shoppers coupons over the Internet.
AOL and Supermarkets Online say they've worked
out a foolproof way to distribute coupons that cannot
be counterfeited and are cheaper to distribute.
The pact marks the first major national distribution of
coupons outside of their usual Sunday newspaper
inserts or junk mass mailings.
Under the terms of the deal expected to be announced
today, a user on AOL and its Digital City local guides
can download a variety of deals offered by
manufacturers and take a printout of picks to his
On the printout the bar
code is scanned at the checkout counter, for one-time
The checkout counter then prints out coupons picked
by the user, who will be able to use them at his next
visit to the store.
"Everyone is pleased with the system," Supermarkets
Online co-founder Mike Scroggie said.
"Supermarkets can track the data, and manufacturers
know exactly who got their coupons," he added.
AOL will collect several million dollars a year to make
Supermarkets Online an anchor tenant on AOL's food
Scroggie said the food giants such as Kraft General
Foods, Kelloggs and Del Monte like the idea of using
the web to send their cents-off and special coupons to
"It's 26-percent cheaper for the manufacturers to
distribute their coupons this way," said Scroggie,
whose company is a subsidiary of Catalina Marketing.
Postal charges have been rising steadily, and
newspaper-insert fees also have inched upwards in
One of the most frustrating costs for packagers,
however, is coupon fraud, which costs the food
industry millions of dollars each year.
Unscrupulous dealers and phony retail fronts will
collect coupons by paying a fraction of their value -
sometimes to volunteer groups clipping coupons as
The fraudsters then submit the coupons to
manufacturers for their rebate checks - without having
sold any merchandise.
Currently, just 45 of the top 500 packaged good
companies use Supermarkets Online to distribute
coupons on its web page (www.valupage.com).
"In two years, you'll see almost all major packaged
goods companies distributing their coupons this way,"
He said that more than 80 percent of households use
coupons, including households wired for the Internet.
"There's a great demand on the 'Net for coupons," he
Meanwhile, AOL's Digital City took another growth
step yesterday with a deal to let users of MCI
WorldCom's Internet service access all 60 city guides.
Digital City packages interactive guides of local news,
community resources, entertainment, classified and