Amazon edging in on Peapod territory

NEW YORK (CNNMoney.com) -- Online retailer Amazon.com is delivering perishable groceries to a Seattle suburb in a pilot program, testing out a possible new food delivery service, according to a report Thursday.

The company is making next-day deliveries of fresh fruit, vegetables, meat and milk ordered online to customers in Mercer Island, Washington, according to a report in The Wall Street Journal citing Michael Arrington's TechCrunch blog.

The company also expects to expand the program, called Amazon Fresh, to include Seattle and beyond "when we're ready," spokesman Craig Berman told the Journal.

The company will store the groceries at a local warehouse and use 12 of its own trucks to deliver perishables in temperature-controlled totes.

"It's important that we're starting this very small, and that this is a test, and that we are going to evaluate our service closely and determine the best way to provide service," Berman said.

Amazon began delivering non-perishable groceries, including health and personal care items last year, and gourmet foods in 2003.

Amazon was an early investor on Homegrocer.com, which launched along with Webvan Group in the '90s. The businesses failed when sales didn't keep up with the companies' investments in infrastructure, including warehouses and delivery vans, The Wall Street Journal reported.