Grocery Gateway delivers groceries to the doors of 40,000 registered customers around Toronto, but CEO Bill Di Nardo makes it clear he's not really a grocer. "We're in the logistics business," he says. "We're the last mile to your door."

It's an online grocery store, open seven days a week with good - and growing - product selection and in-person payment options. Its prices are competitive with supermarkets, "but price is not our value proposition," says Mr. Di Nardo. For the consumer, Grocery Gateway is a time-saver.

From its origins in Mr. Di Nardo's basement four years ago, Grocery Gateway at www.grocerygateway.com is now the largest consumer-direct online company in Canada. It's already delivering wine, beer, books, videos and toys, and soon it's highly automated warehousing, picking and distribution system will be offering everything from cough-and-cold remedies to office supplies. Within five years, Mr. Di Nardo says, it aims to be a $1-billion-a-year company.

Keep in mind that the flight path for takeoff has been close to vertical. Grocery Gateway's first warehouse just opened in May. Weekly growth of 5% suddenly tripled when the weather changed in the fall. Total volume had also tripled as of December. Meanwhile, the company's managers have somehow kept the rocket on course - delivery time is now down to 90 minutes and falling, while fulfillment costs have been cut in half.

Meanwhile, major online grocery enterprises in the US have experienced difficulties, including some significant bankruptcies and mergers. Mr. Di Nardo says Grocery Gateway is saved by virtue of reaching its "minimum efficient scale" quickly. In other words, by opening one warehouse and achieving near-capacity within a few months, the company is proving to investors that its concept works.

Investment - and Grocery Gateway's ability to raise plenty of it - has been another advantage. Mr. Di Nardo and his management group have raised more than $70 million in equity funding from the likes of the Ontario Teachers' Pension Plan, Sofinov, Royal Bank Capital Partners, Manulife Capital and others.

But the Grocery Gateway management team, drawn from food, beverage, logistics and courier backgrounds, has wisely understood that good groceries must be a given. What will make or break the venture is the logistics of quick delivery.

That end of the business works on a well-crafted plan that is part technological wizardry and part old-fashioned hustle. Warehouse management software groups the grocery orders and allocates portions to different radio-frequency-tracked order-pickers. Route management software decides which orders go on which trucks, and when the trucks will leave for which destinations.

Then it comes down to more than 50 trucks getting there quickly, and polite service people who take off their shoes at the door and even load the pantry for customers who can't do it themselves.

The Grocery Gateway experience holds a lesson for other online entrepreneurs pursuing a consumer-direct market. "The e-commerce promise of shop-in-your-pajamas has largely failed," says Mr. Di Nardo, "because of a failure to deliver on a major part of the value proposition." The missing link, he believes, is prompt, accurate and courteous delivery.