Camarillo-based Pink Dot is betting that there are a lot of lazy people beyond the borders of Southern California. With $32 million from two rounds of venture funding late last year, L.A.’s firmly entrenched grocery delivery service is gearing up for an ambitious nationwide expansion next month to compete with the likes of Kozmo.com and other Web grocers. “This market is huge and there are a lot of places for people to play,” said Pink Dot Chief Executive Dan Frederickson. The expansion is being funded by money Pink Dot raised from venture firms William Blair Capital Partners, GE Equity, St. Paul Venture Capital, Brand Equity Ventures, Graystone Venture Partners and Corber Corp. Frederickson said Pink Dot will complete its third round of funding in the next month, adding more fuel to its expansion plans. Pink Dot currently delivers groceries in Los Angeles and Orange counties to people who order by phone or through its Web site, pinkdot.com. Company officials would not provide specifics on which cities Pink Dot plans to enter and when, but said it will be in four new markets by the end of the year. Even with such firm financial backing, the company faces a tough road in the growing online food delivery market. Jupiter Communications estimates consumers will spend $800 million buying groceries online this year. But the competition is lining up. While analysts say the market is still open, it is becoming increasingly crowded and a shakeout is expected later this year after distribution networks are in place and competitors go head-to-head in selected markets. So far, no one has made a profit in the online grocery business, in which consumers order supermarket items from a Web catalog, charge purchases to their credit cards, then sit back and wait until a delivery van shows up with the goods. Pink Dot is operating at a disadvantage because it’s getting into the business relatively late, said Jill Frankle, e-commerce analyst with Gomez Advisors, an Internet research firm. “I think it’s definitely going to be challenging for them,” Frankle said. “Kozmo has already built a brand name for itself through extensive marketing and is well known in New York, Boston, Seattle, San Francisco, L.A. and other cities where it has launched.” Pink Dot is unknown outside the greater Los Angeles area. If that weren’t bad enough, Kozmo also has Internet heavyweight Amazon.com on its side. The Net retailer invested $60 million in Kozmo earlier this year as part of a future deal to deliver Amazon’s goods through Kozmo. Further, Pink Dot will also likely be competing against other Web grocers like Webvan and Homegrocer.com, both of which already operate in Southern California. Frederickson, though, says Pink Dot has one key factor in its favor: Its standard convenience-store fare consists of many products not offered by Kozmo. “Pink Dot is one of the largest need-and-speed shopping services,” he said. “Our spectrum of products is larger than anyone else out there. A lot of the rapid delivery services focus on entertainment products, with videos and the like, and our market is really different.” Room for another player Ian Larkin, managing director of Chicago-based William Blair Capital Partners, one of Pink Dot’s venture funders, acknowledges that the field is competitive, but said there is enough space for Pink Dot in the market. “While (Pink Dot) may not win the war, they’ll certainly come in second or third,” he said. “I don’t think the market is too crowded.” Larkin said Pink Dot accepts smaller orders than most Web grocers, and delivers the goods faster. Pink Dot is no stranger to competition. It’s been vying in Southern California with Kozmo and Webvan for about the last six months. Frederickson said the arrival of these online grocers hasn’t had a big impact on Pink Dot’s business. He said orders over pinkdot.com have doubled over the last six months, though he declined to provide numbers. To build Pink Dot’s brand name outside Southern California, Frederickson plans to rely on direct-mail ads and enter into partnerships similar to the one announced with Sparkletts Water Co. in April. As part of the deal, the two companies will market each other’s services to their respective clients and share home-delivery marketing information. Pink Dot will also add Sparkletts water to its delivery offerings. Frederickson said Pink Dot’s strength lies in its experience in the home-delivery market. “We think we’re different than companies starting out,” Frederickson said. “Pink Dot is not a new company. We have a proven financial model.” The privately held Pink Dot opened its first store on Sunset Boulevard in 1987. It didn’t open a second location until 1995. Over the last five years, it has expanded into 10 stores in Los Angeles and Orange counties. Larkin said that while his firm liked the Pink Dot concept, it was particularly attracted to Pink Dot’s management team. “The key thing was the people,” Larkin said. “We knew they would build a good team that is way overqualified.” Frederickson headed Kinko’s Inc. from 1986 to 1997 and oversaw the copy chain’s nationwide expansion. Other top Pink Dot executives come from Mattel Inc., Smart & Final Inc., In-and-Out Burger, Texaco Inc. and other name-brand companies. In December, Pink Dot named Pizza Hut Inc.’s former CEO Allan Huston to its board of directors.