Mercato raises $26M Series A to help smaller grocers compete online

The pandemic upended the way people shop for their everyday needs, including groceries. Online grocery sales in the U.S. are expected to reach 21.5% of the total grocery sales by 2025, after leaping from 3.4% pre-pandemic to 10.2% as of 2020. One business riding this wave is Mercato, an online grocery platform that helps smaller grocers and speciality food stores get online quickly. After helping grow its merchant sales by 1,300% in 2020, Mercato has now closed on $26 million in Series A funding, the company tells TechCrunch.

The round was led by Velvet Sea Ventures with participation from Team Europe, the investing arm of Lukasz Gadowski, co-founder of Delivery Hero. Seed investors Greycroft and Loeb.nyc also returned for the new round Gadowski and Mike Lazerow of Velvet Sea Ventures have also now joined Mercato’s board.

Mercato itself was founded in 2015 by Bobby Brannigan, who had grown up helping at his family’s grocery store in Brooklyn. But instead of taking over the business, as his Dad had hoped, Brannigan left for college and eventually went on to bootstrap a college textbook marketplace, Valore Books, to $100 million in sales. After selling the business, he returned his focus to the family’s store and found that everything was still operating the way it had been decades ago.

Image Credits: Bobby Brannigan of Mercato

“He had a very basic website, no e-commerce, no social media, and no point-of-sale system,” explains Brannigan. “I said, ‘I’m going to build what you need.’ This was my opportunity to help my dad in an area that I knew about,” he adds.

Brannigan recruited some engineers from his last company to help him build the software systems to modernize his dad’s store, including Mercato’s co-founders Dave Bateman, Michael Mason, and Matthew Alarie. But the team soon realized could do more than help just Brannigan’s dad — they could also help the 40,000 independent grocery stores just like him better compete with the Amazon’s of the world.

The result was Mercato, a platform-as-a-service that makes it easier for smaller grocers and speciality food shops to go online to offer their inventory for pickup or delivery, without having to partner with a grocery delivery service like Instacart, AmazonFresh or Shipt.

The solution today includes an e-commerce website and data analytics platform that helps stores understand what their customers are looking for, where customers are located, how to price their products, and other insights that help them to better run their store. And Mercato is now working on adding on a supply platform to help the stores buy inventory through their system, Brannigan notes.

“Basically, the vision of it is to give them the tech, the systems, and the platform they need to be successful in this day and age,” notes Brannigan.

He likens Mercato as a sort of “Shopify for groceries,” as it gives stores their own page on Mercato where they can reach customers. When the customer visits Mercato on the web or via its app, they can enter in their zip code to see which local stores offer online shopping. Some stores simply redirect their existing websites to their Mercato page, as they can continue to offer other basic information, like address, hours, and other details about their stores on the Mercato-provided site, while gaining access to Mercato’s over 1 million customers.

However, merchants can also opt for a white-label solution that they can plug into their own website, which uses their own branding.

The stores can further customize the experience they want to offer customers, in terms of pickup and delivery, and the time frames for both they want to commit to. If they want to ease into online grocery, for example, they can start with next-day delivery services, then speed thing up to same-day when they’re ready. They can also set limits on how many time slots they offer per hour, based on staffing levels.

Image Credits: Mercato

Unlike Instacart and others which send shoppers to stores to fill the orders, Mercato allows the merchants themselves to maintain the customer relationship by handling the orders themselves, which they can receive via email, text or even robo-phone calls.

“They’re maintaining that relationship,” says Brannigan. “Usually, it’s a lot better if it’s somebody from the store [doing the shopping] because they might know the customer; they know the kind of product they’re looking for. And if they don’t have it, they know something else they can recommend — so they’re like a really efficient recommendation engine.”

“The big difference between an Instacart shopper and the worker in the store is that the worker in the store understands that somebody is trying to put a meal on the table, and certain items could be an important ingredient,” he notes. “For the shoppers at Instacart, it’s about a time clock: how quickly can they pick an order to make the most money.”

The company contracts with both national and regional couriers to handle the delivery portion, once orders are ready.

Mercato’s system was put to test during the pandemic, when demand for online grocery skyrocketed.

This is where Mercato’s ability to rapidly onboard merchants came in handy. The company says it can take stores online in just 24 hours, as it has built out a centralized product catalog of over a million items. It then connects with the store’s point-of-sale system, and uploads and matches the store’s products to their own database. This allows Mercato to map around 95% of the store’s products in a matter of minutes, with the last bit being added manually — which helps to build out Mercato’s catalog even further. Today, Mercato can integrate with virtually all point-of-sale (POS) solutions in the grocery market, which is more than 30 different systems.

As customers shop, Mercato’s system uses machine learning to help determine if a product is likely in stock by examining movement data.

“One of the challenges in grocery is that most stores actually don’t know how many quantities they have in stock of a product,” explains Brannigan. “So we launch a store, we integrate with the POS. And with the POS we can see how quickly a product is moving in-store and online. Based on movement, we can calculate what is in stock.”

This system, he says, continues to get smarter over time, too.

“We’re certainly three to five years ahead, and we’re not going back,” says Brannigan of the COVID impacts to the online grocery business. “It’s very plentiful now in many places, in terms of e-commerce offerings. And the nature of retail businesses is competitive. So if 1% of people are online, it might not drive other people. But if you have 15% of stores online, then other stores have to get online or they won’t be able to compete,” he notes.

Mercato generates revenue both from its consumer-facing membership program, with plans that range from $96/year – $228/year, depending on distance, and from the merchants themselves, who pay a single digit percentage transaction fee on orders — a lower percentage than what restaurant delivery companies charge.

The company has now scaled its service to over 1,000 merchants across 45 U.S. states, including big cities like New York, Chicago, L.A. D.C., Boston, Philadelphia, and others.

With the additional funding, Mercato aims to expand its remotely distributed team of now 80 employees, as well as its data analytics platform, which will help merchants make better decisions that impact their business. It also plans to refresh the consumer subscription to add more benefits and perks that make it more compelling.

Mercato declined to share its valuation or revenue, but as of the start of the pandemic last year, the company had said it was reaching a billion in sales and a $700 million run rate.

#e-commerce, #ecommerce, #funding, #grocery-store, #lukasz-gadowski, #machine-learning, #online-grocery, #online-shopping, #retailers, #shopping, #startups, #supermarkets, #velvet-sea-ventures

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Amsterdam’s Crisp, an online-only supermarket, raises €30M Series B led by Target Global

Crisp, an Amsterdam-based, online-only supermarket focused on fresh produce, has raised €30 million in a Series B financing led by leading Target Global and joined by Keen Venture Partners and the co-founders of Adyen and Takeaway.com. Crisp has now raised a total of €42.5 million to date. It plans to use the money to expand in the Netherlands, and eventually across Europe.

Crisp says its USP is seasonal products sourced directly from 600+ small and high-quality producers at an affordable price in the Netherlands. Customers order through a smartphone app and deliveries are the next day within a 1-hour time slot. It also uses a 100% electric fleet serving big cities and suburbs, and its model is to have zero food waste.

The European grocery market is currently worth €2 trillion, but access to customers for high-quality, smaller producers is still tricky and blocked by incumbents. Crisp is taking advantage of consumers moving online, and wanting fresher food.

Tom Peeters, CEO and co-founder of Crisp, told my via online interview that “the differentiation on our model is that we offer quality and convenience. So, fish is super fresh fruits and produce is super fresh, etc. We basically stay away from the standard supermarket proposition that everything is always there, and you manage long shelf life. We’d rather build a very short chain sourcing directly at the source and bringing it in a very convenient way to you.”

He said it’s not a 15 minute delivery but the next day in order to ensure freshness. “The typical customer is a young family. An average order is 45 products and rather than offering all the brands, we on-boarded the long-tail of food producers in our digital marketplace, so we sourced from over 600 sources of food.”

He said: “Food in Holland is 40 billion euros, in Germany it is 200 billion. I think Europe combined it’s over two or 3 trillion. So that means basically we don’t need to spread thin over many countries in order to build a healthy business, not just healthy products, so we make money on every customer order.”

Founded in 2018, by serial entrepreneurs Tom Peeters, Michiel Roodenburg and Eric Klaassen Crisp claims to be now one of the fastest-growing supermarkets in the Netherlands, with a seven-fold in sales in 2020 and more than 85% of sales coming from repeat customers, it says.

Bao-Y van Cong, Investment Director at Target Global, headquartered in Berlin, said: “Crisp is building a world-class technology platform that is of value to both consumers and producers. The way we buy our food has not changed a lot since the 1950’s, creating inefficiencies in quality, affordability, and convenience. Crisp reflects the changing relationship that consumers today have with food: The European market for grocery shopping is starting to move online fast, super-accelerated by the pandemic. At the same time, we see a massive surge in demand for fresh and transparently sourced food.”

#adyen, #amsterdam, #berlin, #europe, #food, #food-waste, #germany, #grocery-store, #netherlands, #retailers, #shopping, #smartphone, #supermarkets, #takeaway-com, #target-global, #tc

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Walmart drops the $35 order minimum on its 2-hour ‘Express’ delivery service

In a move designed to directly challenge Amazon, Walmart today announced it’s dropping the $35 minimum order requirement for its two-hour “Express” delivery service, a competitor to Amazon’s “Prime Now.”  With Walmart Express Delivery, customers can order from Walmart’s food, consumables or general merchandise assortment, then pay a flat $10 fee to have the items arrive in two hours or less.

The service is useful for more urgent delivery needs — like diapers or a missing ingredient for a recipe, SVP of Customer Product, Tom Ward, noted in an announcement. They’re not meant to sub in for larger shopping trips, however — Express orders are capped at 65 items.

Today, Express Delivery is available in nearly 3,000 Walmart stores reaching 70% of the U.S. population, Walmart says. It builds on top of stores’ existing inventory of pickup and delivery time slots as a third option, instead of giving slots away to those with the ability to pay higher fees.

Like Walmart’s grocery and pickup orders, Express orders are shopped and packaged for delivery by Walmart’s team of 170,000 personal shoppers and items are priced the same as they are in-store. This offers Walmart a potential competitive advantage against grocery delivery services like Instacart or Shipt, for example, where products can be priced higher and hurried or inexperienced shoppers aren’t always able to find items or search the back, having to mark them as “out of stock.”

In theory, Walmart employees will have a better understanding of their own store’s inventory and layout, making these kind of issues less common. It will also have direct access to the order data, which will help it better understand what sells, what replacements customers will accept for out-of-stocks, when to staff for busy times, and more.

In addition to grocery delivery, Express Delivery competes with Amazon’s Prime Now, a service that similarly offers a combination of grocery and other daily essentials and merchandise. Currently, Prime Now’s 2-hour service has a minimum order requirement of $35 without any additional fees in many cases — though the Prime Now app explains that some of its local store partners will charge fees even when that minimum is met, and others may have higher order minimums, which makes the service confusing to consumers.

Walmart’s news comes at a time when Amazon appears to be trying to push consumers away from the Prime Now standalone app, too.

When you open the Prime Now app, a large pop-up message informs you that you can now shop Whole Foods and Amazon Fresh from inside the Amazon app. A button labeled “Make the switch” will then redirect you. Meanwhile, on Amazon’s website touting Prime’s delivery perks, the “Prime Now” brand name isn’t mentioned at all. Instead, Amazon touts free same-day (5 hour) delivery of best sellers and everyday essentials on orders with a $35 minimum purchase, or free 2-hour grocery delivery from Whole Foods and Fresh.

When asked why Amazon is pushing Prime Now shoppers to its main app, Amazon downplayed this as simply an ongoing effort to “educate” consumers about the option.

Walmart, on the other hand, last year merged its separate delivery apps into one.

After items are picked, Walmart works with a network of partners, including DoorDash, Postmates, Roadie, and Pickup Point, as well as its in-house delivery services, to get orders to customers’ doorsteps. This last-mile portion has become an key area of investment for Walmart and competitors in recent months — Walmart, for example, acquired assets from a peer-to-peer delivery startup JoyRun in November. And before that, a former Walmart delivery partner, Deliv, sold to Target.

This is not the first time Walmart has dropped order minimums in an attempt to better compete with Amazon and others.

In December, Walmart announced its Prime alternative known as Walmart+ would remove the $35 minimum on non-same day Walmart.com orders. But it had stopped short of extending that perk to same-day grocery until now.

To some extent, Walmart’s ability to drop minimums has to do with the logistics of its delivery operations. Walmart has been turning more its stores into fulfillment centers, by converting some into small, automated warehouses in partnership with technology providers and robotics companies, including Alert Innovation, Dematic and Fabric.

And because its stores are physically located closer to customers than Amazon warehouses, it has the ability to deliver a broad merchandise selection, faster, while also turning large parking lots into picking stations — another thing that could worry Amazon, which is now buying up closed mall stores for its own fulfillment operations. 

Walmart today still carries a $35 minimum on other pickup and delivery orders and same-day orders from Walmart+ subscribers.

#amazon, #ecommerce, #food, #grocery-store, #instacart, #prime, #prime-now, #retailers, #shipt, #target, #united-states, #walmart, #whole-foods

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Mexican online grocer Jüsto raises $65M in General Atlantic-led Series A

Jüsto, an online supermarket based in Mexico City, announced Tuesday it has raised $65 million in Series A round led by General Atlantic.

The amount is sizable for a Series A in general, but supersized for a LatAm startup. In fact, according to Pitchbook data cited by General Atlantic, the round represents the largest Series A raised in Latin America in the past decade.

Existing backers also participated in the round including Foundation Capital and Mountain Nazca.

Ricardo Weder, former president of Cabify (a large ride-sharing company operating in Latin America, Spain, and Portugal) founded Jüsto in 2019 with a mission to “disrupt the Latin American grocery industry.” It claims to be the first supermarket in Mexico with no physical store. Customers can buy their groceries directly from the website or via the app and Jüsto delivers the order to the customer’s location of choice.

The concept is clearly resonating with consumers as Jüsto saw impressive growth in 2020 with a 16-fold increase in revenue. 

Jüsto prides itself on working directly with fresh produce suppliers so that it can offer “the freshest” fruits, vegetables, meats and fish in the market. It also offers a variety of products such as pantry staples, personal hygiene and beauty, home and cleaning, drinks and pet-related items.

The startup only sells items from local suppliers, with whom it prides itself on developing fair trade agreements. (“Jüsto” means fair in Spanish) It also uses artificial intelligence to forecast demand and to try and reduce food waste at its micro-fulfillment centers. The company’s approach results in “competitive prices, lower transaction costs, and improved convenience to consumers by eliminating intermediaries in the supply chain,” according to the company.

Looking ahead, Jüsto plans to use its new capital on expanding across Mexico and Latin America as a whole, enhancing its last-mile logistics infrastructure and marketing initiatives.

Luis Cervantes, managing director and head of Mexico City for General Atlantic, believes Mexico is at an inflection point in its transition to a digital economy.

“We see Jüsto as leading the way in the high-growth online grocery space with its technology-centric, mission-driven approach,” he said in a written statement. “Under Ricardo’s leadership, we believe Jüsto is positioned for significant expansion as it disrupts and transforms the legacy grocery value chain.”

 Jüsto marks General Atlantic’s fifth investment in Mexico since 2014. Since then, General Atlantic has invested nearly USD $1 billion in what it describes as “high-growth” Mexican companies. 

The financing brings Jüsto’s total raised to over $100 million. Other investors include FEMSA Ventures, S7V, Elevar Equity, Bimbo Ventures, Quiet Capital, Sweet Capital, H2O Capital  and SV LatAm Capital, among others.

#artificial-intelligence, #ecommerce, #foundation-capital, #funding, #general-atlantic, #grocery-store, #justo, #latin-america, #mexico, #mexico-city, #recent-funding, #startups, #tc

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Good Eggs raises $100M and plans to launch in Southern California

Grocery delivery startup Good Eggs is announcing that it has raised $100 million in new funding, and that it’s planning to launch in Southern California in either the summer or fall of this year.

Parts of this story might sound familiar to readers familiar with Good Eggs — when the startup raised its most recent, $50 million funding round in 2018, CEO Bentley Hall also mentioned plans for geographic expansion.

It seems, however, that the company has found plenty of opportunity for growth while remaining focused on the San Francisco Bay Area. Good Eggs says that in the past year, revenue has grown to the nine figures (more than $100 million), hired more than 400 employees and nearly doubled its customer base.

Hall also noted that the company opened a new, larger warehouse in Oakland just a few days before shelter-in-place orders took effect last March. So the team was busy enough trying to operate a new warehouse, meet increased demand for grocery delivery and keep workers safe in the process.

Good Eggs box

Image Credits: Good Eggs

And while the grocery delivery market has become increasingly competitive, Hall argued that Good Eggs stands out thanks to the quality and breadth of its products — 70% of its products are locally sourced, and it often delivers them within 48 hours of harvesting.

“There’s lots of people offering groceries, meal kits, prepared meals, alcohol — we do all of that, with a certain sourcing criteria,” Hall said. As a result, Good Eggs has become the “primary source” for many of its consumers, representing 65% to 85% of their home food purchases.

It’s also worth noting that this represents a bit of a turnaround for the company, after the it shut down operations in Los Angeles, New York City and New Orleans in 2015, with Hall coming on as CEO shortly afterwards. And it sounds like he isn’t in a rush to launch in a bunch of new markets.

“I think of [Southern California] not as one big region, but as several small sub-regions,” Hall said. “There’s the LA region, northern San Diego, Orange County — those areas collectively are the size of two or three Bay Areas. That’s a meaningful increase in our addressable market.”

Good Eggs CEO Bentley Hall

Good Eggs CEO Bentley Hall

The new funding was led by Glade Brook Capital Partners, with participation from GV, Tao Invest, Finistere Ventures and Rich’s, as well as previous investors Benchmark Partners, Index Ventures, S2G, DNS Capital and Obvious Ventures. Glade Brook’s J.P. Van Arsdale is joining the company’s board of directors.

“The grocery market is undergoing fundamental change and the shift to e-commerce and higher quality products and services is accelerating,” Van Arsdale said in a statement. “Good Eggs is experiencing rapid growth with strong unit economics and is well-positioned to become a category-defining leader. We are excited to partner with their team to help drive future growth and expansion.”

In addition to geographic expansion, Hall said the money will allow Good Eggs to continue adding new products and to find ways to improve the e-commerce experience.

In addition to the funding, Good Eggs is also announcing that it has hired Vineet Mehra as its chief growth and customer experience officer. Mehra was previously chief marketing officer and chief customer officer at Walgreens Boots Alliance, and before that as executive vice president and global chief marketing and revenue officer at Ancestry.

#bentley-hall, #ecommerce, #food, #food-and-drink, #funding, #fundings-exits, #glade-brook-capital-partners, #good-eggs, #grocery-store, #los-angeles, #oakland, #retailers, #san-diego, #startups

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UK on-demand supermarket Weezy raises $20M Series A led by NYC’s Left Lane Capital

Weezy — an on-demand supermarket that delivers groceries in fast times such as 15 minutes — has raised $20 million in a Series A funding led by New York-based venture capital fund Left Lane Capital. Also participating were UK-based fund DN Capital, earlier investors Heartcore Capital and angel investors, notably Chris Muhr, the Groupon founder.

Although the company hasn’t made mention of a later US launch, the presence of US investors would tend to suggest that. Weezy is reminiscent of Kozmo, the on-demand groceries business from the dotcom boom of the late ’90s. However, it differs from Postmates in that it doesn’t do pickups.

The cash injection will be used to expand its grocery delivery service across London and the broader UK, and open two fulfillment centers across London. Some 40 more UK sites are planned by the end of 2021 and it plans to add 50 new employees in the next 4 months.

Launched in July 2020, Weezy uses its own delivery people on pedal cycles or electric mopeds to deliver goods in less than 15 minutes on average. As well as working with wholesalers, it also sources groceries from independent bakers, butchers and markets.

It has pushed at an open door during the pandemic. In Q2 2020 half a million new shoppers joined the grocery delivery sector, which is now worth £14.3bn in the UK, according to research.

Kristof Van Beveren, Co-founder and CEO of Weezy, said in a statement: “People are no longer happy to wait around for deliveries, and there is strong demand for a more efficient service.”

Weezy’s co-founders are Kristof Van Beveren and Alec Dent. Van Beveren is formerly from the consumer goods world at Procter & Gamble and McKinsey & Company, while Dent headed up operations at UK startup Drover and business development at BlaBlaCar.

Harley Miller, managing partner, Left Lane Capital, commented: “Weezy’s founding team have the right balance of drive, experience and temperament to lead in e-commerce innovation
and convenience within the UK grocery market and beyond.”

Nenad Marovac, founder and managing partner, DN Capital, said: “Even before the pandemic, interest in online grocery shopping was on the rise. The first time I ordered from Weezy, my delivery arrived in seven minutes and I was hooked.”

#alec-dent, #delivery, #distribution, #dn-capital, #europe, #grocery-store, #groupon, #heartcore-capital, #kristof-van-beveren, #left-lane-capital, #london, #managing-partner, #marketing, #mckinsey-company, #nenad-marovac, #new-york, #procter-gamble, #retailers, #tc, #united-kingdom, #united-states, #weezy

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Walmart partners with smart box maker HomeValet for grocery delivery pilot

Walmart announced today it will soon begin to pilot a new solution that could eventually allow the retailer to deliver groceries to customers’ homes 24 hours per day. The company is partnering with HomeValet, the maker of a temperature-controlled smart box that’s placed outside the home. Customers’ groceries can be delivered, contact-free, to the secure box and kept cold at any time — even if the customer isn’t at home.

The smart boxes will be tested initially with customers near Walmart’s headquarters in Bentonville, Arkansas, starting this spring. There won’t be a way to sign up for the service. Instead, Walmart will conduct outreach to its current delivery customers in Northwest Arkansas to learn of their interest in participating.

The HomeValet boxes themselves are an internet-of-things platform which offer three temperature-controlled zones, making them capable of storing frozen, refrigerated and pantry items. The boxes communicate with the delivery provider’s device, which gives them secure access to the smart box at the time of the delivery to place the items inside.

According to the HomeValet FAQ, the boxes also disinfect the exposed surfaces of delivered items as well as the inside of the box itself, in between deliveries, using UVC light.

This could appeal to customers who have been trying to reduce their exposure to the novel coronavirus by wiping down all their groceries before putting them away. (The HomeValet website, however, makes no specific claims about COVID-19. Instead, it simply says the UV-C LED disinfection method it uses can create “inhospitable environments to microorganisms such as bacteria, viruses, molds and other pathogens.”)

HomeValet notes that Walmart customers will be the first to gain access to its boxes, as the product is just now going to market. The general public will be able to pre-order boxes for themselves later this year, with pricing still to be announced. HomeValet intends to eventually sell to both consumers and retailers.

HomeValet, a D.C. Metro area-based startup, was founded by father and son team, John and Jack Simms, years before the COVID-19 pandemic with the goal of offering more secure home deliveries. However, the pandemic created a new sense of urgency inside the company to get their product to market as consumers’ needs transformed overnight and continued at an accelerated pace, they’ve said.

As a result, HomeValet acquired an Indiana-based engineering firm, Envolve Engineering LLC, founded by former Whirlpool engineers, back in September. The company touted the deal at the time as a way to bring the capabilities of a Fortune 500 organization to its faster and more nimble startup.

“Consumers want convenience and peace of mind now more than ever. HomeValet’s safe, temperature-controlled Smart Box and app, can enable 24/7 secure deliveries whether customers are occupied at home or receiving remotely,” said John Simms, HomeValet co-founder and CEO. “We’re excited for Walmart customers to be some of the first to enjoy contactless, unattended home delivery,” he added.

Though Walmart envisions how a smart box could allow it to expand its delivery hours, it won’t be offering 24/7 deliveries during the pilot. Instead, the focus of the pilot will be to learn more about if and how its customers like to interact with this technology and how Walmart might incorporate it into its operations going forward.

HomeValet is one of many solutions to date that Walmart has tested to make grocery delivery more efficient. Not all those tests have rolled out broadly. For example, Walmart in 2019 began to trial an in-home grocery delivery service that allows Walmart delivery drivers to enter the home through a smart lock system and, in some cases, put groceries away in the customer’s fridge. Following the COVID-19 outbreak, Walmart pulled back on the in-kitchen program, which is still only operating in Pittsburgh. (InHome delivery is also offered in Kansas City, Vero Beach and West Palm Beach, but groceries are left inside the door.)

Walmart didn’t disclose further details about the nature of its partnership with HomeValet, but said there’s no cost to the customers during the pilot period. More information will be available as the program goes to launch in the spring.

#delivery, #ecommerce, #food-delivery, #grocery-delivery, #grocery-store, #retailers, #walmart

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Who’s building the grocery store of the future?

The future of grocery stores will be a win-win for both stores and customers.

On one hand, stores want to decrease their operational expenditures that come from hiring cashiers and conducting inventory management. On the other hand, consumers want to decrease the friction of buying groceries. This friction includes both finding high-quality groceries at consumers’ personal price points and waiting in long lines for checkout. The future of grocery stores promises to alleviate, and even eliminate, these points of friction.

Amazon’s foray into grocery store technology provides a succinct introduction into the state of the industry. Amazon’s first act was its Amazon Go store, which opened in Seattle in early 2018. When customers enter an Amazon Go store, they swipe the Amazon app at the entrance, enabling Amazon to link purchases to their accounts. As they shop, a collection of ceiling cameras and shelf sensors identify the items and places them in a a virtual shopping cart. When they’re done shopping, Amazon automatically charges for the items they grabbed.

Earlier this year, Amazon opened a 10,400-square-foot Go store, about five times bigger than the largest prior location. At larger store sizes, however, tracking people and products gets more computationally complex and larger SKU counts become more difficult to manage. This is especially true if the computer vision AI-based system also must be retrofitted into buildings that come with nooks and crannies that can obstruct camera angles and affect lighting.

Perhaps Amazon’s confidence in its ability to scale its Go stores comes from vertical integration that enables it to optimize customer experiences through control over store format, product selection and placement.

While Amazon Go is vertically integrated, in Amazon’s second act, it revealed a separate, more horizontal strategy: Earlier this year, Amazon announced that it would license its cashierless Just Walk Out technology.

In Just Walk Out-enabled stores, shoppers enter the store using a credit card. They don’t need to download an app or create an Amazon account. Using cameras and sensors, the Just Walk Out technology detects which products shoppers take from or return to the shelves and keeps track of them. When done shopping, as in an Amazon Go store, customers can “just walk out” and their credit card will be charged for the items in their virtual cart.

Just Walk Out may enable Amazon to penetrate the market much more quickly, as Amazon promises that existing stores can be retrofitted in “as little as a few weeks.” Amazon can also get massive amounts of data to improve its computer vision systems and machine learning algorithms, accelerating the speed with which it can leverage those capabilities elsewhere.

In Amazon’s third and latest act, Amazon in July announced its Dash Cart, a departure from its two prior strategies. Rather than equipping stores with ceiling cameras and shelf sensors, Amazon is building smart carts that use a combination of computer vision and sensor fusion to identify items placed in the cart. Customers take barcoded items off shelves, place them in the cart, wait for a beep, and then one of two things happens: Either the shopper gets an alert telling him to try again, or the shopper receives a green signal to confirm the item was added to the cart correctly.

For items that don’t have a barcode, the shopper can add them to the cart by manually adding them on the cart screen and confirming the measured weight of the product. When a customer exits through the store’s Amazon Dash Cart lane, sensors automatically identify the cart, and payment is processed using the credit card on the customer’s Amazon account. The Dash Cart is specifically designed for small- to medium-sized grocery trips that fit two grocery bags and is currently only available in an Amazon Fresh store in California.

The pessimistic interpretation of Amazon’s foray into grocery technology is that its three strategies are mutually incompatible, reflecting a lack of conviction on the correct strategy to commit to. Indeed, the vertically integrated smart store strategy suggests Amazon is willing to incur massive fixed costs to optimize the customer experience. The modular smart store strategy suggests Amazon is willing to make the tradeoff in customer experience for faster market penetration.

The smart cart strategy suggests that smart stores are too complex to capture all customer behaviors correctly, thus requiring Amazon to restrict the freedom of user behavior. The more charitable interpretation, however, is that, well, Amazon is one of the most customer-centric companies in the world, and it has the capital to experiment with different approaches to figure out what works best.

While Amazon serves as a helpful case study to the current state of the industry, many other players exist in the space, all using different approaches to build an aspect of the grocery store of the future.

Cashierless checkout

According to some estimates, people spend more than 60 hours per year standing in checkout lines. Cashierless checkout changes everything, as shoppers are immediately identified upon entry and can grab products from the shelf and leave the store without having to interact with a cashier. Different companies have taken different approaches to cashierless checkout:

Smart shelves: Like Amazon Go, some companies utilize computer vision mounted on ceilings and advanced sensors on shelves to detect when shoppers take an item from the shelf. Companies associate the correct item with the correct shopper, and the shopper is charged for all the items they grabbed when they are finished with their shopping journey. Standard Cognition, Zippin and Trigo are some of the leaders in computer vision and smart shelf technology.

Smart carts and baskets: Like Amazon’s Dash Cart, some companies are moving the AI and the sensors from the ceilings and shelves to the cart. When a shopper places an item in their cart, the cart can detect exactly which item was placed and the quantity of that item. Caper Labs, for instance, is pursuing a smart cart approach. Its cart has a credit card reader for the customer to checkout without a cashier.

Touchless checkout kiosks: Touchless checkout kiosk stations use overhead cameras that verify and charge a customer for their purchase. For instance, Mashgin built a kiosk that uses computer vision to quickly verify a customer’s items when they’re done shopping. Customers can then pay using a credit card without ever having to scan a barcode.

Self-scanning: Some companies still require customers to scan items themselves, but once items are scanned, checkout becomes quick and painless. Supersmart, for instance, built a mobile app for customers to quickly scan products as they add them to their carts. When customers are finished shopping, they scan a QR code at a Supersmart kiosk, which verifies that the items in the cart match the items scanned using the mobile app. Amazon’s Dash Cart, described above, also requires a level of human involvement in manually adding certain items to the cart.

Notably, even with the approaches detailed above, cashiers may not be going anywhere just yet because they still play important roles in the customer shopping experience. Cashiers, for instance, help to bag a customer’s items quickly and efficiently. Cashiers can also conduct random checks of customer’s bags as they leave the store and check IDs for alcohol purchases. Finally, cashiers also can untangle tricky corner cases where automated systems fail to detect or validate certain shoppers’ carts. Grabango and FutureProof are therefore building hybrid cashierless checkout systems that keep a human in the loop.

Advanced software analytics

#amazon, #amazon-go, #artificial-intelligence, #cashierless-checkout, #column, #ecommerce, #facial-recognition, #food, #grocery-store, #inventory-management, #labor, #payments, #point-of-sale, #real-estate, #retail, #robotics

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China’s tech firms rush to deliver solutions for grocery shopping

Nearly all of China’s largest internet firms have established a presence in online grocery. Just this week, news arrived that Alibaba co-led the $196 million C3 funding round of Nice Tuan, the two-year-old grocery group-buying firm’s fourth round year to date.

People in China shop online for almost everything, including groceries. At first, grocery e-commerce appears to have caught on mainly among the digitally-savvy who have grown reliant on the convenience of e-commerce and don’t mind paying a bit more for delivery. Many elderly shoppers, on the other hand, still prefer visiting traditional wet markets where ingredients are generally cheaper.

Now tech companies in China are scrambling to capture grocery shoppers of all ages. A new business model that’s getting a lot of funding is that of Nice Tuan, the so-called community group buying.

In conventional grocery e-commerce, an intermediary platform like Alibaba normally connects individual shoppers to an array of merchants and offers doorstep delivery, which arrives normally within an hour in China.

A community group-buying, in comparison, relies on an army of neighborhood-based managers — often housewives looking for part-time work — to promote products amongst neighbors and tally their orders in group chats, normally through the popular WeChat messenger. The managers then place the group orders with suppliers and have the items delivered to pick-up spots in the community, such as a local convenience store.

It’s not uncommon to see piles of grocery bags at corner stores wating to be fetched these days, and the model has inspired overseas Chinese entrepreneurs to follow suit in America.

Even in China where e-commerce is ubiquitous, the majority of grocery shopping still happens offline. That’s changing quickly. The fledgling area of grocery group-buying is growing at over 100% year-over-year in 2020 and expected to reach 72 billion yuan ($11 billion) in market size, according to research firm iiMedia.

It sounds as if grocery group-buying and self-pickup is a step back in a world where doorstep convenience is the norm. But the model has its appeal. Texting orders in a group chat is in a way more accessible for the elderly, who may find Chinese e-commerce apps, often overlaid with busy buttons and tricky sales rules, unfriendly. With bulk orders, sales managers might get better bargains from suppliers. If a group-buying company is ambitious, it can always add last-mile delivery to its offering.

Chinese tech giants are clearly bullish about online grocery and diversifying their portfolios to make sure they have a skin in the game. Tencent is an investor in Xingsheng Youxuan, Nice Tuan’s major competitor. Food delivery service Meituan has its own grocery arm, offering both the traditional digital grocer as well as the WeChat-based group-buy model. E-commerce upstart Pinduoduo similarly supports grocery group purchases. Alibaba itself already operates the Hema supermarket, which operates both online and offline markets.

#alibaba, #alibaba-group, #asia, #china, #e-commerce, #ecommerce, #food, #funding, #grocery-store, #group-buying, #meituan-dianping, #online-grocery, #pinduoduo, #tc, #tencent, #wechat

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Instacart, in partnership with ALDI, will support SNAP EBT for online groceries

Instacart is making its grocery delivery and pickup services more accessible to lower-income customers by offering customers the ability to pay for groceries using their SNAP (Supplemental Nutrition Assistance Program) benefits. This is the first time Instacart shoppers have been able to use government assistance programs when paying for groceries, and follows earlier moves by larger retailers, including Amazon, Walmart, and others in extending SNAP EBT to online grocery.

In Instacart’s case, the option is being made available in partnership with ALDI, which will offer the ability for SNAP EBT participants to access fresh food and other staples using the online service.

When shopping, Instacart users will be able to add ALDI’s EBT SNAP-eligible items to their cart, then select how much of their benefits they want to allocate to their order before checking out.

Image Credits: Instacart

The program will launch over the new few weeks, and will first arrive at ALDI’s over 60 Georgia stores before expanding to over 570 stores across Illinois, California, Florida and Pennsylvania in the months ahead.

Instacart says it runs its Customer and Shopper Care team from Atlanta, which one reason why it selected Georgia as the debut market — adding it was important to first support the communities where its own employees live and work.

Today, online grocery shopping is often seen as a luxury service, but that should not be the case. Often, it’s just as affordable to shop online than in-store (if using the pickup option, at least), as customers can more easily compare prices with other retailers online. For some lower-income customers, online shopping can also save time when they’re stretched between jobs and family commitments.

The pandemic has now further complicated access to food for those on SNAP benefits, and in particular, for high-risk individuals. These customers now have to take risks with their lives and health to shop in-store, making online grocery more of a necessity.

“The introduction of Instacart’s EBT SNAP payments comes at a time when food insecurity in the U.S. has compounded as the nation continues to be impacted by COVID-19,” Instacart stated in its announcement. “According to Feeding America, due to the effects of the pandemic, more than 54 million people may experience food insecurity in 2020, which includes a potential 18 million children. In Georgia specifically, food insecurity impacts 12.5% of the population and disproportionately affects communities of color,” it noted.

Instacart is now one of several online retailers supporting SNAP EBT for groceries.

Before the coronavirus outbreak, the U.S. Dept. of Agriculture had been working to make online grocery more accessible to SNAP recipients through an online purchasing pilot program with support of retailers including Amazon, Walmart, ShopRite, and others. The pilot retailers  have made it possible to shop for groceries online, then pay using SNAP EBT.

ALDI and Instacart are not listed on the USDA’s website as program participants, however.

#e-commerce, #ecommerce, #georgia, #grocery-store, #instacart, #online-grocery, #online-shopping, #retailers, #supplemental-nutrition-assistance-program

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Businesses reducing trash and plastic consumption are beginning to look like treasure to some VCs

Zuleyka Strasner didn’t set out to become an advocate for zero-waste consumption.

The former manager of partner operations at Felicis Ventures had initially pursued a career in politics in the UK before a move to San Francisco with her husband. It was on their honeymoon on a small island in the Caribbean that Strasner says she first saw the ways in which plastic use destroyed the environment.

That experience turned the onetime political operative into a zero-waste crusader — a transformation that culminated in the creation of Zero Grocery, a subscription-based grocery delivery service that sells all of its goods in zero-waste packaging.

Strasner returned from Corn Island with a purpose to reduce her plastic use and found inspiration in the social media posts and work of women like Anamarie Shreves, the founder of Fort NegritaLauren Singer, who became known for her TedX Teen talk on living waste free and launched Package Free; and Bea Johnson, who became a social media celebrity for her work reducing consumption and living waste-free.

Following in the zero-waste footsteps of others eventually led Strasner from her home in Redwood City, Calif. to San Francisco’s Rainbow Grocery, a food co-op dedicated to sustainable business practices. That 45 minute drive and hour spent in a store juggling jars, bottles, and shakers to perform basic shopping tasks convinced Strasner that there had to be a better way to shop zero-waste — especially for busy parents, professionals, and singles.

So she built one.

“I may have had no team and no money, but I had data. I spent 6 months alpha testing the early version of Zero. I was working from my apartment (cue cliché) getting real sign-ups, servicing real customers and doing a lot of growth hacking,” Strasner wrote in a post on Medium about the company’s early fundraising efforts. “It was really janky, but going between research reports, market data and the data I was collecting from real-people, I had something tangible to put under investors noses to back up how Zero looks at scale.”

Living through COVID-19 is a literal trash heap 

Strasner’s push to create alternatives to single-use plastic in grocery delivery comes as the use of single use plastics skyrockets and grocery delivery services surge — putting her new company in the enviable position of solving an obvious problem that’s becoming more apparent to everyone.

An August study from the investment bank Jefferies on single-use plastic identified the surge in plastic use and laid the blame at the feet of the pandemic.

“Bans and taxes have been rolled back, physical and chemical recycling activity has decreased, and virus concerns may have reduced consumers’ desire to minimize consumption of single-use plastics,” said the report, entitled “Drowning in Plastics,” which was quoted in Fortune.

While much of the use in home delivery and consumer goods has been offset by reductions in the use of plastics in manufacturing as industries slowed down production, the reopening of international economies means that there’s the potential for renewed industrial use even as consumers renew their love affair with plastic.

Companies like Strasner’s present a way forward for consumers willing to pay a premium for the waste reduction — and she’s not alone.

Changing the supply chain for food and consumer packaged goods 

Lauren Singer was already two years into operating her (profitable and cash-flow positive since “day one”) Brooklyn-based and e-commerce stores when she raised $4.5 million for her plastic free and zero-waste wares last September.

The image of the years worth of waste she claimed to be able to fit into a single jar had made her a viral sensation on Instagram and she’d managed to turn that post, and her celebrity, into a business. She wasn’t alone. Bea Johnson, another star of the zero-waste movement wrote the book on going zero waste and has turned that into a business of her own.

At Package Free, products range from a line of plastic-free and zero-waste lifestyle products like bamboo toothbrushes and mason jars, to natural tooth powder alongside natural pacifiers, and a dog shampoo bar. The company’s packaging is composed of 100% up-cycled post-consumer box with paper wrapping and paper tape, according to the company.

Meanwhile, another New York-based startup, Fresh Bowl, raised $2.1 million in January to bring zero-waste packaging and circular economic principles to the bowl business. The company, founded by Zach Lawless, Chloe Vichot and Paul Christophe, uses vending machines around New York that could hold roughly 220 prepared meals with a five-day shelf-life. Those meals were distributed in reusable containers that customers could return for a refund of a deposit.

Before the pandemic hit in the early months of the company’s financing each of its machines were on track to bring in $75,000 in revenue — and roughly 85% of the company’s containers were being returned for re-use according to a January interview with chief executive officer Zach Lawless.

Roughly 40% of landfilled material is food or food packaging, Lawless said. “For consumers it’s hard to make that trade-off between convenience and sustainability,” he said. Companies like Fresh Bowl and Strasner’s Zero Grocery are each trying to make that tradeoff a little easier.

Designing a zero-waste delivery service

Zero Grocery currently counts around 850 unique items in stock and expects to be over 1,000 items at the end of the year — and all delivered in reusable or compostable packaging, according to Strasner.

“Our aim is to not create anything that would go into the landfill and really limit what would need to be recycled. For the products that are single use… they are banded toilet rolls and they’re wrapped in a single sheet of paper. It’s all compostable,” said Strasner. 

Zero Grocery’s current operations are confined to the Bay Area, but the company has seen its growth triple when the pandemic hit in March and then grow twenty times over the ensuing months, according to Strasner. And unlike companies like Singer’s and Lawless’, Strasner didn’t have the luxury of reaching out to a handful of investors for a small cap table.

“I have continuously raised throughout this period to get to this moment in time. Initially i believed that we would have a more typical round structure, maybe myself misunderstanding that I’m an atypical founder,” Strasner said. As a Black, trans, woman, the path to “yes” from investors involved over 250 pitches and an undue amount of “no’s”. 

An early champion was Charles Hudson, the founder of Precursor Ventures, who helped lead a seed round for the company back in 2019. Hudson’s investment allowed the company to launch its first service, an exclusive, á la carte, home delivery service. It was basically Strasner wheeling a cart brimming with produce, grains and compostable items into customers’ homes and filling their own jars.

Zero Grocery chief executive Zuleyka Strasner on an early delivery run for her company. Image Credit: Zero Grocery

Ultimately untenable, the first service gave Strasner a view into the ways in which grocery delivery worked, and allowed her to create the second version of the service.

That was more like a latter day milkman service, where the company would deliver next-day, door-to-door delivery of over 100 zero-waste products. These were pre-packaged goods that the company just dropped off and then had customers return (a similar thesis to Fresh Bowl’s retail strategy).

That was around November 2019, when the company launched publicly across the Bay Area with our new offering. The initial traction allowed Strasner to raise another $500,000 from existing investors and new firms like Chingona Ventures and Cleo Capital.

“At that point we had sixty members on the platform and had done four figures of revenue of that month,” Strasner said.

Then COVID-19 hit the Bay Area and sales started soaring. To meet the needs of a strained supply chain — since the company doesn’t use any third-party services for delivery and involves a heavy bit of sanitization of containers so they can be re-used — Zero Grocery raised another $700,00 from Incite.org, Gaingels, Arlan Hamilton and MaC Ventures.

As Strasner wrote in a Medium post:

When COVID-19 hit the US, our team was among the first companies to go into lockdown. By late February, only essential personnel were on the warehouse floor for order preparation and delivery in head-to-toe PPE. Soon after that, the Bay Area went into full shelter-in-place.

Much like other companies in the grocery delivery space, our demand skyrocketed. To keep up, we grew our team in half the time we anticipated and launched features that were half-baked. Customer experience is tantamount, and our underdog team fought tooth-and-nail to preserve that despite long hours, little sleep, and no time for planning. We abandoned our notions of roles and split up the responsibilities of customer service, order packing, feature development, and more.

Strasner’s experiences as an immigrant, Black, trans founder mean that she thinks about sustainability not just in environmental terms, but also social sustainability. That’s why she works with the staffing service R3 Score to provide opportunities for people who had criminal records. The service provides a risk analysis for employers of job applicants who have a criminal record, to give employers a better sense of their viability as an employee.,

As she told Fast Company, “This is a highly capable, untapped labor force who is ready to work and is actively looking for opportunities… This is not merely a COVID stopgap measure for us; it’s something we’re incorporating into our business for the long-term.”

More money, fewer problems? 

Zero Grocery now counts many thousands of customers on its service and has just raised another $3 million, led by the investment firm 1984, to grow the business. The company charges $25 for a membership that includes free deliveries and collects empty containers. Non-members pay a $7.99 delivery free for groceries priced competitively with Whole Foods and other higher end grocery options.

Right now, Zero Grocery occupies the as the only fully zero-waste online grocery store in the U.S., and its numbers are growing quickly.

But that kind of success can breed competition, and there are certainly no shortage of would-be competitors waiting in the wings.

Already some of the largest consumer packaged goods companies in the U.S. have rolled out a version of zero-waste delivery services for their products. These are companies like Procter & Gamble and Froneri, the owner of ice cream brand Haagen Dazs (and others). In April, their reusable, no-waste delivery service Loop launched nationwide to provide customers across the country with recyclable and reusable packaged containers.

The commercialization of new kinds of packaging technologies from companies like NotPla, Varden, and Vericool mean that compostable material packaging could become a wider solution to the waste dilemma.

Still, these solutions to packaging waste come with their own issues, like the sustainability of the supply chain used to make them and the carbon footprint of the manufacturing processes. In instances like these reducing the need to manufacture new material is likely the most sustainable option.

And, in many cases, companies like Zero Grocer help their vendors do a lot of the work to reduce the footprint of their own supply chains.

“A lot of work is to enable them to exist within a plastic free supply chain using our technology,” said Strasner of the work she’d done with vendors. 

“I started Zero to make zero-waste grocery shopping effortless and empower people to protect the planet while shopping conveniently,” she said. That’s a notion everyone can treasure. 

#arlan-hamilton, #charles-hudson, #cleo-capital, #economy, #felicis-ventures, #food, #grocery-store, #haagen-dazs, #lauren-singer, #mac-ventures, #precursor-ventures, #procter-gamble, #tc, #varden, #vericool, #whole-foods

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Missfresh racks up $495 million in funding as China’s e-grocery booms

The COVID-19 lockdown around the world introduced online grocery to many shoppers for the first time, boosting an industry that had long drawn skepticism. In China particularly, the older generations often worry about buying perishable food without scrutinizing them in person.

Still, venture investors are bullish on the future of online grocery. One beneficiary is China’s Missfresh, which announced (in Chinese) Thursday a new funding round of $495 million led by a fund under state-backed China International Capital Corporation. Other investors include ICBC International Securities, Tencent, Abu Dhabi Capital Group, Tiger Global, and a fund managed by the government of Changshu county, home to Missfresh’s east China headquarters.

By placing mini-warehouses closer to customers, the six-year-old startup is able to offer 30-minute delivery to households across 16 Chinese cities.

Few players are able to compete in e-grocery, for the business requires early investment in large-scale cold chains and expensive user acquisition to make home deliveries profitable. Unsurprisingly, almost all forerunners in China’s online grocery are backed by or collaborate with an internet giant.

Missfresh is deeply integrated into Tencent’s WeChat messenger. Alibaba has its own in-house Freshhippo supermarket chain that comes with a delivery service. Restaurant delivery platform Meituan added grocery to its offering last year. Dingdong Maicai is a rare case without the backing of a major tech firm, seeking funds from venture capital institutions like Qiming Venture Partners and Gaorong Capital.

Some question how many new adaptors will stick to on-demand grocery shopping in post-lockdown life. Research suggests they may. China saw 11.6 million more daily active users of e-grocery in May compared to the same period a year before, according to research firm QuestMobile. Consumers may be hooked to the convenience, but those who see their corner stores shutter due to lost business during the lockdown don’t have a choice but to go digital.

#asia, #china, #e-grocery, #ecommerce, #grocery-store, #meituan-dianping, #missfresh, #online-grocery, #qiming-venture-partners, #tiger-global

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Shelf Engine has a plan to reduce food waste at grocery stores, and $12 million in new cash to see i

For the first few months it was operating, Shelf Engine, the Seattle-based company that optimizes the process of stocking store shelves for supermarkets and groceries, didn’t have a name.

Co-founders Stefan Kalb and Bede Jordan were on a ski trip outside of Salt Lake City about four years ago when they began discussing what, exactly, could be done about the problem of food waste in the US.

Kalb is a serial entrepreneur whose first business was a food distribution company called Molly’s, which was sold to a company called HomeGrown back in 2019.

A graduate of Western Washington University with a degree in actuarial science, Kalb says he started his food company to make a difference in the world. While Molly’s did, indeed, promote healthy eating, the problem that Kalb and Bede, a former Microsoft engineer, are tackling at Shelf Engine may have even more of an impact.

Food waste isn’t just bad for its inefficiency in the face of a massive problem in the US with food insecurity for citizens, it’s also bad for the environment.

Shelf Engine proposes to tackle the problem by providing demand forecasting for perishable food items. The idea is to wring inefficiencies out of the ordering system. Typically about a third of food gets thrown out of the bakery section and other highly perishable goods stocked on store shelves. Shelf Engine guarantees use for the store and any items that remain unsold the company will pay for.

Image: OstapenkoOlena/iStock

Shelf Engine gets information about how much sales a store typically sees for particular items and can then predict how much demand for a particular product there will be. The company makes money off of the arbitrage between how much it pays for goods from vendors and how much it sells to grocers.

It allows groceries to lower the food waste and have a broader variety of products on shelves for customers.

Shelf Engine initially went to market with a product that it was hoping to sell to groceries, but found more traction by becoming a marketplace and perfecting its models on how much of a particular item needs to go on store shelves.

The next item on the agenda for Bede and Kalb is to get insights into secondary sources like imperfect produce resellers or other grocery stores that work as an outlet.

The business model is already showing results at around 400 stores in the Northwest, according to Kalb and it now has another $12 million in financing to go to market.

The funds came from Garry Tan’s Initialized and GGV (and GGV managing director Hans Tung has a seat on the company’s board). Other investors in the company include Foundation Capital, Bain Capital, 1984 and Correlation Ventures .

Kalb said the money from the round will be used to scale up the engineering team and its sales and acquisition process.

The investment in Shelf Engine is part of a wave of new technology applications coming to the grocery store, as Sunny Dhillon, a partner at Signia Ventures, wrote in a piece for TechCrunch’s Extra Crunch.

“Grocery margins will always be razor thin, and the difference between a profitable and unprofitable grocer is often just cents on the dollar,” Dhillon wrote. “Thus, as the adoption of e-grocery becomes more commonplace, retailers must not only optimize their fulfillment operations (e.g, MFCs), but also the logistics of delivery to a customer’s doorstep to ensure speed and quality (e.g., darkstores).”

Beyond Dhillon’s version of a delivery only grocery network with mobile fulfillment centers and dark stores, there’s a lot of room for chains with existing real estate and bespoke shopping options to increase their margins on perishable goods as well.

 

#bain-capital, #correlation-ventures, #e-grocery, #engineer, #food, #food-waste, #foundation-capital, #ggv, #grocery-store, #hans-tung, #marketing, #microsoft, #molly, #packaging, #partner, #real-estate, #retail, #retailers, #salt-lake-city, #seattle, #serial-entrepreneur, #shelf-engine, #signia-ventures, #sunny-dhillon, #tc, #united-states

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From farm to phone: A paradigm shift in grocery

In the blink of an eye, millennials, moms and grandparents alike have abandoned the decades-old practice of wandering dusty grocery aisles for the convenient and novel use of online grocery. While Instacart, Amazon Fresh and others have been offering an alternative to brick-and-mortar grocery for years, it is the pandemic that has classified them as essential businesses and more than ever afforded them a clear competitive advantage.

But these past couple months have seen not only drastic changes in consumer behavior, but also fundamental shifts in the business models adopted by grocers worldwide. These shifts are not temporary — indeed, they are here to stay, corona-catalyzed and permanent.

Fulfillment innovation can drive efficiency and cost savings

For the consumer, online grocery generally starts and ends the same way: They place their order on an app or website, and hours later it shows up at their door. But the ways those orders are being fulfilled run the gamut.

The most widely known approach comes from Instacart, which relies on hundreds of thousands of human shoppers fulfilling customers’ online grocery orders by shopping side-by-side with regular brick-and-mortar customers. The model clearly works for Instacart, which is valued at nearly $14 billion after its latest raise.

However, this model is far from ideal. Even pre-COVID, shoppers were known to crowd out regular customers, not to mention introduce high delivery costs and the element of human error to the fulfillment process.

One obvious solution has become the central fulfillment center, or CFC. CFCs are large, standalone warehouses — often serving distinct geographies — that can supply both brick-and-mortar stores and online grocery deliveries. As order volumes rise and consumers demand faster and faster delivery times, innovation has already been infused into the CFC model.

Some grocers, notably Kroger, believe that introducing robotic automation into CFCs via solutions such as Ocado can create economies of scale for fulfillment. These CFCs deploy fulfillment robots, controlled by air-traffic control tech, that run along a grid system and move goods via categorized crates. Kroger is continuing its investment in the model, recently announcing three new Ocado-automated CFCs in the West, Pacific Northwest and Great Lakes regions of the United States. The smallest location is over 150,000 square feet.

While Kroger remains uniquely attached to the CFC model, Albertsons/Safeway, Walmart and many others prefer the microfulfillment center (MFC). MFCs, typically far smaller in size (think ~10,000 square feet), are automated warehouses carved out of the back of existing stores that drive faster fulfillment times in a smaller geographic area, allowing chain stores to use their numerous geographic locations to act as effective fulfillment/delivery hubs for e-grocery coverage.

#advertising-tech, #albertsons, #amazon, #automation, #column, #e-grocery, #ecommerce, #extra-crunch, #food, #grocery-store, #instacart, #kroger, #logistics, #market-analysis, #merchandising, #michael-moritz, #natural-language-processing, #ocado, #online-grocery, #robotics, #safeway, #signia-venture-partners, #startups, #walmart, #whole-foods

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What grocery startup Weee! learned from China’s tech giants

When Larry Liu moved to the U.S. in 2003, one of the first challenges he experienced was the lack of Chinese ingredients available in local groceries. A native of Hubei, a Chinese province famous for its freshwater fish and lotus-inspired dishes, Liu got by with a limited supply found at local Asian groceries in the Bay Area.

His yearning for home food eventually prompted him to quit a stable financial management role at microcontroller company Atmel and go on to launch Weee!, an online market selling Asian produce, snacks and skincare products.

Like other players in grocery e-commerce, the five-year-old startup has seen exponential growth since the coronavirus outbreak as millions are confined to cooking and eating at home. Nearly a quarter of Americans purchased groceries online to avoid offline shopping during the pandemic, according to Statista data. Online grocery giants Instacart and Walmart Grocery boomed, both hitting record downloads.

In a Zoom call with TechCrunch, Liu, who’s now chief executive of Weee!, said that COVID-19 played a “very important role” in his company’s recent growth, and paved its way to profitability.

“It happened a lot faster than we expected, but we were growing rapidly with even more ambitious plans for expansion prior to COVID-19,” he said. “People are buying more because restaurants are closed. Many are first-time users of grocery delivery.”

The startup’s revenue is up 700% year-over-year and is estimated to generate an annual revenue in the lower hundreds of millions of dollars.

Online grocery, the WeChat way

#asia, #china, #coronavirus, #covid-19, #ecommerce, #extra-crunch, #food, #foodtech, #grocery-delivery, #grocery-store, #instacart, #larry-liu, #market-analysis, #online-grocery, #online-shopping, #pinduoduo, #startups, #walmart, #weee

0

Gatik adds autonomous box trucks to its ‘middle mile’ game plan

Gatik, the autonomous vehicle startup focused on the ‘middle mile’ of logistics, has added box trucks to its fleet as Walmart and other customers look for ways to boost efficiency and shore up the supply chain amid surging demand from consumers ordering goods online.

Gatik came out of stealth nearly a year ago with a game plan — and Walmart as a customer — to haul goods short distances for retailers and distributors using self-driving commercial delivery vans. The self-driving vehicles still have a human safety operator behind the wheel.

CEO and co-founder Gautam Narang has previously told TechCrunch that the company can fulfill a need in the market through a variety of use cases, including partnering with third-party logistics giants like Amazon, FedEx  or even the U.S. Postal Service, auto part distributors, consumer goods, food and beverage distributors as well as medical and pharmaceutical companies.

The business plan hasn’t changed. But its fleet has. In July, the startup launched a commercial service with Walmart to deliver online grocery orders from the retailer’s main warehouse to its neighborhood stores in Bentonville, Arkansas. Initially, Gatik used light commercial trucks and vans — specifically Ford Transit Connect vans — that were outfitted with its self-driving system.

Customer feedback prompted the company to add bigger temperature-controlled vehicles. Gatik’s commercial fleet of more than 10 vehicles are used to serve multiple Fortune 500 companies across North America, according to the startup. The figure doesn’t include additional vehicles being tested in California.

Gatik expects to name new partners and operations in U.S. and Canada this year.

The box trucks, which range in size between 11 and 20-feet long, can deliver ambient, cold and frozen goods. Each vehicle completes between six to 15 runs a day. Gatik has used its box trucks to deliver more than 15,000 orders for multiple customers since operations began.

The shift to autonomous box trucks taps into a trend among major retailers to use micro distribution centers to help meet increasing demand from consumers ordering goods online. Class 8 semi trucks, which once went directly to a retail store, now hauls goods to the MDCs. This allows retailers like Walmart to store more goods closer to its retail locations to meet demand for online orders.

“Micro fulfillment or distribution centers are all the rage right now — that’s basically the wave that we’re riding,” Narang said. “Companies are targeting warehouse automation for micro fulfillment centers. They’re automating the warehouses, and we’re automating the on-road logistics.”

Grocery chains were struggling to keep up with the growing demand of online grocery pickup and delivery even before the COVID-19 pandemic. But Narang expects demand for online grocery pickup and delivery to increase twofold. Gatik has already seen a 30% to 35% uptick in the number of runs it completes each day in order to meet demand.

“I think this is going to last because the crisis is shaping how consumers do their shopping,” Narang said.

Eventually, Gatik will pull the human safety driver out of the vehicle. It’s an achievable goal, Narang added, because the company has focused on repeatable pre-determined routes and has introduced constraints that simplify the technical challenge. For instance, Gatik vehicles don’t make multiple lane changes and only make right turns.

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Uber Eats beefs up its grocery delivery offer as COVID-19 lockdowns continue

Uber Eats has beefed up grocery delivery options in three markets hard hit by the coronavirus.

Uber’s food delivery division said today it’s inked a partnership with supermarket giant Carrefour in France to provide Parisians with 30 minute home delivery on a range of grocery products, including everyday foods, toiletries and cleaning products.

The service is starting with 15 stores in the city, with Uber Eats saying it plans to scale it out rapidly nationwide “in the coming weeks”.

In Spain it’s partnered with the Galp service station brand to offer a grocery delivery service that consists of basic foods, over the counter medicines, beverages and cleaning products in 15 cities across the following 8 provinces: Badajoz, Barcelona, Cádiz, Córdoba, Madrid, Málaga, Palma de Mallorca and Valencia.

Uber Eats said there will be an initial 25 Galp convenience stores participating. The service will not only be offered via the Uber Eats app but also by phone for those without access to a smartphone or Internet.

The third market it’s inked deals in is Brazil, where Uber said it’s partnering with a range of pharmacies, convenience stores and pet shops in Sao Paulo to offer home delivery on basic supplies.

“Over the counter medicines will be available from the Pague Menos chain of pharmacies, grocery products from Shell Select convenience stores and pet supplies from Cobasi — one of the largest pet shop chains in the country,” it said. “The new services will be available on the Uber Eats app, with plans to launch in other Brazil states and cities in the coming weeks.”

The grocery tie-ups are not Uber Eats’ first such deals. The company had already inked partnerships with a supermarket in Australia (Coles) and the Costcutter brand in the UK, where around 600 independent convenience stores are offered via its app.

Uber Eats also lets independent convenience stores in countries around the world self listed on its app. However the latest tie-ups put more branded meat on the bone of its grocery offer in Europe and LatAm — with the Carrefour tie-up in France marking its first partnership with a major supermarket in Europe.

It’s worth noting Spain’s food delivery rival, Glovo, has an existing grocery-delivery partnership with the French supermarket giant in markets including its home country — which likely explains why Uber Eats has opted for a different partner in Spain.

Asked whether it’s looking to further expand grocery deliveries in other markets hit by the public health emergency Uber Eats told us it’s exploring opportunities to partner with more supermarkets, convenience stores and other retailers around the world.

As part of its response to the threat posed by the COVID-19 pandemic, the company has switched all deliveries to contactless by default — with orders left at the door or as instructed by a user.

It also told us it’s providing drivers and delivery people with access to hand sanitiser, gloves and disinfectant wipes, as soon as they become available. And said it’s dispensing guidance to users of its apps on hygiene best practice and limiting the spread of the virus.

Uber Eats has previously said it will provide 14 days of financial support for drivers and delivery people who get diagnosed with COVID-19 or are personally placed in quarantine by a public health authority due to their risk of spreading the virus, with the amount based on their average earnings over the last six months or less.

The policy is due for review on April 6.

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