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The Spoon

Daily news and analysis about the food tech revolution

Future of Grocery

Zero Grocery Raises $3M Seed Round for Plastic-Free Grocery

Zero Grocery Founder and CEO Zuleyka Strasner announced today via Medium that Zero has raised $3 million in Seed funding for its plastic-free grocery delivery service. According to Strasner, “the largest check” came from 1984, with other investors such as Arlan Hamilton, AVG Basecamp Fun, Bluestein Ventures and more participating. This brings the total amount raised by Zero Grocery to $4.7 million.

Based in the San Francisco Bay Area, Zero Grocery doesn’t use any plastic in its grocery delivery service. According to the company FAQ, food is bought wholesale and packed into glass jars, tiffins, boxes and other containers.

Zero has a membership option for $25 a month, which gives offers free deliveries and also collects empty containers from previous deliveries (which then get sanitized and re-used). You don’t have to have a membership to shop at Zero, though non-members pay a $7.99 delivery fee.

The timing is certainly ripe for Zero’s fundraise. First, the pandemic has spurred record amounts of online grocery shopping over the past six months. And while the numbers have fallen, the online grocery sector is projected to keep growing and hit $250 billion by 2025.

In the Medium post, Strasner even mentioned that the pandemic drove 20x new business for Zero, but it was it was able to adjust on the fly and survive:

As other grocery stores faced out-of-stocks due to a mutual reliance on the same distributors and sources for their products, we were able to avoid out-of-stocks and maintain a consistent customer experience. We had put our model to the test and succeeded, and it allowed us to serve customers in the best way we possibly could.

But the plastic-free nature of Zero’s service is also compelling. People are more acutely aware than ever, especially in light of a recent NPR and Frontline’s recent headline “How Big Oil Misled The Public Into Believing Plastic Would Be Recycled.”

Thankfully, there is a new wave of waste-free grocery stores coming up to help tackle the problem. In addition to Zero Grocery, there’s Zero Market in Denver, CO, and Nada Grocery in Vancouver, Canada. Even big brands like Unilever and Pepsi are getting in on the reusable container train through the Loop store.

All of this combined, along with $3 million means that there are a lot more zeros in Zero’s warchest to help it scale its plastic-free mission.

UPDATE: An earlier version of this post misstated that there was a jar deposit for non-members.

Walmart Sets Goal of Zero Emissions by 2040

There are multiple layers of good news in Walmart’s announcement today that it’s targeting zero emissions across all of its operations by the year 2040.

First, on its face, it’s good news when the world’s largest retailer decides to do something beneficial for the planet (though one could argue the actual the “good” here doesn’t balance out the company’s main business of selling us more stuff). According to today’s press announcement, Walmart says it will:

  • Convert to 100 percent renewable energy by 2035 through a mix of wind, solar and other energy sources
  • Electrify and zero out emissions from all of its vehicles including long-haul trucks by 2040
  • Shift to “low-impact” refrigerants for cooling and electrify the climate control of its stores, clubs, warehouses and data centers by 2040

As part of today’s announcement, Walmart also said that it will “manage or restore at least 50 million acres of land and one million square miles of ocean by 2030.” The company also pledged to drive the adoption of regenerative agriculture practices and management of sustainable fisheries.

This is not the first eco-initiative from Walmart, a company that has a complex history of “greening,” as this paper published in the Stanford Social Innovation Review back in 2008 points out. But Walmart’s current renewable efforts are coming at a time when the company is possibly changing its relationship with consumers. The pandemic has spurred people towards new heights of online shopping, and Walmart recently launched its Walmart+ subscription service, which offers free same-day delivery of groceries as a perk.

Online commerce and increased need for delivery changes how Walmart will move goods around. Instead of just going from distribution centers to stores, it will be driving more goods around directly to people’s doors across the country. More deliveries means more trucks on the roads (or drones in the sky), more often, which means that actually, that electrified vehicle fleet should probably come sooner than 2040.

But the year 2040 is actually the other layer of good news from Walmart’s announcement. At least the company thinks there will still be a planet to sell goods on by then.

Farmstead Launches Grocery OS to Help Other Grocers Get Those Online Dollars

Online grocer Farmstead announced today that it is making its in-house grocery delivery software, Grocery OS, available to other national and regional grocers.

Farmstead’s pitch is that Grocery OS can help traditional grocers migrate from physical stores to online, working up through dark stores and into warehouse-only formats. In doing so, Farmstead says Grocery OS will also provide more delivery capacity and get retailers more e-commerce revenue.

Grocery e-commerce has experienced record growth throughout the year as the COVID-19 pandemic pushed more people into online grocery shopping. According to a recent Mercatus study, online grocery shopping will continue to grow, hitting $250 and accounting for 21.5 percent of total grocery sales by 2025.

“COVID shows there is pent-up demand for online grocery,” Pradeep Elankumaran, Farmstead Co-Founder and CEO, told me during an interview this week. Of course, this pent-up demand translated at first into delayed grocery delivery windows, often needing to be scheduled weeks out, as well as waitlists and other breakdowns in the process.

Though things have calmed down and plateaued in grocery e-commerce, the trick now for traditional retailers is to build a system that can scale to meet continued demand. As Elankumaran said, however, running a digital-first store is a lot different from running a traditional store that people go in and shop at.

That’s where Farmstead claims its Grocery OS software stack can help. Grocery OS, which Farmstead uses for its own operation, promises to help traditional grocery retailers boost their delivery capacity, manage inventory, picking and packing orders, and handle marketing.

But as Elankumaran pointed out, transitioning to e-commerce isn’t just about grabbing a bigger piece of the pie. It’s also a defensive move for existing retailers. “You also have a whole bunch of pressure from Amazon and Walmart driving pickup and delivery,” he said.

Indeed, Amazon just opened up a delivery-only Whole Foods in Brooklyn and Walmart launched its Walmart+ subscription service that includes free grocery delivery.

According to the press announcement, Grocery OS is already being used by one of the “top 3” national grocers in the U.S. As noted, it’s also been used by Farmstead as that company has weathered its own pandemic growth spurt. While he wouldn’t provide specifics, Elankumaran said that Farmstead has experience 6x growth in revenue over the span of three or four months, grew its team size by 3x and moved into a 17,000 sq. ft. facility from its former 3,000 sq. ft. warehouse.

But Farmstead isn’t giving up its own grocery ambitions. Elankumaran’s goal is to build and scale Farmstead into a national retail brand. And he’ll be using Grocery OS to do it.

Study: Online Grocery to Hit $250B, Account for 21.5 Percent of Total Grocery Sales

There are a lot of questions around the lasting impact the pandemic will have on the way we get our food. A new report out today from Mercatus and Incisiv attempts to answer some of those questions as they pertain to the way we’ll shop for groceries.

In the report, titled “eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior,” Mercatus and Incisiv predict that by the year 2025, online grocery will hit $250 billion and account for 21.5 percent of all grocery sales.

Worth noting is how the pandemic has altered and shaped the online grocery landscape. Of the 60,000 American shoppers across the country surveyed for the report, 62 percent of respondent said they were shopping online because of COVID-19. And it seems like this new e-commerce behavior has become normal for many people. The 21.5 percent adoption in 2025 is a post-COVID data point, and is up 60 percent over pre-COVID projections.

Another finding from the report is that while 40 percent of online shoppers are likely or very likely to continue buying groceries online, the vast majority — 78 percent — still prefer going to the physical grocery store either to shop or do curbside pickup.

Who is shopping online may surprise you, as Mercatus/Incisiv found that older populations (45-plus years old) made the biggest shifts towards technology. In that group, 46 percent adopted new fulfillment options like curbside pickup and 35 percent ordered groceries online for the first time.

The report also found that 43 percent of respondents have shopped online for groceries in the past six months, up from 24 percent two years ago.

The one caveat with this report is that it was backed by Mercatus, which sells a grocery e-comerce platform. So it has a horse in this online grocery race. But Mercatus has also backed research by Brick Meets Click, which has helped provide a barometer of online grocery adoption both pre- and during this pandemic.

Speaking of, that Brick Meets Click survey was released last week and showed that online grocery shopping had fallen to $5.7 billion in August from its record peak in of $7.2 billion June. That $5.7 billion, though, is up from $5.3 billion in April, so there is still plenty of inertia behind the move to online grocery shopping.

Mercatus/Incisiv seem to have taken this slowdown into account, writing:

Growth of online grocery will slow in the immediate term, as shoppers return to stores due to reduced concern for COVID-19 risks. Retailers will be required to invest both in technology and re-alignment of operating models (store labor, forward deployment etc.) to improve customer experience and drive the next wave of growth, while ensuring profitability. Growth is expected to pick-up again in early 2022.

Of course, none of these projections are set in stone. We still have one full quarter in what has been a tumultuous year, and literally anything could happen to impact the meal journey. So all our questions won’t be answered for quite some time.

H-E-B to Use Swisslog for Automated Micro-Fulfillment

Even though everything is bigger in Texas, the San Antonio-based H-E-B grocery chain is going small. Today, the chain announced it has partnered with Swisslog to install automated micro-fulfillment centers at an undisclosed number of stores (tip of the hat to Grocery Dive).

According to the press announcement, H-E-B will make use of Swisslog’s AutoStore solution, which will use a combination of bins and robotics to shuttle grocery items around. Swisslog says that it has more than 170 AutoStore installations worldwide. H-E-B has 400 locations across Texas.

Swisslog’s micro-fulfillment centers will help H-E-B speed up the processing of online grocery orders for delivery and curbside pickup. Keeping up with the crush of new e-commerce customers was something retailers across the country struggled with throughout a good part of this year as pandemic fears pushed people into online grocery shopping.

While the first few months of the pandemic saw record amounts of online grocery shopping, recent survey data from Brick Meets Click shows that grocery e-commerce dropped in August to $5.7 billion, down from its peak of $7.2 billion in June. Having said that, August’s online grocery numbers were higher than the the $5.3 billion in April.

Swisslog is among a number of companies angling to bring more automation to grocery e-commerce fulfillment. Alert Innovation is being used by Walmart, Fabric is working with Fresh Direct, Takeoff Technologies has lined up Albertsons, ShopRite, and Loblaw’s, and Kroger is building out its own centers using Ocado.

While we’re still waiting to see exactly how many people stick with online grocery shopping (FWIW, even Whole Foods’ CEO thinks a lot of people won’t go back into grocery stores), H-E-B’s announcement shows that retailers continue to make big investments in micro-fulfillment. Will these micro-moves yield Texas-sized returns?

Surplus Food Startup Hungry Harvest Closes Series A Round at $13.7M

Food rescue startup Hungry Harvest has closed its Series A round at $13.7 million, according to a company press release. The round was led by Creadev with participation from Danone Manifesto Ventures, Quadia, and Maywic Select Investments.

Hungry Harvest is one of several companies out there rescuing “ugly” produce and other staples from groceries in an effort to curb food waste and redistribute food to those in need. The company collects fruits, vegetables, and other items deemed cosmetically unfit for mainstream retailers and packs them into variety boxes customers can order and have delivered to their doorsteps. Users can customize their boxes based on how often they cook, how many people they are feeding, and whether they prefer organic produce or will eat anything. Boxes range in price from $15 for a “Mini Harvest” all the way up to $42 for a “Super Organic Harvest.”

The company also donates to local organizations fighting food insecurity in the U.S. Hungry Harvest says it plans to use the new funds to improve the customer experience for its products and scale its social mission of getting affordable food to those in need. 

The concept of rescuing ugly produce from landfills has steadily grown in popularity over the last couple years as the world’s multibillion-dollar food waste problem becomes more top of mind for more consumers. Those consumers now have ample options when it comes to purchasing cheaper produce that would get tossed at a grocery store, including Karma, Imperfect Produce, and Misfits Market. Some of these companies are actually partnering with grocery stores, as Flashfood is doing with Meijer stores in Detroit. 

For it’s part, Hungry Harvest currently delivers to Baltimore, D.C., Philadelphia, Charlotte, Raleigh, Miami and Detroit.

Tortoise Unveils its Not-Autonomous Grocery Delivery Robot

Up to now, San Francisco-based Tortoise has mostly been known for its technology that helps manage micro-mobility fleets like electric scooters and bikes. But earlier this week the company took to Twitter to unveil its new line of business: delivery robots.

But Tortoise is setting itself apart from other players like Starship and Kiwi that are already in the robot delivery space. First off, the slow-moving Tortoise, roughly the size of an electric wheelchair, is bigger than a rover bot and can carry 100-plus pounds. It’s not meant for on-demand delivery of burritos or lattes, but rather for making scheduled deliveries of groceries, parcels and other goods within a three mile radius of a store or hub.

Second, and perhaps more intriguing, is the fact that Tortoise robots are not autonomous. There are teleoperators who drive each Tortoise remotely. This manual control, according to the Tortoise rep I spoke with by phone this week, will allow the company to get to market and scale faster that other delivery robots.

It’s not hard to see why. While the idea of a fleet of self-driving robots is very cool, it can also come with some very real-world problems. Last fall, Starship’s robots had to pause deliveries in Pittsburgh after complaints of the robot blocking the sidewalk entrance of a person in a wheelchair. And based on this guest post in TechCrunch last month, robots have still not fully adapted to be disability friendly.

With a human at the Tortoise wheel, so to speak, the robots can stop, reverse and in general avoid incidents that could impact pedestrian and property safety. So having teleoperators could make city and local governments more amenable to Tortoise bots scurrying around on public sidewalks.

Needing one human to operate one Tortoise at at a time seems like it could be a barrier to scaling. However, the Tortoise rep told me that eventually, driving robots could operate like a call center, with drivers around the world, or Tortoise could become a gig-economy platform where people stay at home and play what is essentially a real-world videogame, driving the robots around. Though I can’t imagine it would pay all that well.

Tortoise’s business model is to flat-out lease robots to customers who would be responsible for storing and charging the robots. Tortoise would do maintenance as needed and control the driving platform to get deliveries to their destination. The company already has one bulk food delivery company as a customer with more retail partner announcements to come.

Tortoise is launching at a time when interest in delivery robots is accelerating. The pandemic has restaurants and retailers looking for ways to reduce human-to-human transmission. In addition to providing contactless delivery, Tortoise robots won’t get sick.

But Tortoise is also an example of how thinly sliced the delivery robot market is getting. You have the small rover bots of Starship and Kiwi, the larger bike lane-driving robots of Refraction, and the even larger pod-like vehicles of Nuro. By eschewing restaurant delivery and focusing on bigger grocery deliveries, Tortoise is carving out its own, more narrow niche.

Tortoise may not have been first in the delivery robot race, but it’s focus could speed it to front-runner status soon enough.

Survey: Online Grocery Falls in August, Though Majority Will Continue E-Shopping

What goes up must come down, especially, in this case, when people feel safe enough to go out. New survey data from Brick Meets Click/Mercatus shows that U.S. grocery delivery and pickup sales for August dropped to $5.7 billion, down from June’s record high of $7.2 billion.

This pullback in online grocery isn’t a huge surprise. Between March and June of this year, online grocery shopping had seen one record month after another, but that growth was artificially inflated, fueled by the pandemic.

According to Brick Meets Click, the fall in online grocery dollars correlates with increased ease about COVID-19, with 38 percent of U.S. households expressing high levels of concern about the virus in August versus the high of 47 percent in April.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” David Bishop, a partner at Brick Meets Click, said in a press release announcing the August results. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

This larger base is actually good news for those investing in online grocery services. Brick Meets Click said that roughly 37.5 million, or 29 percent of all U.S. households, are monthly active users of grocery delivery and pickup. That’s an increase of 133 percent over August of 2019, when that number was just 16.1 million.

August wasn’t without its own record setting, however. Brick Meets Click found that spending per order hit a record $95 in August, up 32 over a year ago. Active shoppers placed 1.6 orders per month versus 1.0 orders during the same time last year.

Additionally, more people are developing new online grocery shopping habits. According to the survey, 75 percent of customers said they are “extremely or very likely” to online grocery shop through their retailer again within the next 30 days. This desire to continue shopping online, said Brick Meets Click, was likely because of improved online shopping experiences.

Considering that people have been living under pandemic conditions for half a year (!) now, new habits have definitely set in. One thing to look for is the change in the weather. Now that people have experienced online grocery shopping, will they return to it when the weather outside is frightful (and delivery and pickup can be so delightful)?

Walmart’s Drone Delivery Pilot with Flytrex Takes off in North Carolina

Walmart announced today that it has partnered with Flytrex to start a drone delivery pilot program in Fayetville, North Carolina. The drones will deliver select groceries and household essential items.

Neither company provided more details about specific service areas or hours, but we do know that Flytrex has already been operating drone deliveries in Iceland since 2018 and more recently in North Dakota here in the U.S.

As we’ve written before about Flytrex:

The Flytrex drone is a hex-copter capable of carrying a 6.5 pound payload (enough to feed a family of four, said Bash), up to 40 m.p.h., with a range of six miles. The system is really built for suburban sprawl, and uses a tether to lower deliveries down to people when it arrives at its destination. Bash said that while a human driver can typically only make two to three deliveries an hour, a Flytrex drone operator can make up to 15.

Fytrex’s other pitch is that is has numerous safety-related redundancies that allow its drones to withstand catastrophic events like motor loss, battery loss and communication failure.

Walmart’s announcement comes just weeks after its retail rival, Amazon, won approval from the FAA for its own drone delivery program. Elsewhere in the U.S., Google Wing has been making drone deliveries in Virginia, Deuce Drone will start making grocery deliveries in Mobile, AL, and Uber had plans to do drone delivery in San Diego this summer.

But given the complexities of drone delivery (flight paths, added layers of safety in the event of a drone failure, etc.), we aren’t anywhere close to hearing a steady drone of drones overhead anytime soon. Walmart even conceded as much in its announcement today, writing, “We know that it will be some time before we see millions of packages delivered via drone. That still feels like a bit of science fiction, but we’re at a point where we’re learning more and more about the technology that is available and how we can use it to make our customers’ lives easier.”

It’s only a bit like science fiction now though.

Food Tech News: Lettuce Glow, Plus More Expansions for Food Tech Companies

Since most of us are still relatively homebound, it’s no surprise much of the food tech news of late has been about grocery, grocery delivery, farming at home, and big food brands going the direct-to-consumer route.

Herewith, the latest developments in those areas from around the web this week:

Lettuce Grow’s Farmstand Gets a Glow

Lettuce Grow, a smart-garden company founded by Jacob Pechenik and Zooey Deschanel, announced this week a new accoutrement for all your at-home farming needs. The company is launching its Glow Rings LED indoor grow lights as an add-on to its Farmstand hydroponic vertical garden. The garden, which we covered back when it was first released, previously lacked any lighting technology and had to be kept outside. The addition of the Glow Ring means those would-be agtech enthusiasts with no outdoor space can try their hand at the indoor smart-farming concept. 

Giant Food Stores grows Mid-Atlantic footprint | Supermarket News

A Giant Partnership for Union Kitchen

Grocery chain Giant Food is expanding its partnership with Washington, D.C.-based food accelerator Union Kitchen. The chain will offer more products from Union Kitchen participants — all of whom are food and bev producers — through its grocery delivery program. For shoppers, it means access to more locally made and/or grown goods.

JUST Is Expanding to More U.S. Stores . . . Again

Eat JUST, the company behind plant-based egg product JUST, said this week via an email to The Spoon that it is in the midst of what it calls its largest expansion yet. By the end of September, the company will have its products at “more than 17,000 points of retail distribution” across the U.S., a 40 percent increase that includes stores like Walmart, Kroger, Albertsons, and Safeway. Food Lion, Giant Food, and many other local stores are also on the list.

Albertsons Expanding Use of Micro-Fulfillment with Takeoff

Albertsons is adding more micro-fulfillment centers (MFC) from Takeoff Technologies in an effort to keep up with grocery e-commerce, according to a story in Supermarket News.

Takeoff Technologies’ MFCs use a series of conveyors, rails and totes to help automate the process of fulfilling online grocery orders. When an order comes in, the system retrieves and assembles the various items, which are then packed into bags by a human before being sent out for delivery or curbside pickup.

Albertsons launched the first two of its MFCs with Takeoff in San Jose and San Francisco towards the end of last year. The grocer is now looking to build out a number of new MFCs with Takeoff over the rest of this year and into next. Chris Rupp, chief customer and digital officer at Albertsons Cos., told Supermarket News, “We have a series of new locations we’ll launch over 2020 and 2021 that will help us deliver more groceries, faster, to customers in some of our highly concentrated areas of business.”

Those new MFCs will include both back-of-house facilities — that is, fulfillment centers built into the backs of existing stores — as well as standalone MFCs that are basically dark grocery stores. Last year ShopRite announced it was building out a standalone MFC with Takeoff.

That Albertsons is expanding its use of MFCs is not that surprising. The pandemic has pushed people into record amounts of online grocery shopping. Back in April, at the height of the lockdowns, I spoke with Curt Avallone, the Chief Business Officer of Takeoff Technologies who said that the company had seen demand for online grocery up 80 to 100 percent at its facilities, and that basket sizes had gone up from $150 to $200.

Those levels may have plateaued or even dipped since April, but Albertsons’ committing to building out more automated MFCs is an indication that grocery e-commerce is now a more permanent part of the country’s shopping habits.

Albertsons isn’t alone in adopting more automation to fulfill online orders. During my call with Avallone, he said that Takeoff had six operational units with other partners including Sedano’s and Loblaw’s, with another 20 MFCs being built. Kroger is also hard at work building out its own Ocado-powered smart warehouse fulfillment centers across the country.

Instacart Enters Convenience Category, Now Delivers from 7-Eleven

Good news for those craving a Slurpee, but don’t want to leave their homes: Instacart announced today that it is now offering same-day delivery from national convenience store chain 7-Eleven.

The service is available from more than 750 7-Eleven stores in Texas, Florida, Maryland, Virginia and Washington D.C., with a national rollout to more than 7,000 stores to follow. Instacart will offer delivery of thousands of convenience store items including grocery, alcohol, over-the-counter meds and presumably a hot dog that’s been on hot rollers.

Customers in the current service area can start shopping from 7-Eleven today by visiting www.instacart.com/711 or using the Instacart mobile app. Just as with its grocery service, an Instacart Shopper will go to the store, pick out the order and deliver it. Deliveries can also be scheduled.

The COVID-19 pandemic has seen a surge of interest in Instacart’s delivery service. The company said that since March it has expanded with more than 130 retailers to add roughly 6,500 new stores to the Instacart platform.

This partnership with 7-Eleven is Instacart’s first foray into the convenience category, and in a way foreshadows the looming battles ahead as third party delivery services expand. DoorDash, another third-party delivery service, has made multiple moves into the convenience category throughout the year, including partnerships with Circle K, WaWa and… 7-Eleven. All of these efforts recently culminated with DoorDash opening up its own ghost convenience store chain in select cities.

If Instacart and DoorDash duking it out to bring you a Big Gulp doesn’t blur the lines enough for you, there’s the fact that DoorDash is now getting into grocery delivery. Uber Eats, another third-party delivery player is also starting to offer grocery delivery.

It’s understandable that we’re headed for a big delivery battle royale across multiple store categories. Restaurants, which were the bread and butter for services like DoorDash and Uber Eats, have been decimated by the pandemic. As a result, those services are on the hunt for new revenue opportunities, and with record amounts of e-commerce, grocery is a big juicy target.

While Instacart if firmly entrenched in the grocery space (Walmart recently added the company as a delivery partner), adding convenience stores can help broaden its defensive moat. Instacart doesn’t want to see DoorDash creep into more categories and have people get used to the idea of ordering more and different types of food delivery from them.

As these delivery services look to stake out more territory in their search for customers and revenue, we can expect to see similar category expansion announcements from all the delivery players in the coming months.