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The Spoon

Daily news and analysis about the food tech revolution

Future of Grocery

Ahold Delhaize Launching Automated Fulfillment Center in Philadelphia

Ahold Delhaize announced today that it is building out an automated fulfillment center in Philadelphia (hat tip to Winsight Grocery Business). When completed, this facility will be able to fulfill 15,000 online delivery orders a week.

This new fulfillment pilot will be powered by Peapod Digital Labs, Ahold Delhaize’s in-house e-commerce engine, and offered to customers of the Giant Co. market. Ahold Delhaize is also working with Swisslog’s AutoStore for the robotics and software systems for the automated fulfillment center.

This is not Ahold’s first trip to the robotic fulfillment center rodeo. The company owns a majority stake in FreshDirect, which is using Fabric for a Washington D.C.-area fulfillment center. And in 2018, the company announced it was working with Takeoff Technologies to create a number of micro-fulfillment centers for its retail brands including Stop & Shop, Food Lion and Giant Food. According to Winsight, Ahold said today more micro-fulfillment pilots are forthcoming.

Ahold Delhaize’s expanded use of automation is no surprise. Grocery e-commerce had a banner year in 2020, thanks in large part to the pandemic keeping people at home. Online grocery is expected to remain sticky with consumers even after the pandemic recedes with some projecting online grocery taking up 21.5 percent of total grocery sales by 2025.

As such, grocery retailers are investing in new ways of getting people their food faster. Kroger is building out a series of Ocado-powered automated fulfillment centers across the U.S. Walmart is planning to implement dozens of automated micro-fulfillment centers at its stores. And Albertsons is expanding the use of automated fulfillment as well.

Most of these, however have been announcements. We’ll need to watch this space in the coming months to see if automated fulfillment centers truly deliver on their promise of cost-effective, increased efficiency.

GrubMarket Raises $90M to Make Its Food Delivery Service Available Nationwide

Virtual food marketplace GrubMarket announced today it has raised $90 million in an oversubscribed Series D round, up from $60 million when the round was first announced in October 2020. Participants include “funds and accounts” managed by BlackRock, ACE & Company, Celtic House Venture Partners, Sixty Degree Capital, The Strand Partners, Reimagined Ventures, Trinity Capital Investment, Madison Bay Capital Partners, Marubeni Ventures, GGV and others.

GrubMarket connects consumers with farmers via an extensive online marketplace where customers can shop for grocery items and some household goods. GrubMarket also has a B2B component through which it sells wholesale goods to grocery retailers, restaurants, corporate offices, and other business settings. The company counts Whole Foods, Kroger, Hello Fresh, Blue Apron, and many other companies among its customers.

Meanwhile, its WholesaleWare platform, which is a software platform food companies can use to manage their businesses. That includes anything from inventory and financial management to HR tasks and driver routing.

Mike Xu, GrubMarket’s CEO, said in a statement that the Series D round was originally intended to be no more than $30 million, and that the company has made “efforts to keep this round $100 million.” He said the new capital will allow the company to invest more in talent, technology, and acquisitions in the future. The company also plans to “expand to most regions of the country” over the next 12 months. In October of 2020, Xu said his company plans to go public, but did not give an exact timeframe for an IPO.   

Online grocery as a category is expected to account for 21.5 percent of all grocery sales by 2025, and companies currently offer all manner of takes on the concept. Right now that includes big-box retailers like Walmart, those like Rosie that are focused on independent grocers, and those like Imperfect Foods, which cater to specific niches of the buying public. GrubMarket’s “farm-to-pantry” approach certainly serves a demand, since buying direct from farms has increased among consumers.

But Grubmarket’s focus more and more appears to be on reinventing the supply chain and doing away with some of the inefficiencies there, hence the WholesaleWare platform and the growing B2B customer base. Expect that portion of the business to grow substantially from the new infusion of capital. 

Sustainable E-Grocer Imperfect Foods Increases Series D Round to $110M

Imperfect Foods has increased its recently announced series D round to $110 million, up from $95 million. The increased round now includes two additional investors, Hamilton Lane and Blisce, and brings Imperfect’s total funding to $229.1 million.

The company says it will increase the production capacity of its online grocery store and improve the shopping experience for customers. 

Imperfect Foods’ evolution from food redistribution service to full-stack online grocer started in 2019 when the company began offering “rescued” foods beyond produce items: meats, pantry staples, and dairy, for example. The idea was to extend Imperfect’s original modus operandi — rescuing surplus food and selling it to consumers for a discount — to any type of food, whether an avocado or an unused cheese plate rescued from an airline.

Rescuing food is one tactic in the fight against food waste. Surplus and so-called “ugly” groceries, inventory at restaurants, and, yes, cheese plates and other food items from airplanes, would typically go to the landfill, contributing to the world’s multibillion-dollar food waste problem. Redirecting that cosmetically imperfect but perfectly edible food to consumers also informs the business models of Misfits Markets, Flashfood, Too Good to Go, and several others.

More investment dollars for Imperfect and these other companies suggests U.S. consumers are receiving the concept of ugly-food redistribution more in 2021 than they have in the past. Historically, the category has been more popular in Europe. However, with online grocery projected to be 21.5 percent of total grocery sales by 2025 and awareness of our food waste problem increasing, more folks are willing to pay less for their food items, even if they come with imperfections.

Imperfect said in a press release sent to The Spoon that the Series D round, including the add-on investments, will help the company build “the most sustainable online grocery service.” Currently, users in parts of the U.S. can sign up at the company’s e-commerce storefront to receive deals on grocery delivery. Imperfect currently serves the West South Central, Midwest, and Northeast regions and the West Coast. 

Stop & Shop Pilots Locker Pickup at Boston Location

Grocery retailer Stop & Shop is testing out the use of pickup lockers at one of its Boston stores (hat tip to Supermarket News). The temperature-controlled lockers allow customers to place an order online and have that order assembled and securely kept in-store until pickup.

The new lockers have three temperature settings: frozen, refrigerated and room temperature. After placing an order, the customer selects the locker option and a 45-minute time window for pickup. Customers receive a code via text within 15 minutes of their pickup time that they scan or enter on the locker kiosk screen. A light on the locker containing their order will flash and the door will unlock, allowing customers to grab their goods and go.

Stop & Shop is charging $2.95 for locker pickup and customers can’t order alcohol or other age-restricted items. There are also size restrictions, so presumably no ordering a 20-pack of paper towels.

If this pilot is successful, Stop & Shop says it could roll them out to more stores.

Pickup lockers are poised to become a regular feature at the grocer store. Albertsons launched two different takes on unattended pickup in recent months. In October, the company launched locker pickup at select Chicago Jewel-Osco locations in Chicago. Then in January of this year, the company debuted its robotic pickup kiosk, also at a Chicago Jewel-Osco.

Grocers are experimenting with new ways to get customers their groceries faster. The pandemic has more people shopping for groceries online, and at-store pickup can be a more convenient option for customers while being less costly for a retailer than ramping up home delivery.

In addition to these nascent locker programs, we’re also seeing retailers like Walmart, Albertsons and H-E-B increased their use of in-store automated order fulfillment. Kroger is meeting its e-commerce demand by building out large automated warehouses across the country to fullfill orders.

I expect we’ll see more locker options added to grocery stores, along with the incentive to use them, throughout this year. It’s not quite as convenient as curbside pickup (i.e., customers have to get out of their cars), but in urban areas where people may shop on bike or foot, it should provide a more convenient grocery experience.

Rosie Raises $10M Series A for its Local Grocer E-Commerce Platform

Rosie, which provides an online marketplace for local grocery stores, announced today that it has raised a $10 million Series A round of funding. The round was led by Avenue Growth Partners and brings the total amount raised by Rosie to nearly $12 million.

Founded in 2012 and based in Ithaca, NY, Rosie is an e-commerce platform that allows smaller and independent grocers to sell their wares digitally. Users download the Rosie app and select from local grocery stores available in their area. Customers shop for groceries as they would through any such app and schedule a time for either pickup or delivery (this option seems dependent on the retailer).

According to the press announcement, Rosie works with “hundreds” of retailers across the country. The company said it experienced a 900 percent increase in the number of stores signed up for the service during the pandemic.

Rosie is certainly raising money at the right time. Grocery e-commerce experienced massive growth last year thanks to the pandemic. With various levels of quarantines and lockdowns happening over the past 12 months, digital grocery shopping has become a new habit for many U.S. consumers. Online grocery is projected to be 21.5 percent of total grocery sales by 2025.

Because of this boost in e-commerce, we’ve seen all the big players make moves to grab more of your grocery dollars. Walmart, Amazon, Target, Albertsons and Kroger have all made major moves to expand shopping options, increase pickup and delivery, and speed up order fulfillment.

There are a number of startups, however, working to help make sure smaller grocers don’t get left behind. Similar to Rosie, Mercato is another platform that gives independent stores the ability to sell goods online. On the delivery side, Dumpling is building out a network of small business, independent grocery delivery services.

Rosie’s news comes on the heels of online grocer Good Eggs announcing a $100 million fundraise earlier this week. Given the growth in e-commerce, expect a steady stream of similar funding announcements throughout the year.

Online Grocer Good Eggs Raises $100M, Plans Southern California Expansion

Online grocer Good Eggs announced today that it has raised $100 million in new funding. The round was led by Glade Brook Capital Partners with participation from GV, Tao Invest, Finistere Ventures, and Rich’s, as well as existing investors Benchmark Partners, Index Ventures, S2G, DNS Capital, and Obvious Ventures. This brings the total amount raised by Good Eggs to roughly $170 million.

This new funding comes after a record-breaking year for online grocery sales thanks to the pandemic. While the numbers have tapered off from their highs, the various pandemic lockdowns have lasted long enough for shoppers to form new grocery-buying habits. The online grocery market is projected to grow over the next four years and take up 21.5 percent of total grocery sales.

Bentley Hall, CEO of Good Eggs, told me during an interview this week that his company has benefited from this growth in online grocery. Hall said that in 2020 Good Eggs, which currently only operates in the California [SAN FRANCISCO] Bay Area, moved to a bigger warehouse facility, hired more than 400 new employees and saw its revenues surpass $100 million.

As part of today’s announcement, Good Eggs also said it has appointed Vineet Mehra as the company’s new Chief Growth and Customer Experience Officer. Prior to Good Eggs, Mehra was Global Chief Marketing Officer and Chief Customer Officer at Walgreens Boots Alliance. Mehra will oversee Good Eggs’ expansion into Southern California.

Hall didn’t specify where in Southern California his company would be expanding to first, only saying that by the end of 2022 Good Eggs would be serving two of the following three regions: Los Angeles, Orange County and Northern San Diego.

The boom in online grocery is bringing with it increased competition for Good Eggs. The company will face pressure from giants that are greatly ramping up their grocery activities. Walmart is adding more automation to fulfill online grocery orders faster and Amazon has already opened six physical Fresh supermarkets around Los Angeles/Southern California.

Hall indicated that the company isn’t currently looking at automation at its facility to speed up order fulfillment, but he does see a future where the company offers curbside pickup options in addition to its delivery program.

E-Fish Delivers Fresh Fish to Your Door 48 Hours After It’s Been Caught

When the pandemic hit, I shifted just about all of my grocery shopping online, including my proteins like chicken and fish. I still buy my fish online, getting frozen fillets delivered to my door each month.

But E-Fish, a startup that launched around the time the pandemic hit last year, says it can do one better. The company delivers fresh — not frozen — fish to your door 48 hours after it is out of water.

E-Fish started out as a fish marketplace for restaurants such as Jean-Georges, Esca, The Fulton, and Bellemore. But when the pandemic hit, many restaurants across the country shut down, cutting off E-Fish’s target market. Not only that, restaurant closures were also devastating the fish industry, who lost all those restaurant customers. So E-Fish pivoted, and like so many other restaurant food suppliers, launched its own direct-to-consumer sales channel.

Jeffrey Tedmori, Co-Founder and CEO of E-Fish, told me by phone this week that this D2C marketplace pivot was also helpful for fish harvesters because they can focus on catching fish while E-Fish takes care of all the digital marketing and sales.

E-Fish never touches the product. Instead, it has relationships with different fish harvesters on both coasts of the U.S. When you visit E-Fish and place your order, that order along with a shipping label is forwarded directly to the harvester.

That doesn’t mean your order ships right away, however. As Tedmori explained, when an order is placed, “A lot of the time the product isn’t even caught.” So the harvester goes out, catches the fish, preps it and ships it out to the customer. The result, said Temori, is an “Unparalleled level of quality.”

You’ll pay for that freshness. Two pounds of Black Cod will set you back $70 plus shipping and taxes (E-Fish ships across the U.S., except for Hawaii and Alaska). While that is probably more than your corner store, it is not that far out of line with other online fish markets like CrowdCow.

E-Fish has received Angel funding and is now part of the Techstars Anywhere accelerator cohort. The company currently has relationships with fishers in Massachusetts, Maine, Florida and California, and is looking to scale up from there.

Walmart Scaling its Automated Fulfillment with Alert Innovation, Dematic and Fabric

Walmart announced today that it is ramping up its use of automated centers to fulfill online grocery orders. The company said it is already planning “dozens” of locations with “many more to come.”

Automated fulfillment centers use robotics to assemble items for incoming orders. The result is a faster turnaround for customer delivery or pickup.

According to a corporate blog post announcing the news:

[Walmart will] be building local fulfillment centers with various technology partners, including Alert Innovation, Dematic and Fabric. With these partners, we’ll be testing different orientations and add-on innovations to understand what works best in different environments. For example, in some locations, we’ll be adding on to our stores. In others, the fulfillment centers will sit inside the existing store footprint.

At its Salem, New Hampshire location, Walmart had piloted Alert Innovation’s automated fulfillment technology back in 2019. Walmart didn’t explain why has chosen three different solutions going forward, though if the retailer is going all-in on automated fulfillment, one company may not have been able to scale up quickly enough. We do know that Fabric specializes in building automated fulfillment centers in small, non-traditional spaces, and Walmart said its rollout would test different automated fulfillment configurations.

After a slow burn for the past few years, automated fulfillment is becoming hot with grocers in 2021. FreshDirect is also using Fabric’s solution for a fulfillment center in the Washington D.C. area. Albertsons is expanding its use of Takeoff Technology’s micro-fulfillment. Dematic is being used in Amazon’s grocery stores. H-E-B is using Swisslog. And Kroger is set to open up the first of its planned 20 automated customer fulfillment centers this year.

The reason for this burst in robotic fulfillment activity is the pandemic. COVID-19-related fears pushed people into record amounts of online grocery shopping last year. While a vaccine is being deployed, people have developed new habits, and online grocery shopping is expected to take up 21.5 percent of total grocery sales by 2025.

As such, retailers need to increase their throughput now to retain customer loyalty. Faster turnaround means more slots available for curbside pickup and delivery. Walmart may not have found inventory counting robots on its floors particularly efficient, but it seems to believe robots in the backroom building out orders is.

Sunbasket Transitions from Meal Kit Player to ‘Full-Service Meal Delivery Company’

Sunbasket, best known for its meal-kit subscription service, announced today it is broadening its product line and evolving to become “a full-service food delivery company.” The newly revamped service will offer a range of different food items to consumers, from full meals to snacks and pantry staples.

Reaching more potential customers, including those who need something more convenient than a full-on meal kit, seems to be at the heart of this transition. “The onset of COVID-19 forced consumers to quickly adopt new habits when it came to food, and Sunbasket was inspired to reflect on our company’s values to better serve our customers,” said Don Barnett, CEO, Sunbasket, said in a statement. Barnett added that he believes the company’s “refreshed emphasis on convenience will be appealing to even more people.”

To that end, the Sunbasket site now carries a mix of meal kits, heat-and-serve meals, meats (plant-based and traditional), dairy products, pantry staples, and snacks.

What is not completely clear from Sunbasket’s revamped website is whether a user still has to sign up for a subscription in order to get the pantry staples. From the looks of it, you would still need to sign up for a meal plan (either a meal kit or the heat-and-serve option), at which point you could add other staples onto your existing order. As has always been the case with Sunbasket, the commitment is month to month.

Today may be the official announcement for Sunbasket’s expanded roster of foods, but the company has dropped hints of such a transition for some time. In 2019, it expanded its dinner-only lineup to include breakfast and lunch meals, as well as add ons like granola butter and single-serving snacks.

And while the traditional meal kit is seeing some resurgence because of the pandemic (everyone’s eating at home), the sector’s ongoing struggles are well-documented. Most meal kit companies, including Kroger-owned HomeChef, Purple Carrot, and Blue Apron, have added a wider variety of food items as well as some customization features.

Sunbasket’s move to offer grocery items is a first in the meal kit sector, but it’s one of many examples of previously narrowly focused food companies expanding to incorporate online grocery into their wares. Misfits Market and Imperfect Foods, both companies that originally focused on rescuing cosmetically “ugly” fruits and veggies, have since expanded their services to include online marketplaces where all manner of pantry goods and food supplies can be bought. As a meal kit company, Sunbasket’s core business differs from these two companies, but it’s newly announced expansion appears to be similar.

With online grocery shopping expected to hit $250 billion and account for 21.5 percent of all grocery sales by 2025, it wouldn’t be surprising if other meal kit companies soon follow Sunbasket’s lead.

Kroger Building Ocado-Powered Warehouse in Phoenix, AZ

Kroger announced on Friday that it will build out its next automated customer fulfillment center (CFC) in Phoenix, AZ. This marks Kroger’s first robot-powered warehouse in the U.S. Southwest region.

These CFCs use robotic technology from UK grocery Ocado (which Kroger is an investor in). Online orders are assembled automatically inside the center through a series of totes on rails, and packaged up for delivery.

Kroger announced a few years back that it would build out 20 such warehouses across the U.S., and has since started work on sites in a number of different locations including: Monroe, OH, Groveland, FL, Forest Park, GA, Dallas, TX, and Pleasant Prairie, WI, Frederick, MD, Romulus, MI, as well as the Pacific Northwest, Great Lakes and West Regions. The first Kroger CFC is expected to open in Monroe this year.

Ocado Robotic System For Kroger

Grocery e-commerce, which got a boost last year thanks to the pandemic, is expected to become the new normal for many shoppers. Online grocery is projected to grow over the coming years and take up 21.5 percent of overall grocery sales by 2025.

As such, grocery retailers are building out a variety of automated systems to keep up with that increased demand. While Kroger is building out these centralized delivery warehouses that serve large areas of customers, others are taking a more local approach. Albertsons built out micro-fulfillment centers in the backs of two of its Bay Area stores, and is expanding to more. And Texas grocery chain H-E-B is adding automated micro-fulfillment to a number of its locations.

Kroger’s CFCs are the opposite of “micro” fulfillment. The forthcoming Phoenix facility will be 200,000 sq. ft., and will open 24 months after groundbreaking to support customers across Arizona.

Instacart Expands Curbside Pickup Options for Retailers

Grocery fulfillment service, Instacart, announced this week it is expanding curbside pickup options for its retail partners.

Instacart currently provides curbside pickup services for more than 60 retailers, including ALDI, Food Lion, Publix, and starting this week, three Costcos in New Mexico. Instacart’s curbside pickup is available in more than 3,300 stores across 30 states today.

In its announcement, Instacart outlined the new order fulfillment and curbside pickup options for its retailers:

  • Partner Pick – Retailers use their own employees to pack and fulfill orders that come in through customized Instacart Pickup software
  • Instacart In-Store Shopper Pick – Instacart in-store Shoppers will pick and pack grocery orders for pickup
  • Full-Service – A new pilot program at select retailers where full-service Instacart Shoppers will be able to choose orders to pick, pack and stage for pickup or delivery

Last year, the pandemic pushed record number of shoppers into online grocery shopping, accelerating the need for more delivery and curbside pickup options. Even after the pandemic recedes, online grocery shopping is expected to grow and take up 21.5 percent of total grocery sales by 2025.

Curbside pickup is an attractive option for both retailers and shoppers. For retailers, it only requires setting up designated pickup areas in their parking lot and letting customers come to them. And for shoppers, the pickup option can be more convenient, fitting into their regular errand schedule and not requiring them to stay at home to wait for a delivery driver.

As such, retailers are implementing a number of different ways to get customers their pickup orders more efficiently. Albertsons, for instance, has made a number of moves including the use of robots to automate online order fulfillment at some stores, as well as trialing an automated pickup kiosk and temperature controlled pickup lockers.

With Instacart’s news this week, retailers who can’t afford fancy robotics to fulfill orders will be able to use their own employees to pick and pack, or leverage Instacart’s scalable gig workforce to do so.

It wasn’t all good news from Instacart, however. With some retailers using their own workforce for packing orders, Instacart also announced it would be laying off 2,000 employees, including it’s only unionized labor group.

Imperfect Foods Raises a $95M Series D Round

Imperfect Foods, a national online grocer that specializes in selling surplus and cosmetically “imperfect” foods, announced today that it has raised a $95 million Series D round of funding. The round was led by Insight Partners and brings Imperfect’s total amount of funding to $214.1 million.

Imperfect Foods (formerly Imperfect Produce) aims to reduce waste in our current food system by “rescuing” so-called ugly foods — think misshapen carrots or potatoes — and selling them directly to consumers at a discounted prices. Without these rescues, such food would go straight to the landfill, further contributing to the world’s multibillion food waste problem.

In 2020, Imperfect transitioned from a regional produce delivery service into a national full-service grocer, expanding its catalog to include pantry items, meat, seafood, dairy and other products. Items sold are surplus, cosmetically imperfect, or sourced from sustainable partners. Some examples from last year include buying up allotments of cheese plates going unused by airlines and popcorn kernels from empty movie theaters. Imperfect also released a holiday snack box at the end of 2020 that featured cosmetically imperfect but otherwise perfectly edible snack items.

Imperfect said in today’s press announcement that it has a growing customers subscriber base of more than 350,000 customers. But it’s not alone in the “ugly” food space. Misfits Market, which does much the same thing, has raised more than $100 million in funding.

That money is flowing into Imperfect and Misfits is not too much of a surprise. The global pandemic pushed record numbers of people into online shopping. Even though vaccines are now out, and we may be seeing the pandemic recede, grocery e-commerce is projected to remain sticky with consumers and grow to gobble up 21.5 percent of overall grocery spending by 2025. So having an established grocery delivery infrastructure right now is far from an imperfect business idea.