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The Spoon

Daily news and analysis about the food tech revolution

Delivery & Commerce

Robot Delivery, Eh? Pizza Hut Canada Trials Serve Sidewalk Delivery Robot

This week Pizza Hut Canada announced they are partnering with sidewalk delivery robot startup Serve to run a two-week pilot program in Vancouver, B.C.

The trial will send the Serve robot to select customers’ doors when they place an order via the Pizza Hut app. Customers selected for the trial will be able to track the robot’s location via the app and will use a one-time pin to retrieve their order from the Pizza Hut-branded robot. You can see the robot navigating the streets of Vancouver in the video below.

Pizza delivery robots are being tested in B.C.

While various Pizza Hut franchise owners have dabbled in using robotics to make pizzas, this is the first time that we’ve seen the chain use a robotic delivery vehicle. The partnership also marks a first for Serve Robotics as it’s the first time the startup has deployed its delivery bot in Canada.

For now, the two companies are not giving any indication of whether this trial could extend beyond the initial trial. My guess is if things go well, we could see more Pizza Hut locations utilizing the Serve delivery-bot.

Fresh Portal Is a Tech-Powered Take on the Old-Timey Milk Door

When I first saw the Fresh Portal at CES, I thought it made a whole lotta sense. After all, what food-ordering families wouldn’t appreciate the ability to keep groceries or restaurant-delivered food cold or warm until they arrive home from work?

But the idea behind the Fresh Portal isn’t exactly new. In fact, you can go back as far as the early 1900s to find a predecessor in the milk door. Milk doors were built into homes when the milkman was as common as the mailman, an early version of a storage locker where that weekly delivery of milk could be stored until ready for pickup. Like the Fresh Portal, the milk door was actually two doors, one on both the outside and inside with the storage cavity in between.

Milk doors were built into homes to receive delivery of fresh milk

Fresh Portal founder Jeremy High is aware of the history of home delivery storage lockers. In a recent interview with The Spoon, he said his product is a modern, high-tech take on the old-timey milk locker.

“Fresh Portal is a modern twist on that,” High said. “It has Wi-Fi and Bluetooth. It receives deliveries of the food you’re getting delivered by DoorDash or Instacart, groceries, and even packages.”

Because the Fresh Portal is designed for the modern era of food delivery, it also keeps food hot or cold and has an app that sends notifications to the customer.

“Deliveries stay at the right temperature until you’re ready to get home and deal with them. Fresh Portal is developing a whole new way to interact with the things that you need to live your life.”

High sees the Fresh Portal going into higher-end homes to begin with, not too surprising given High is a home developer. But, over time, he also sees them going into a wide variety of housing types, including condos and apartments.

“We have a multifamily capability as well. If you think about that lobby space where you get deliveries, there’s usually a security door and a second door that’s leading from the lobby to where the residents are. We have a capability that can combine those two.”

While High has taken inspiration from the old-school milkman, he envisions a future world where a more modern version of delivery worker will interact with his product.

“Fresh Portal is going to work with robots and drones,” said High. “As that future is is unfolding, we see that as kind of a future where costs of delivering items to your home will come down because of some new robotic delivery capabilities, and we plan to be on the delivery side of that.”

You can see our full interview with High below. If you’d like to talk to him about Fresh Portal and his ideas for the future of delivery, you can meet him at SKS in just a few weeks. Make sure to get your ticket here.

The Spoon Interviews - Fresh Portal

Some Cities Are Pushing Back on Sidewalk Robots. Here Are Some Possible Ideas For Peaceful Coexistence

While sidewalk delivery robots promise to help reduce carbon emissions and car traffic on cluttered city streets, not everyone is excited about them, including one city traffic administrator in the Yaffa municipality of Tel Aviv.

According to an article published this week in the English-language edition of Israel newspaper Haaretz, Ofir Cohen, the director of transportation, traffic and parking for Yaffa, sent a letter in early July to Israel’s Transportation Ministry to convey his belief that sidewalk robots from Russian tech company Yandex were a nuisance to pedestrians.

From the letter:

“One of the ways we give priority to pedestrians is by limiting bicycle traffic on sidewalks,” Cohen wrote. “It’s understood that the robots, which are about 80 centimeters [31 inches] wide, could be a potential real nuisance for pedestrians on the sidewalks although we have also been impressed by the [robots’] smart-navigation capabilities.”

And then, on Sunday, less than a month after Cohen sent his letter, the municipality notified the Transportation Ministry it was terminating Yandex’s pilot program.

Cohen said he believed the robots should be removed from sidewalks because they made them a much less useable public resource. He also expressed concern about the impact of robot traffic on low-mobility pedestrians as well as the elderly and children.

פלישת הרובוטים לישראל החלה: לראשונה ברחובות תל אביב, רובוט משלוחים אוטונומי. ככה זה פועל.

These are essentially the same reasons that the city council of Toronto decided to issue a ban on the use of sidewalk robots late last year. The city’s accessibility advisory committee proposed the ban, expressing concern that the robots would be hazardous to those with low mobility and impaired vision, as well as elderly people and children.

“Sidewalks are an important publicly-funded public resource, created for pedestrians to safely use,” David Lepofsky, the chair of the Accessibility for Ontarians with Disabilities Act Alliance, wrote in a letter to the Council. “Their safe use should not be undermined for such things as private companies’ delivery robots.”

My guess is these rulings – which followed San Francisco’s ban on sidewalk robots in 2018 – will become more and more common as sidewalk robots go from trials to wider deployments. Because of this, it’s probably worth exploring ways to accommodate the increased use of robotic delivery vehicles and pedestrians.

One idea is simply to set limits on fleet size and traffic. In cities with lighter pedestrian traffic, having limits to ensure the sidewalks don’t become overburdened with robots makes sense.

Another is to continue to push for guidelines and safety measures for robot fleets on pedestrian walkways. Guidelines put into place during the Toronto trial included a 6 MPH speed limit, mandatory insurance for robot companies, audible signals, reflectors with lights, brakes, and a requirement that robots yield to pedestrians. I can these being expanded further and putting the legal and financial burden on robotic delivery companies to ensure pedestrians are not obstructed in any way.

Finally, I can also imagine cities exploring robot travel lanes, similar to what you might see for bikes on streets and on the sidewalks themselves. And who knows, beyond that, we might even see some of them consider sending the robots underground into tubes.

What do you think? Are there other ways you can envision pedestrians coexisting with sidewalk delivery bots? Drop us a line and let us know or let us know in the comments.

Ottonomy Debuts a Swervy, Customizable Delivery Robot in Ottobot 2.0 as it Closes $3.3M Seed Round

Today Ottonomy, a maker of autonomous delivery robots, unveiled its second generation robot, the Ottobot 2.0, alongside its announcement of its $3.3 million seed funding round according to an announcement sent to The Spoon. The new funding, which is led by pi ventures, also has Connetic Ventures, Branded Hospitality Ventures, and Sangeet Kumar (Founder & CEO of Addverb Technologies) joining the round.

As you can see in the video below, the second-gen Ottobot introduces several features, including a new swerve-drive capability (which Ottonomy calls “crab mode”) in which the Ottobot’s drive train can turn each wheel independently. This allows the Ottobot 2 to spin in place (aka ‘zero-radius turning’) and swerve as it navigates (vs. the more tank-style mobility of robots without a swerve drive) towards it destination. This type of advanced maneuverability allows robots to weave through tight spaces, something that the Ottobot will need with its emphasis on both indoor and outdoor delivery.

Ottobots 2.0 - Most Accessible #Manoeuvrable #Scalable #AutonomousDeliveryRobots #Ottonomy #Ottobot

Other features of the new Ottobot 2.0 include modular storage locker capability (operators can switch out storage lockers to different configurations), a large front-facing color display screen, contactless delivery access, and uphill/incline travel capability.

Another interesting difference is the gen two doors are opened on the side vs. access via the top of the cabin on the first-generation Ottobot. The side-accessible doors are breadbox-style, meaning they slide open vs. a hatch-style door. Both gen one and two allow users to open the Ottobot after scanning a QR code.

Ottonomy, which began operating its first generation robot in the CVG (Cincinnati/Northern Kentucky) airport in 2021, will use the money to expand to new markets in North America, Europe, and the Middle East.

‘Late Empire Sort of Stuff’: Wonder Faces Backlash Over Environmental Impact of Vans

By and large, the residents of the northern New Jersey suburbs where Wonder delivers agree that the well-funded startup’s food tastes great.

What they can’t agree on is whether having hundreds of Mercedes diesel vans idling curbside each night while Wonder employees prep meals is a good idea at a time when most experts agree climate change is fast becoming an existential crisis.

A story published in yesterday’s edition of the Wall Street Journal details the bickering that has broken out amongst residents of South Orange and Maplewood, New Jersey, about the omnipresent vans zig-zagging through their towns each night.

On the one hand, some feel the Wonder trucks are an unnecessary and carbon-emitting extravagance.

“There’s a stigma of calling the Wonder truck and having them idle outside your house for the decadent purpose of making you dinner in a truck,” resident Will Meyer told the Journal. “It feels like this is late empire sort of stuff.”

And then there are those who don’t see a problem with the trucks.

“It doesn’t bother me,” said Lisa Bressler, who didn’t see the trucks being much different from Amazon and UPS trucks driving around town. “I guess I like unnecessary luxuries.”

For my own part, the trucks seem a bit out of step with efforts to reduce the carbon footprint of food delivery. Serve, a maker of sidewalk delivery robots, asks on their Twitter page why should we use a two-ton car to deliver a two-pound burrito. It’s a legitimate question that makes me wonder if a three or four-ton diesel van sitting outside my home cooking food for 20 minutes is a good idea.

Ok sure, so maybe a couple of hundred vans probably don’t make a huge difference in the grand scheme of things, but what about a scaled-up, USA-wide Wonder? The company has grand plans to eventually take this to cities across the country and if it’s as disruptive as Marc Lore thinks it is, it could essentially reinvent food delivery. In a scenario like that, we’re looking at tens of thousands of Wonder vans driving around every night and sitting curbside.

Wonder’s Scott Hilton told the Journal they are evaluating electric vehicles, so maybe by the time the company rolls out across the country, they’ll have this thing figured out. But for now and the foreseeable future, residents of this New Jersey suburb will continue to debate the impact of Wonder’s vans on the environment.

Forget Sidewalk Robots or Drones. In the Future, Food Could Travel to Your Home in Underground Pipes

Why use a drone or sidewalk delivery robot to deliver packages when you can have them sent directly to your kitchen via a series of tubes?

No, I’m not referring to Ted Stevens’ imagining of the Internet or a plotline from a Steampunk novel, but one startup’s vision of an underground delivery network that would send packages hurling towards their end destination at speeds of up to 75 miles per hour.

That startup is Pipedream Labs, which has a plan to build an underground pipe network for near-instant delivery of physical goods. The idea, which is one of those that is so crazy you can’t figure out if it’s brilliant or stupid, works like this:

The Pipedream delivery system would be a citywide underground delivery network that utilizes pipes and electric-powered delivery pods to shuttle things around at high speeds. It’s essentially a Hyperloop for delivery, only instead of transporting people, it will bring you the latest Amazon package or hamburger from your favorite restaurant.

While the initial plan is to create a “middle mile” network for long-haul delivery across cities, the company’s CTO says they have a vision for eventually delivering products directly into consumers’ homes. He envisions a new kind of home appliance called the Home Portal which would enable “cheap, fast, and environmentally friendly delivery of groceries, food, and packages.”

The delivery infrastructure will be PVC piping, the same kind used by city utilities for plumbing or electrical systems. In fact, the company says they plan on making all infrastructure usable by utilities “if needed” or “in the event that PipeDream migrates to an alternative delivery method (Star Trek Transporter?) or ceases operations”.

Packages would be delivered “intra-district” to different parts of the city and would go to what the founder describes as delivery nodes.

The nodes will utilize delivery portals, vending machine like kiosks that would hand off goods to a customer or to a last-mile delivery person or robot. Portals hand off packages through a hatch and can cache up to 8 delivery pods at a time, allowing it – for a limited amount of time at least – to act like an Amazon storage locker.

Source: Pipedream Labs

Delivery pods are 10.8″ in diameter by 18″ in length and have a theoretical speed of over 110 miles per hour (but will likely move around at a speed of 60 to 75 miles per hour when in operation). They have two sections, a drive section (which includes the motor, electronics, and battery) and a removable cargo carrier section.

Pipedream envisions all sorts of products delivered via their pods, including food. According to the company, the internal capacity has room to carry 95% of grocery items and most any type of prepared food from a restaurant (except for pizza, which the company says they are working on).

The analyst in me looks at an idea like this and says there’s no way it would work. The cost of building out the network, the difficulty of navigating city bureaucracies to get a network deployed, not to mention the many technical challenges of creating an underground system and operating it all seem insurmountably difficult.

But as I think about a world where ever-more products are delivered to our homes, it doesn’t take long to realize we’ll need a variety of creative solutions beyond the status quo. Car delivery doesn’t make sense long-term for small packages, but we also don’t want to live in a dystopia with drone darkened skies or sidewalk robots congesting our walkways. Taking a portion of package delivery underground may make the most sense long term.

Of course, it will take a while before we ever know if Pipedream’s, um, dream comes true. The company has only raised $1.6 million in seed funding so far and would need to tap into utility loan funding to build a network of the size they envision.

But who knows? Maybe Elon Musk will embrace underground delivery the same way he’s helped push underground transportation forward and invest in the company, or a forward-looking city will work with Pipedream to fund an underground delivery network for stuff over the next decade.

Either way, an operating underground delivery network is an interesting new idea and one that might have a future in an increasingly e-commerce-driven world.

People Using The Wonder Food Delivery Service Are Bonkers About It

You’ve probably heard about Wonder by now. The high-profile company founded by Marc Lore has people buzzing with its nearly billion in funding and a model that includes chef-designed meals and a network of vans that cook up the food curbside.

Last month I wrote that Wonder has the opportunity to either reinvent the food delivery business or become a case study like others who have tried and failed to build out fully integrated delivery models.

What I didn’t write about is how much Wonder’s customers seem to love the product. After hearing from people I’ve talked to and reviews I’ve read about it online, it seems the service has an almost fanatical user base.

One person I spoke to told me his family uses Wonder multiple times a week, ordering meals that can range well above a hundred dollars with alcohol included to more affordable middle-of-the-week family meals.

Another wrote via Linkedin, “I live in that one metro market that Wonder delivers to, and it is wildly popular in my town. Last week I couldn’t decide between two Wonder “restaurants” Di Fara from Brooklyn or Mozza from LA. Both pizza spots impossible to get into but not when the Wonder truck pull up to your house and cooks it for you on the spot!”

The responses via Apple’s app store are even more gushing:

“The food was wonderful, and I cannot wait to order again. What a fabulous concept. It really works. Telling everyone that I know about the fabulous Wonder trucks.“

“Impressive how quickly you can be eating a fine restaurant quality meal from the comfort of your own home. Hoping Wonder continues to thrive, and that they keep the bar raised high for their commitment in delivering fine ingredient quality meals.“

Here are a few observations about why Wonder seems to be developing an infatuated following:

Users love the quality of the food. In review after review, people say the food is really good. Almost everyone says the food is as good or better than they could get in a restaurant.

The service is white glove. While some users have said Wonder has a kink or two to work out, it doesn’t seem to matter because the customer service is so strong. When Wonder makes a mistake, someone is there to make it right. People also love the chefs who show up at their door in a white coat and Wonder hat to deliver their meals.

People love access to chef-designed meal concepts. Getting quick access to food that could have been made in far-away and popular restaurants like Di Fara Pizza or J Bird from Jonathan Waxman is something that resonates with reviewers.

Word of mouth and omnipresent delivery vans are reinforcing success. Everyone in the New Jersey metro area Wonder serves seems to know about the service. Word of mouth is extremely strong and people are seeing the Wonder vans buzzing up and down the street.

While I can’t verify how many of the app’s reviews are from Wonder employees or Wonder-friendly people, there are too many positive ones (over three thousand at this point) for the early buzz to be contrived. The strong reviews also seem to reinforce what anectodally appears to be a higher than industry average frequency of usage by Wonder customers. I also imagine strong customer metrics are one of the big reasons the company has continued to raise money in an environment much tougher than it was just 6 months ago.

If you’re lucky enough to live in Wonder’s delivery area, drop us a line and let us know your thoughts. I am still unsure how the model scales nationwide, but there’s no doubt that early results show Marc Lore and his team may be creating something special with Wonder.

Will Wonder Reinvent the Food Delivery Biz, or Become Another Cautionary Tale? Only Time Will Tell

Imagine you wanted to build a complete-from-scratch meal delivery company.

Not just the delivery part like Doordash. I’m talking about building a company that is essentially an entire restaurant and food delivery industry in a box, one that works with big-name chefs to develop new restaurant concepts, builds centralized food production facilities, creates a network of mini-kitchen hubs around a large metro area, and owns the delivery network to get the food to people’s doors.

In other words, everything. If that sounds like a big vision, it is, and it’s exactly what Marc Lore is building with Wonder. The founder of Jet.com and Diapers.com described the concept in a Linkedin post last December:

Our innovative, vertically-integrated approach begins with exclusive menus from the country’s best chefs and restaurants. A central commissary sources high-quality, fresh ingredients and serves as the start of each meal’s journey. Orders are then fired, finished, and plated in our mobile kitchens just steps away from your door, and served as soon as they’re ready — allowing you to experience the food the way it’s meant to be enjoyed. 

Lore is no stranger to big industry-shifting ideas. He created Diapers.com, one of the early pioneers in online baby products (acquired by Amazon) and Jet.com, a discount-pricing based online retailer acquired by Walmart in 2016. He also has plans to build a Utopian city in the American west.

Wonder’s business model is essentially built around a three-layer logistics network, one where the company owns centralized production, a distributed network of mini-kitchens in various neighborhoods, and the final delivery network that drops the food off at the consumer’s doorstep.

If it sounds reminiscent of Zume, it’s because the two ideas are kinda similar. Zume created a vertically integrated food delivery business complete with a robot-powered pizza-making ghost kitchen, mobile food trucks with ovens built-in and a fleet of scooters to deliver pizza to the customer. Zume also raised a bunch of capital – $423 million – before the company ended up laying off 80% of its employees and exiting the food delivery business to focus on sustainable packaging.

Despite the similarity between the two concepts, Zume’s troubles haven’t dissuaded investors from investing in Wonder. Lore has raised $900 for Wonder so far, including a $350 million Series B announced this month.

In fact, if one thing is clear, it’s that Lore is good at raising money. He raised over $800 million for Jet before he sold it to Walmart, and he’s also started an investment company with Alex Rodriguez with plans to raise $500 million. He also is raising $25 billion for the first phase of construction of utopian city called Telosa, with eventual plans to raise $400 billion.

But even for someone as talented as raising money as Lore, you still have to wonder how long investors will stay patient as his company builds out its food delivery business and scales it to other cities. After raising close to a billion dollars, the company is serving one metro market so far, a cluster of neighborhoods in the New Jersey area. While it’s clear that standing up its first metro market will probably be more capital intensive than its second and third market – the restaurant concepts, recipe development and core technology development built now can be leveraged for each new market expansion – the company will still need to build out a three-layer delivery network for each new metro is expands into.

Who knows, maybe Lore and Wonder can generate enough cash flow with its New Jersey business and can cost-control its burn rate to extend the $900 million out for a couple of years to fund another market build-out or two. Still, no matter how frugal the company remains, it’s going to have to go back to investors at some point, and with things getting tougher in a global macroeconomic environment filled with increasing uncertainty, nothing – including the future availability of multi-hundred million funding rounds – is a certainty at this point.

And it’s not just the economy, but an extremely competitive, fast-changing restaurant and food delivery business. I’d argue the restaurant and food delivery business is even more competitive and market-saturated than baby products or discount e-commerce offerings. Wonder is competing not only with well-capitalized competitors in Amazon, UberEats, and DoorDash, but also facing off against a local mom-and-pop restaurant on every street corner that is increasingly relying on digital business models to survive as we emerge from the pandemic.

All that considered, Lore has an amazing track record that would be foolish to ignore. He’s achieved successful exits for his previous companies, selling both Jet and Diapers.com to big entrenched players (though both companies have been subsequently shut down by their new owners). So maybe investors are looking at those two previous exits and are comfortable Lore can pull yet another rabbit out of a hat.

For his sake and theirs, let’s hope he can do it once again, because if he can’t, I suspect we’ll be studying the case of Wonder years from now as another cautionary tale of audacious visions and spent venture capital.

PARC Spinout EverCase Uses Electric & Magnetic Fields to Store Food in Freezers Without Ice Crystals

If you’ve ever put meat or fish into a freezer, you’ve probably noticed it doesn’t look nearly as fresh once you thaw it out.

That’s because the process of freezing food alters and damages its structure at a cellular level. As the temperature drops, water molecules slow down, and ice crystal embryos form ice nucleation sites. From there, the ice spreads to freeze the entire piece of food. Water within the food expands by up to 9% when frozen, causing food cells to rupture. When frozen food thaws, nutrients and flavors leach out from the food, often in the form of drip loss (that red liquid dropping from a warmed piece of red meat).

But what if you could store and preserve food in a freezer at sub-zero temperatures and avoid the damage incurred by traditional freezing? That’s the idea behind a new startup called EverCase, a spinout from storied research and business incubator Xerox PARC.

The new company, announced on June 15th, is the result of almost a decade of research that started when Dr. Soojin Jun, a professor at the University of Hawai’i at Mānoa, got a three-year research grant from the USDA in 2013 to research the technology dubbed “Supercooling.”

Jun’s Supercooling technology utilizes pulsed electric and oscillating magnetic fields to cause water molecules within food stored at sub-zero temperature to vibrate, inhibiting the formation of ice crystals. The result is food that, when pulled out of a Supercool equipped freezer, has almost the exact look and texture of food that is fresh and not riddled with ice crystals.

Image Above – Left: Drip Loss from thawed traditionally frozen meat. Right: EverCase’s comparison of meat using different preservation techniques

Jun would eventually take his ideas to Xerox PARC where he would get help incubating them and preparing them for commercialization. The end result of that move is EverCase, a new spinout that plans to build systems with Supercooling that can be used in existing freezers.

You can watch a demo in the video below where EverCase shows a piece of frozen meat compared with a piece of meat stored using Supercooling technology.

EverCase Demo Video

The company is pitching nothing less than a revamp of the traditional “cold chain” supply network, where freezers, from packers to the retail storefront (and possibly even to the home), use Supercooling technology. The company’s pitch deck talks of a new category of smart packaging and a new preserved food category of ‘Supercooled foods.’ They also plan to work with refrigeration manufacturers and other OEMs to build Supercooling technology into freezers and refrigerators.

It’s an ambitious plan, but there’s no doubt there could be a market for technology that helps food sidestep some of the downsides of traditional cold chain freezer technology. The company does say its technology is “inexpensive to make,” but it’s still unclear to me what the total cost of upgrades for a restaurant, retailer, or food packer would be. Nevertheless, it is encouraging that EverCase says its technology works with existing freezers because forklift upgrades for the massive amount of installed freezer systems throughout a mature cold-chain network is a non-starter.

The company is headed up by Chris Somogyi, a former co-founder of cell-cultured seafood startup BlueNalu and business development exec at PARC, and other executives from IBM, Xinova, and PARC. According to the announcement, EverCase is in the process of a Series A funding round.

Food Tech News Pod: The Wendyverse, 15-Minute Grocery Struggles & Roku’s Big Food Play

It’s another weekly food tech new wrap-up.

The stories we discuss this week include:

As always, you can find more episodes of The Spoon Podcast on Apple Podcasts, Spotify, or wherever you get your podcasts. You can also just click play below to listen to today’s show.

Is Roku About To Bring Us Shoppable TV Content Featuring Martha Stewart & Other Culinary Giants?

Last week, Walmart and Roku announced a deal that would allow TV viewers watching streaming via a Roku device to purchase items – including food items – using their remote.

According to the announcement, the new experience will allow customers to click on and purchase items advertised within the “moments of entertainment” (translation: during an actual show and not an explicit commercial), as well as during commercial breaks during ad-supported programming.

The new integration will allow viewers to click on a shoppable ad and proceed to checkout. The customer’s payment information will be pre-populated from Roku Pay, Roku’s payments platform, and then the customer taps “OK” on the Walmart checkout page to place the order. A Walmart purchase confirmation is emailed to the customer.

By taking shoppable commerce to the TV screen, Walmart is going beyond the shoppable integrations the company has previously done through partnerships with SideChef and Tasty. While the rise of video-centric social media platforms is blurring the lines, TV watching (including streaming) typically is a much different experience than time spent in front of our computers doing activities like online shopping.

For Roku, the move builds on an impressive ad business which saw the company garner the bulk of its $734 million in Q1 non-hardware revenue via advertising sales. The core of the company’s ad business is done via its Oneview Platform, which does ad-targeting of consumers based on their viewing behavior and allows Roku to deliver ads interspersed into shows on its own channel and via streaming partners that do have ad-supported content (like, say, Hulu) that open up ad inventory to Roku.

This deal is interesting on its own, but it becomes much more intriguing considering Roku’s recent big bet on original cooking content featuring names like Martha Stewart, Emeril Lagasse, and Christopher Kimball. That news was unveiled in May at Roku’s 2022 NewFronts when the streaming company announced co-production deals with Marquee Brands and Milk Street Studios to produce seven new streaming shows exclusively for the Roku Channel.

Why are the two deals, when considered together, much more interesting than on their own? Because while Roku can theoretically insert commerce-conversion opportunities for Walmart or other partners in ads on other streaming channels, the streaming company can go much deeper with commerce integrations on its channel where it has the full rights to the content and owns all the ad inventory.

Some of those deeper integrations might include in-show shopping moments. For example, imagine watching “Martha Cooks” or “Milk Street’s My Family Recipe” (two of the new shows on Roku TV) and seeing Martha or Christopher Kimball showing off a new holiday recipe. The Roku platform would allow a call to action overlay within the show itself where viewers could click via their remote to view the food items in the recipe, add them to a cart, and a transaction to be completed there on the spot.

While the Walmart and the new show slate are technically different deals, I would be shocked if Roku wasn’t pushing the possibilities around in-show commerce when negotiating with Martha, Emeril and Kimball. Conversely, the timing of the Walmart shoppable ad partnership is giving Roku a premium grocery partner just as the streaming company is beefing up its food and cooking content.

Longer-term, I would imagine other streaming partners like Hulu or even Netflix (which is considering ad content) would be open to enabling in-show commerce on shows on their channel via Roku’s platform. Roku has over 60 million viewers using its platform, giving it one of the largest addressable audiences in the world of streaming. If they can tie all the pieces together and bring more streamer partners on board, the company could position itself as a true TV commerce power player.

The Case for 15-Minute Grocery Delivery is Questionable. So Why Did It Raise So Much Capital?

For about as long as I’ve been seriously watching the Internet industry, companies have been trying to make a business of home grocery delivery.

It started back in the late nineties when companies like Webvan and Homegrocer raised massive amounts of capital after convincing investors that food shopping would be largely done online in the future.

Webvan would raise almost $400 million in venture investing and another $375 million through an IPO. HomeGrocer raised $440 million in venture capital and almost $288 million going public.

None of it was enough. The two companies would eventually merge and went bankrupt less than a year later.

Of course, some online grocers survived, including some originating in the early days of the Internet. Ocado, conceived in the year 2000, continues to this day and is one of the biggest online grocers (and grocery automation technology companies).

But despite the occasional success story like Ocado, the reality is online grocery shopping is a tough business, one that seems to possibly work as part of a broader omnichannel market approach where grocers like Walmart, Kroger and now, yes, Amazon offer both in-person and online shopping experiences for the consumer. And even Ocado.com is essentially an omnichannel model, partnering in the early days with Waitrose.

Which brings us to the 15-minute grocery category, a model built around hyper-local delivery with distributed micro-fulfillment centers placed in dense urban markets like NYC, Philadelphia, and other locations. Startups in this space focus on convenience, offering a limited set of items, not unlike you might find in a convenience store like 7-Eleven (but usually with a little more fresh food sprinkled into the mix).

The market, which in some ways kicked off with GoPuff’s founding a decade ago, witnessed a whole bunch of new entrants enter the market over the past couple of years, including companies with similarly weird names like Gorillas, JOKR, Fridge No More, Weezy to name a few. These companies feasted on a downright frothy venture capital market, raising a breathtaking $4 billion last year alone:

However, with the worldwide economic climate facing significant uncertainty in the face of decades-high inflation, rising interest rates, and a war in eastern Europe, the easy money spigot has been shut off. As a result, some of these companies are either falling into the deadpool, getting scooped up by other competitors, or like JOKR and Gorillas, attempting to cut costs through layoffs and market pullouts to preserve capital runway as they try to survive what looks to be a long economic winter.

Of course, all of this begs the question: Why did all these startups get so much funding in the first place? As the early online grocers demonstrated, building out a network of stores and warehouses and a delivery infrastructure to get a basket of goods to consumers is an extremely expensive business.

Don’t believe me? This chart from a recent McKinsey report on online grocery shows just how tough the margins are for a standard online grocery business before we even consider the extra costs of accelerated delivery.

For a typical e-grocery business, COGS (cost of goods – i.e. groceries – sold) are the biggest expense, around 70% of a total order. The leftover 30% is eaten up by in-store and pick-and-pack labor, last-mile delivery expenses, and associated e-commerce fees. When it’s all said and done, a typical online grocery order has a negative 13% margin.

Of course, fast-grocery startups might offer slight markups in pricing and also make money through delivery fees (which range from $1.80 to $5 per order) and membership subscriptions, but what’s somewhat surprising in retrospect is that fast-grocery companies don’t have drastically different pricing or fee structures compared to that of traditional e-grocery prices.

Beyond the negative marginal profit of each order, the biggest expense driver for these companies and what likely ate the lion’s share of the billions of dollars in the collective capital runways is the buildout of their fulfillment centers and dark store networks. Being fast requires lots of points of presence to be within a 15-minute delivery window (or shorter, since fulfillment and delivery driver load-in takes at least a few minutes once the order comes through), which means lots of construction, equipment and technology costs.

Indeed, the venture community must have seen something here in a business – online grocery delivery – that has shown itself to be historically unprofitable. My guess is the rationalizations for writing these large checks fell in the following categories:

Customers will pay for convenience: We’re living busy lives and sometimes we just want what we want. If someone can get me a six-pack of beer, a steak, and a bag of chips to my house in 15 minutes, I’ll choose that option.

The pandemic changed the game and converted us into an e-grocery nation: In the early days of the pandemic and throughout 2020, we saw unprecedented conversion rates to online grocery as many consumers were forced to use it for the first time. Surely once they went e-grocery, customers wouldn’t return to the old way of doing things.

The siren song of the giant TAM: Food is a huge industry. I’m sure pitch-deck-making founders convinced investors they could convert a large enough percentage of food shopping customers to their business to take home a healthy percentage of the total available market (TAM) in the long run.

Long-term, technology & automation would drive costs down: I am sure many fast-grocery startup founders thought if they could just amass a large and loyal user-base, they could apply technology and automation to bring down the costs and increase margins as they moved past the large-scale infrastructure buildout of the early years.

These rationales for the fast-grocery business may make sense in a vacuum, and I am sure the impressive growth of early-growth pioneers like GoPuff helped convince many startup founders and eager investors there was some long-term gold to be found in those fast-grocery hills. But therein lies the problem: a closer look at these prospective businesses and anticipation of changing environmental factors – both in the form of the global macro-economic situation and the rise of competitors with built-in cost advantages – should have been enough to turn away some of the investors who jumped into this space.

Consider the e-grocery boom of 2020. While many of us thought that the rapid adoption of e-grocery would likely have some staying power even as the pandemic faded, it was never clear how just how much an average e-grocery shopping consumer would buy online once they had the opportunity to head down to their corner grocery store or load-up on staples at their warehouse store. From the looks of it, many consumers are returning to their local stores.

As for the promise of convenience, even if we assume sub-hour delivery time does offer some value to consumers, that value is reduced if there is a convenience store on the corner where one could just go pick up the goods instead.

And, say, a customer did occasionally use these services, was there any reason to assume they would continue to be that impatient? Amazon and Walmart often can usually deliver within an hour or two. Customers who want something quicker can always use a DoorDash or another food delivery app to get something to you quicker.

In reality, these adjacent competitors should have been the most significant reason investors stayed away from this space. These companies are all logistics-optimized, well-capitalized businesses that are eyeing the same TAM of the newer entrants. They also have legacy businesses with which they’ve built customer lists in the tens of millions in some cases.

We’ll see more consolidation of this market, and my guess is one or two of these startups have a chance to emerge on the other end as long-term survivors. With its early start and a warehouse network that’s largely built out, GoPuff looks like it could have enough of a customer base and capital in the bank to weather the storm. Gorillas, having just raised $1 billion late last year, may have sufficient runway if they can manage their burn rate through the downturn.

But no matter how this market shakes out, investors will be much more hesitant to sink capital in this market, particularly for companies with no discernible differentiation. Long-term, my guess is we might be talking about the fast-grocery boom of the early 20s for the next decade or more as a cautionary tale of a venture-capital fever investing, at least until the next boom cycle causes us to forget the lessons of the past once again.