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The Spoon

Daily news and analysis about the food tech revolution

e-commerce

Vegano Launches an All-Vegan E-Commerce Grocery Marketplace in Canada

Vancouver, Canada-based startup Vegano launched an online vegan marketplace today that will function as an e-commerce grocery-delivery storefront for plant-based food items.

For now, the service operates in the Metro Vancouver area as well as Squamish and Whistler. The company said it plans to expand to Toronto and Montreal by the end of this year in addition to heading Stateside and launching in Los Angeles. 

As its name suggests, Vegano sells 100 percent vegan foods sourced locally to each area the company serves. Up to now, this has been primarily through the Vegano’s meal kit service. Each week, users can pick three meal kits, which are delivered with pre-portioned ingredients and cooking instructions. Vegano says meals can be prepared in 30 to 45 minutes. 

The new online marketplace currently sells around 500 items from brands like No Whey Foods, Very Good Butchers, Field Roast, and others. The company said it plans to bump that number of products up to 10,000 by the end of 201. While shoppers don’t have to be existing Vegano meal kit subscribers to order from the marketplace, there is a $9.99 delivery fee for non-members. Members, meanwhile, can choose marketplace items and arrange to have them delivered on the same day as their meal kit.

Vegano says it has experienced a 150 percent growth in sales since January 2021. And little wonder, given the rise in sales of plant-based proteins around the world. Canada, specifically, got a major boost in this area last year when one of its own plant-based food producers, Merit Functional Foods, nabbed a $100 million investment from the government. Additionally, companies like Impossible and Eat Just have expanded their product lines to Canadian restaurants and retail shelves. The overall market for plant-based protein in Canada is expected to grow 14 percent annually by 2024.

Vegano closed a $4.2 oversubscribed round of Series A funding in March of this year. Funds are going towards scaling the company, and growing its marketplace and CPG offerings, in addition to accelerating product development. The company also plans to launch its own line of products to its marketplace by the end of this year.

Survey: Online Grocery Had $8.4B in Sales in April, Down 10 Percent from March

Some of the stats we’re watching closely as our nation slowly comes out of the pandemic are those for online grocery sales. Namely, will the e-commerce curbside pickup and delivery habits consumers were pushed into during lockdowns stay now that we can literally breathe easier back in stores?

Thankfully the Brick Meets Click/Mercatus Grocery Shopping Survey is keeping track, and according to the numbers released yesterday, U.S. online grocery sales were $8.4 billion in April. This is down 10 percent from March’s $9.3 billion, but up 16 percent from April 2020.

Brick Meets Click/Mercatus found that 67.8 million U.S. households bought groceries online in April, which is down 12 percent from a year ago. While there were fewer households, those that purchased groceries online bought more. Monthly active users placed an average of 2.73 online orders in April 2021, up a tick from 2.68 orders a year ago. Of these orders, 78 percent were for delivery and pickup, which were up 6 percent and 3 percent year-over-year, respectively. The ship-to-home category, however, dropped 9 percent year-over-year.

The survey also showed that more households are using two or more online grocery shopping methods (curbside pickup, delivery, ship-to-home), with 35 percent of monthly active users receiving orders through two or three different methods in April 2021, up nearly 3 percent year-over-year (and 20 percent from pre-pandemic August 2019).

“Online shopping has remained an attractive way to buy groceries for a sizable segment of the U.S.,” said David Bishop, partner, Brick Meets Click in the April survey press announcement. “Last year, retailers were in a race to meet the dramatic surge in demand. This year, it’s about executing a sound and sustainable strategy, with the imperative squarely on improving integration and implementation.”

The last part of Bishop’s statement is key. Grocery retailers have been investing heavily over the past year in systems to encourage and improve curbside pickup and delivery. Walmart is adding automated fulfillment and pickup kiosks, Albertsons is expanding the use of pickup lockers and testing delivery robots, while Amazon is expanding delivery inside your garage while you’re out. All of this investment, however, is predicated on the notion that people will continue to shop for groceries online after the pandemic recedes. It’s still too early to tell, but we’re eager to see what Brick Meets Click/Mercatus reveals throughout the year.

Virtual Farmer’s Market Grubmarket Raises $60M

Grubmarket, a kind of virtual farmer’s market, announced today it has raised a $60 million Series D round, according to TechCrunch. The round included participation from BlackRock, Reimagined Ventures, Trinity Capital Investment, Celtic House Venture Partners, Marubeni Ventures, Sixty Degree Capital, and Mojo Partners. It also included participation from existing investors GGV Capital, WI Harper Group, Digital Garage, CentreGold Capital, and Scrum Ventures. It brings Grubmarket’s total funding to roughly $180 million.

Grubmarket founder and CEO Mike Xu also told TC that his company, which is profitable, plans to go public but did not give an exact time for an IPO.

Grubmarket runs a virtual farmer’s market, sourcing food directly from farmers then selling it online to businesses and  individual consumers. Customers can choose from a range of food items from local farms, fisheries, and even some restaurants and meal kit companies. Just as they would on other food delivery marketplaces, customers order their items via the Grubmarket app or website and can either pick them up or have them delivered for a small fee.

The company also operates the WholesaleWare platform, an all-in-one platform for food businesses to manage everything from their inventory and customer relationships to their drivers’ routes and payroll reports. Xu told TC that since the COVID-19 pandemic, sales of WholesaleWare “have seen more than 800% growth over last year.”

That growth shouldn’t surprise too much, as online grocery sales continue trending up in response to the pandemic’s effect on in-store grocery shopping habits. Additionally, we’ve seen an uptick in e-commerce platforms connecting consumers directly to farmers. Chipotle, for example, launched a direct-to-consumer virtual farmer’s market in June, and there are plenty of smaller, regional players, like Good Eggs in San Francisco and Farmdrop in the U.K.

For now, Grubmarket is available to customers in parts of the San Francisco Bay Area as well as Seattle, Michigan, Texas, Boston, and New York, among other places.

Survey: As Online Grocery Trends Up, Walmart Leads and E-Commerce is Here to Stay

Results of a new survey from Coresight Research (registration required) released today show that as grocery e-commerce continues to trend up, thanks to the pandemic, Walmart has overtaken Amazon as the leading retailer and online grocery shopping appears to be the new normal for many consumers.

Coresight has been conducting weekly surveys of US consumers since mid-March and today’s results are from a survey done on August 19th. In this latest survey, Coresight found that 60 percent of respondent had bought groceries online in the past 12 months, up from 52 percent back in March.

Coresight also found that Walmart became the leading retailer for online grocery shoppers, surpassing Amazon. In August 56 percent of the online grocery shoppers had bought from Walmart, up from 52 percent back in March. Amazon saw a decline in Coresight’s study, with 55 percent of online grocery shoppers indicating they bought from there, down from 63 percent in March.

Now that we are six months into this pandemic it seems like people are getting habituated into buying their groceries online. Coresight’s survey found that 36 percent of online grocery shoppers “plan to retain their current online purchasing frequency one the pandemic eases or ends.”

These findings aren’t too surprising. Other research firms have shown month-over-month record numbers of online grocery shopping since the pandemic hit the U.S.. But Coresight’s surveys help add to this body of research and round out the picture of how consumers are changing habits as the pandemic continues.

What is worth studying more is the Walmart v. Amazon rivalry. All grocery retailers struggled under the sudden crush of new customers when the pandemic first hit. Amazon, which saw its grocery business triple year-over-year thanks to COVID, actually had to implement a waitlist for new delivery customers. Coresight surmised from its data that Amazon grew its sales through bigger baskets from existing customers, while Walmart may have been able to attract more customers.

Anecdotally, this fits with my own grocery experience. As delivery windows were hard to come buy during that initial e-commerce wave, Walmart, with its massive network of real-world stores was still able to fulfill my online grocery orders through curbside pickup.

And as Coresight points out, I’m not alone in finding online grocery shopping to be the new normal. Grocers have ironed out many of the early issues that plagued grocery e-commerce and with six months of shopping for groceries online now under their belt, people may have had enough time to establish new food buying habits.

Earlier this year, Coresight predicted that the online grocery sector would grow by 40 percent in 2020 to hit $38 billion in sales. I wonder if they will have to adjust that number as this new data comes in. Additionally, the grocery landscape continues to change. Not only is Amazon adding real world supermarkets to its arsenal of shopping options, but Walmart is expected to launch its new Walmart+ delivery service soon (and has since added Instacart as a grocery delivery partner), and new third-party players like Uber and DoorDash are now getting into the grocery delivery space.

Will Fear of Grocery Contamination Boost Sales of CSAs and Specialized E-Grocers?

I knew it was going to be a great day when I opened up my Twitter feed morning and immediately saw a CNN story about a woman who was arrested for licking $1,800 worth of merchandise at a Safeway store in California. She was purportedly licking jewelry, not food, but there have been multiple other instances of people coughing on and contaminating aisles of food in grocery stores around the country. These stories are heightening our already heightened fears around grocery shopping — and the risk it poses during the coronavirus pandemic.

Those are just stories of people who are contaminating food on purpose. Goods in supermarkets are handled not just by employees but also by perhaps dozens of other shoppers before they make it to your grocery cart. That’s one of the reasons we’re seeing a spike in online grocery delivery sales as well as curbside pickup — contactless delivery programs cut down on the literal touchpoints before food even reaches your home, hopefully lessening the risk of contamination.

All this contamination-mania makes me think that COVID-19 will not only transform how we shop for groceries, but also where we shop for them.

One avenue that could see growth as people take steps to avoid contamination is smaller, more specialized online grocers. These operations, which focus on a more selective array of products, are already seeing a spike in demand. Services like bean marketplace Rancho Gordo and online flour purveyor Maine Grains are selling out or having to delay shipments due to sudden increases in shoppers. Localized grocery delivery services, like Farmstead and SPUD.ca, are also extending delivery hours, waitlisting customers and hiring new staff to try and keep up with the new demand.

Peter van Stolk, CEO of SPUD.ca, told me that one reason these smaller operations are seeing such an increase in demand is that they can “feel safer” than the big box stores.

The key word is “feel.” He noted that, regardless, “the supply chain is the supply chain” — if you buy a box of Annie’s Mac & Cheese from Amazon Fresh or a local e-commerce site, both had to go through the same number of steps (warehouse, distribution center, etc.) to get to the retailer.

SPUD.ca goes to great lengths to ensure the safety of their warehouses — locked doors, gloves and masks, etc. — but Amazon has the same safety measures in place. So if you’re buying foods from established brands, they’ll likely have gone through quite a few (hopefully gloved) hands to reach you, regardless of which store you purchase from.

One thing you can control is whether you purchase from e-commerce services that ship directly from warehouses or from grocery stores. Instacart, for example, uses Shoppers to pick up your groceries from a physical store, meaning all the goods they’re getting are open to contamination from regular old shoppers. Walmart operates in a similar manner, for both delivery and curbside pickup. Services like Amazon Fresh (and Whole Foods), Farmstead, or SPUD.ca, however, fulfill your online orders directly from their warehouses, where all the handlers have to adhere to safety protocol.

Fear over grocery contamination could be one reason that we’re seeing an increase in sales is Community Supported Agriculture (CSAs). Food purchased through CSAs often go through significantly fewer hands than food purchase from large grocery chains, which typically travel through warehouses, distribution trucks and more before ending up on your doorstep. The number of touchpoints varies farmer to farmer, but Simon Huntley, CEO of online farm share platform Harvie, told me over the phone that “people have this perception that if they buy from a local farm or retailer there are less hands on their food.”

There are other benefits to buying food sourced nearby, specifically when it comes to produce. Executive Director of ReFed Dana Gunders also noted via email that “another upside to buying local or from a CSA is that the product is typically fresher, so can last longer (thus accommodates less frequent shopping).”

Obviously, even smaller, more localized e-commerce stores are not guaranteed to be COVID-free. As Huntley admitted: “I don’t know if we can prove that it is safe to buy from a local retailer.” They’re also often more expensive, so they won’t be a feasible retail channel for all budgets. And since many of the stores are more specialized or feature a smaller range of products, you’ll still have to turn to your local grocery store (or e-commerce store, or bodega) to get some essentials, like trash bags and hand soap.

But in a time when we’re trying to be as cautious as possible and also support local businesses, trust is more important than ever. With that in mind, COVID-19 could set up smaller, specialized grocery delivery services for a boom — one that could linger even after the pandemic passes.

COVID-19 Summit: The Question That Keeps Online Grocers Up at Night

It’s no secret that as the pandemic rages on, more and more consumers are ordering groceries online. But as with everything else right now, circumstances and protocols seem to change minute by minute. As Peter van Stolk, CEO of Canadian sustainable e-commerce grocery store SPUD.ca, put it during our virtual COVID-19 summit last week: “The ground is moving under our feet everyday.”

That sentiment seems to be especially true of grocery. We know that we’re relying on grocery — and grocery delivery — more than ever before to keep ourselves fed while social distancing. But how are grocery stores reinventing themselves to stay relevant, safe, and profitable?

That’s exactly what van Stolk discussed with Phil Lempert of Supermarket Guru at last week’s virtual summit. To keep up with this fresh demand and new safety protocols, grocery retailers — both online and brick & mortar — are having to institute new protocols and readapt their current business models.

One big change that SPUD.ca has been tackling is staffing. Van Stolk said that in the two-week period after the coronavirus pandemic hit, the company’s inbound employee applications skyrocketed from 200 to 10,000. Of the people they hired, SPUD.ca had to figure out best practices to keep the workers (not to mention shoppers) safe, including allowing employees to don personal protective equipment (PPE) if they so choose.

To that end, Lempert asked van Stolk about the question that’s keeping him (and presumably other grocery owners) up at night: How can grocery stores absorb additional costs from PPE for grocery workers, bonus payments, and paid sick leave, and still stay profitable?

For SPUD.ca, the answer was simple: start charging handling fees. In the interview, van Stolk said that SPUD.ca had originally stated that it would never charge delivery fees for their online orders. However, as with so many things during the pandemic, van Stolk said that has now changed. SPUD.ca will now charge customers a handling fee for grocery deliveries which is around $6. The company breaks down the fee to show where all the money will go: packaging, labor, sanitization, etc.  

SPUD.ca has had to make other compromises to keep their shoppers safe during the pandemic. Previously, one of the retailer’s main selling points was its emphasis on sustainability: it delivered food in returnable totes which it would later pick up, used reusable cups, etc. For now, the company has had to halt those initiatives to reduce the risk of contamination. “There’s a stop right now on that process,” van Stolk said. “People are focused on safety.”

SPUD.ca is a smaller retailer that only serves the Vancouver and surrounding regions of Canada, so it’s obviously not going through the exact same challenges as, say, giants like Walmart or Amazon which have to coordinate shipments around the globe. However, some problems are universal to the grocery industry right now, including safety, staffing, stocking, and the threat of impending price hikes for certain foods. I’m sure many retailers, large and small, will have sleepless nights as they try to figure out how to navigate this new normal for grocery.

You can watch the full video of the fireside chat below, and check out the other videos from the virtual conference here.

The Spoon COVID-19 Summit: How the Grocery World is Evolving During the COVID-19 Pandemic

Agroy Wants to Be the Amazon for Farmers

“Every other product is available online. Why can’t that be available in American agriculture?”

So asks Brad McDonald, co-founder of Agroy, over the phone during a scheduled chat. The question, of course, is rhetorical, since making agricultural products available—and affordable—online is exactly what he and Agroy are doing.

Agroy is an Amazon-like e-commerce platform that lets farmers connect with other farmers and find wholesale products from around the globe. Founder and CEO Jukka Peuranpää started the company in Finland in 2011, and after six successful years of piloting the concept around Europe approached McDonald to start a U.S. version.

The aim is to make the ease, flexibility, and variety of a marketplace like Amazon widely available to whole the agricultural industry, something no one else has done until now. The company’s LinkedIn page calls itself “a price freedom fighter for farmers.”

“The goal is when a farmer logs into their account they can be confident the products are not only the cheapest in their area, they’re the cheapest in the world,” says McDonald, who holds a spot on the Forbes 30 Under 30 list.

Farmers can sign up for Agroy for free. When a product becomes available in their area, Agroy sends an email with product and pricing information. Farmers can either purchase the item direct through the platform, or simply take the information and use it as extra negotiating muscle elsewhere.

Agroy, meanwhile, negotiates with companies on the price at which goods are sold as well as areas where those goods will be available. The more suppliers Agroy can add, the more farmers it will be able to reach.

Right now products include things like fertilizer, chemicals, and seed. Agroy has also provided animal feed and even pigs in the past. The overarching goal, says McDonald, is to “provide any product a farmer writes a check for.”

So, for example, a farmer in Texas might log into their account be able to find and buy fertilizer from Iowa for a better price than they would find in their own locality.

“By utilizing e-commerce, we lose a lot of the fixed costs the current system has to pay for,” McDonald explains. “Farmers are no longer restrained to only purchasing with their neighbors, but can now make purchases with farmers across the country by purchasing online.”

McDonald himself is a farmer. After working with Rabobank and Bunge, McDonald headed back to his native Iowa because he saw an opportunity: “Most of the people I associate with are farmers. When I first started, no one, including myself, knew of a website where you log on to make ag [agriculture] input purchases. I saw this as a niche in the market.”

The concept has so far been well received in the U.S., according to McDonald, who calls Agroy “a very easy sell.” He adds that most people are shocked no such platform has existed before. Farmers Business Network, for example, has an e-commerce wing, but its main sell is giving farmers the ability to democratize farm data. Access to anything, including the e-commerce element, costs a farmer $600 annually.

Meanwhile, Agroy launched a branch in India recently, and continues to have a presence in Europe. In its native Finland, 8 percent of the agricultural land purchases products through Agroy. The company is currently looking at Brazil and Central America as the next couple places to expand to.

It will be interesting to see where the platform is at in five or even two years time. The network runs across millions of acres of farmland in the U.S. alone right now. With no real competition breathing down its neck, where and how this company expands in the coming years seems virtually limitless right now.

Amazon Go Delays Public Opening Due To Tech Challenges

The Wall Street Journal reported yesterday that Amazon is delaying the public opening of its first fully automated grocery store known as Amazon Go. The store, which has only been open in beta to Amazon employees in the Seattle location, was supposed open at the end of this month. This is being pushed back, due to a few glitches involving tracking items and processing payments.

Amazon reported that it was experiencing technical problems with two key areas of its “Just Walk Out” technology – the company’s payment system was unable to handle or process payments when more than 20 people were in the store at a time. The system also struggled when an item was moved from its specific location on a shelf.

The traditional grocery store has been experiencing disruption for the last several years, with the rise of e-commerce giants like Amazon and Jet.com taking aim at consumer packaged goods (CPGs). Other rising stars like meal kit delivery subscriptions and grocery store delivery give consumers more options for fresh foods like produce and meat that don’t involve setting foot in a brick and mortar store.

But Amazon’s vision for the more convenient food store utilizes existing and emerging tech like connected sensors, machine learning, RFID tags and mobile payments to implement a cashier and checkout line-free experience for consumers. Not only does it create a streamlined door-to-door shopping event for the customer, but it cuts costs for the grocer – who in this case is Amazon – and could help impact the bottom line in a field where margins are shrinking.

And it’s clear why Amazon wants to build physical stores – as much as e-commerce is making grocers in North America rethink ways to attract customers with sales, fresh foods and produce and upgraded natural food and organic offerings, Nielsen’s 2017 research shows only 10% of consumers are currently shopping online for groceries. Amazon will need a multi-prong approach to remain competitive in grocery, especially when it comes to fresh foods and non-CPG items.

Amazon Go’s tech issues don’t seem major – but they are a good reminder that full-on grocery automation is hard. There are a lot of variables to consider, especially in a busy store, where customers are moving around, bumping into each other, moving merchandise without putting it back but not actually buying it. As a reminder to automation enthusiasts, earlier versions of what Amazon is trying to accomplish – self check-out kiosks – are still widely underused in grocery stores. And those of us who have used them know all too well that often, the light above the conveyer belt will inevitably blink when a customer has a problem, beckoning a store employee over.

So the future may be automated – but it’s not clear how seamless those shopping experiences will be, at least not yet. Amazon Go’s public opening and subsequent operations will certainly be telling.