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The Spoon

Daily news and analysis about the food tech revolution

grocery delivery

Germany-Based Gorillas Raises $44M for Speedy Grocery Delivery

German grocery delivery startup Gorillas has raised a $44 million Series A round of funding led by hedge fund Coatue, TechCrunch reports.

Gorillas promises super-speedy grocery delivery, with the company saying it averages a delivery time of 10 minutes. It does this by creating smaller, delivery only (or “dark”) grocery stores. These dark stores can be placed in neighborhoods closer to where customers live, and can be engineered to enable faster pick-and-pack orders only, instead of being set up to serve in-store shoppers as well.

The dark store concept is catching on with a lot of startups. Over in the U.K., Weezy promises fast grocery delivery thanks in part to its smaller neighborhood fulfillment centers. Here in the U.S., DoorDash created its own branded dark convenience store, and Fabric‘s automated fulfillment centers are meant to be built into smaller locations.

The global pandemic pushed people into grocery delivery earlier this year. And though sales have dipped from record highs earlier this year, e-grocery continues to be sticky with customers who are ordering more and more often online. Perhaps more importantly, online grocery sales are projected to keep growing and take up 21.5 percent of total grocery sales by 2025, reaching 250 billion dollars.

So it makes sense that we’re seeing a number of companies angling now to get your e-grocery business and hopefully your loyalty as the entire sector grows. And it’s not just startups either. Amazon and Walmart are aggressively touting speedy delivery and offering free grocery delivery as a perk for joining their respective membership services.

For it’s part, Gorillas told TechCrunch that it plans to use its new funding to roll out its service across more cities in Germany and throughout Europe, starting with Amsterdam in the Netherlands.

Yandex Robots Roaming Russia Delivering Restaurant Meals

Robots from Yandex, a tech giant which is kind of like Russia’s Google, have started making restaurant deliveries in the Russian cities of Moscow and Innopolis, the company announced in a corporate blog post today.

The Yandex.Rover robots are six-wheeled, cooler-sized robots similar to those from Starship and Kiwibot. They work in conjunction with Yandex.Eats, the company’s restaurant and grocery delivery service that has more than 30,000 merchants across 166 cities. Via the YandexEats app, users select their desired restaurant and choose the delivery-robot option to get their food delivered by one of the company’s bots. When the order arrives, recipients unlock the bot with their mobile phone.

Yandex’s blog post didn’t mention how many delivery robots are in its fleet in each city, or how big the service areas are. It did note that its robots are delivering in the White Square district, which is in central Moscow and home to many cafes and restaurants, and that robot delivery is free in Innopolis. Yandex said its robots can also handle inclement weather, which I imagine is an important feature for Russian winters.

The global pandemic has increased interest in robot delivery in part because of its contactless nature. Robots don’t get sick and can theoretically work around the clock. In recent months we’ve seen a number of rover robot deployments in different parts of the world. The City of San Jose partnered with Kiwibot over the summer to enable restaurant delivery. Save Mart in Modesto, California started delivering groceries via Starship’s robots. Pink Dot started making robot deliveries via Postmate’s Serve robot in the West Hollywood neighborhood of Los Angeles. And in South Korea, Woowa Brothers started making robot deliveries to an apartment complex in Seoul.

As part of its announcement, Yandex said that in addition to delivering restaurant meals, its robots would also be making grocery deliveries in the future.

Swedish Grocery Delivery Service Vembla Raises 6M SEK

Vembla, a Swedish delivery service for groceries and other goods, told The Spoon via email today that it has raised 6 million Swedish Krona (~$704,000 USD) from angel investors including Tuomas Kukkonen (FMCG entrepreneur in Finland), Michael Wolf (ex CEO of Swedbank), Manfred Aronsson (ex. CEO Discovery Networks).

Similar to Instacart here in the U.S., Vembla is an app that partners with local grocery stores in Sweden. Customers shop at stores on the Vembla app, while Vembla “shoppers” go in and pick up the order and deliver it. The startup promises to deliver orders in an hour.

According to the press announcement that Vembla sent, online grocery shopping in Sweden hit 5 percent of total sales in 2020, up from 2 percent in 2019. That growth is projected to continue to hit nearly 7 percent of total sales in 2022 (Source: Industry reports, DI, Nordea).

We aren’t that well versed in the Scandinavian grocery market, but it stands to reason that the COVID-19 pandemic would have a similar effect in Sweden as it has here in the U.S. Even though Sweden has been more lax in its approach to tackling the virus.

Domestically, the pandemic pushed online grocery shopping to record heights this year. Over the next five years, online grocery shopping is projected to take up 21.5 percent of all grocery sales in the U.S.

The bigger question for pure delivery plays like Vembla and Instacart is how long retailers will rely on them. Right now, third-party delivery services can help with the crush of new customers. But over the long haul, will retailers want to keep handing over the customer relationship to an outside delivery service, or do more investment to bring delivery in-house?

Ahold Delhaize Buys Majority Stake in FreshDirect

Dutch grocer Ahold Delhaize announced yesterday that it has bought an 80 percent stake in New York-based online grocer FreshDirect. Private equity firm Centerbridge Partners bought the remaining 20 percent. Terms of the deal were not disclosed.

FreshDirect will continue to operate as an independent unit and under its own brand name. The company will join other Ahold Delhaize brands that include Stop & Shop and Giant Foods.

The purchase of FreshDirect comes on the heels of what has been a pandemic-induced record year for online grocery sales. New York City, one of FreshDirect’s main service areas, was hit particularly hard in the early stages of the pandemic, pushing the company’s delivery capacity to the brink. With the U.S. entering its third wave with the virus, having the massive infrastructure and resources of Ahold Delhaize could help FreshDirect weather any coming storm.

The combination of Fresh Direct and Ahold Delhaize also has a tech-forward angle. In addition to being an online-only grocer, FreshDirect also recently opened up a robot-powered fulfillment center in the Washington, D.C. area. For it’s part, Ahold Delhaize has experimented with automated micro-fulfillment centers, in-store robots, and small, cashierless nano-retail environments.

With the FreshDirect acquisition, Ahold Delhaize is also bolstering its capabilities to better fend off competition from the giant players in the grocery space. Walmart has made aggressive grocery delivery moves through its Walmart+ subscription service as well as a partnership with Instacart (and experimenting with self-driving delivery cars). And Amazon, which was once online only, has made moves into the physical space with its Go Grocery and Fresh stores.

With online grocery projected to become 21.5 percent of total grocery sales by 2025, expect these types of salvos between supermarkets to continue into the next year.

Farmstead Raises $7.9M to Expand it Online Grocery Business

Online grocer Farmstead announced today that it has raised a $7.9 million Series A round of funding. The new financing was led by Aidenlair Capital with participation from Y Combinator, Gelt VC, Duro, Maple VC, Heron Rock, 19 York, Red Dog Capital and others. This brings the total amount raised by Farmstead to $14.5 million.

According to the press announcement, the new funding will go towards Farmstead’s national expansion. The San Francisco Bay Area-based company recently added its first service areas outside of California by expanding to Charlotte and Raleigh-Durham, North Carolina.

Farmstead is a pioneer in the so-called dark grocery store space, eschewing a physical store that customers shop in for a delivery-only experience. The company makes use of data and AI to create a just-enough inventory system. The company’s goal is to have the right amount of stock to avoid product outages, but not so much that they are left with unsold inventory.

To help other grocers transition to this type of e-commerce-forward model, Farmstead launched its Grocery OS in September of this year, which, the company says is already being used by a “top 3 U.S. grocer.” As we wrote at the time of that announcement:

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

Farmstead’s expansion comes on the heels of record online grocery shopping, thanks to the pandemic. Grocery e-commerce is projected to be 21.5 percent of total grocery sales by 2025, hitting $250 billion. Farmstead has seen its own business increase dramatically this year. When we last checked in with the company in September, it had experienced 6x revenue growth over a four month period and grew its team by 3x, moving into a 17,000 sq. ft. warehouse facility.

Of course, Farmstead will need this bolstered warchest as established retail giants make their own moves to grab more grocery dollars. Amazon has opened up its own dark store as well as its own chain of supermarkets that will facilitate delivery, and also added an in-garage grocery delivery option in select cities. Grocery giant Walmart has added Instacart for delivery, launched its own Walmart+ subscription service which includes grocery delivery, and even started experimenting with grocery delivery by drone and autonomous car.

Amazon to Start Delivering Groceries Direct to Your Garage

Amazon announced today that it will start delivering groceries directly to the inside of people’s garages as part of its expanding Key service.

Amazon’s Key In-Garage Delivery service allows Prime members with a myQ smart garage door opener to receive packages inside their garage when they aren’t at home. With grocery, that program will now include food in addition to packages.

The expansion of in-garage grocery delivery shouldn’t come as a surprise. Amazon has been making big moves into grocery over the past year. In October of 2019, the company made grocery delivery free for its Prime members. Then it opened two Go grocery stores in Seattle earlier this year before opening three Amazon Fresh supermarkets in Southern California.

Amazon is making all of these moves because online grocery is poised to become big business. The pandemic spurred record amounts of grocery e-commerce earlier this summer. More importantly, online grocery shopping is projected to be 21.5 percent of total grocery sales by 2025.

As such, giant retailers are all battling each other for your grocery buck. Walmart, for instance, has partnered with Instacart and launched its own Walmart+ service to rival Amazon Prime.

Both Amazon and Walmart had competing in-home delivery options at one point that allowed delivery drivers into your house while you’re out. But letting strangers into your garage when you’re away is probably more palatable than letting them into your kitchen. Placing groceries in your garage also means food won’t sit on your porch waiting to be either stolen or (less) damaged by the sun or other elements.

Starting today, Amazon’s in-garage grocery delivery is available to Prime members ordering from Whole Foods or Amazon Fresh in select areas of Chicago, Dallas, Los Angeles, San Francisco and Seattle.

Walmart to Test Autonomous Grocery Delivery With Cruise’s Electric Cars

Walmart announced today that it is hooking up with self-driving electric car company Cruise to experiment with autonomous grocery delivery. The two will pilot a program in Scottsdale, Arizona starting early next year.

The corporate blog post announcing the partnership was light on details, so we don’t know how many stores in the Scottsdale area will be participating, where the service areas will be or how big the fleet of self-driving vehicles will be.

This isn’t Walmart’s first ride with self-driving delivery vehicles. In the summer of 2018, Walmart partnered with Waymo in a small pilot to autonomously chauffeur people from their homes to Walmarts to pick up their orders. The goal of that pilot was to learn more about curbside pick up. In 2019, Walmart worked with autonomous van company Gatik for deliveries along the “middle mile” between its stores. And at the end of 2019, Walmart announced it was using Nuro’s self-driving pod vehicles for grocery delivery in Houston, Texas.

This time around, Walmart’s pitch is less about self-driving and more about the environment, as Cruise’s vehicles are all 100 percent electric. Should this pilot prove successful, it will align with Walmart’s stated goal of achieving zero emissions across all its operations by 2040, including the electrification of all of its vehicles.

Walmart and other retailers will need to offer all the delivery options they can in the coming years. Online grocery is projected to hit 21.5 percent of total grocery sales by 2025, which means grocers will need to boost their capacity for increased delivery. Walmart is already among those leading that charge with two-hour delivery as well as it’s Walmart+ delivery service, which gives members free unlimited delivery. The company has even enlisted Instacart for help with same day grocery delivery.

Full-sized self-driving vehicles still have a lot of regulatory hurdles to overcome, but kudos to Walmart for helping push the technology forward (while getting food to our doors).

Self Point and Tortoise Team Up to Offer Grocers a Robot Delivery Option

Self Point and Tortoise announced today that they have partnered up to make same-day robot delivery available to local grocers.

Self Point makes digital commerce software that allows grocery retailers to build their own websites that integrate point of sale, inventory management and order fulfillment. Tortoise makes a teleoperated electric cart built for transporting heavy loads like groceries. With the Tortoise integration, Self Point’s grocery customers can add robots as a delivery option on orders.

You can check out a video of the Tortoise in operation here:

Tortoise Cart TikTok

Tortoise sets itself apart from other players in the last mile robotic delivery space such as Starship, Refraction and Nuro in a couple of ways. First Tortoise is proudly not autonomous. All Tortoise robots are teleoperated remotely by human drivers. By taking this approach, Tortoise believes it can get to market faster by avoiding some of the hesitations some local governments have with the safety self-driving robots on city sidewalks.

Tortoise is also not positioning itself as an on-demand delivery service. Tortoise is not meant to get you groceries in under a half hour. It’s meant to be scheduled ahead of time. Though it does appear that with Self Point, Tortoise robots will be available same day.

The Self Point + Tortoise partnership is certainly coming at the right time. Earlier this year, the pandemic pushed online grocery shopping sales, and by extension grocery delivery, to record-shattering new heights. Though those numbers have come down in recent months, grocery e-commerce is expected to represent 21.5 percent of total grocery by 2025.

As such we’ll see more grocers going online and needing more options for order fulfillment. Walmart has been doing automated grocery deliveries with Nuro in Houston, TX. Refraction has been doing grocery delivery in Ann Arbor, MI, and in Modesto, CA. And Save Mart is using a fleet of 30 Starship robots to make deliveries.

The robotic delivery market is definitely heating up, and it’s not to hard to imagine through deals like the one with Self Point, Tortoise could arrive in a bunch of neighborhoods rather quickly.

Nuro Raises $500M for its Autonomous Delivery Vehicles

Nuro announced today that it has raised a $500 million Series C round of funding. The round was led by funds and accounts advised by T. Rowe Price Associates, with participation from new investors that include Fidelity Management & Research Company, and Baillie Gifford, as well as participation from existing investors SoftBank Vision Fund 1 and Greylock. This brings the total amount raised by Nuro to $1.5 billion.

Nuro makes pod-like, self-driving, low-speed cargo delivery vehicles. Nuro’s R2 vehicle is roughly half the size of a regular car, is autonomous (there is literally no place for a driver to sit) and travels at 25 mph.

But equally as important as its technology is Nuro’s work around getting regulatory approvals for deliveries. Self-driving vehicles are new, and all levels of government are coming to grips with how to regulate the concept to ensure safety on public streets. In February of this year, Nuro got approvals from the federal government to drive on public roads. This was followed up in April when the state of California gave Nuro the green light to run on its public roads.

Nuro has also done a number of tests over the past couple of years, delivering food for Kroger and Walmart as well as Domino’s.

At the end of October, Nuro revealed that it had been running fully autonomous tests, meaning no drivers and no chase cars, successfully over the previous few months in Houston, TX, Phoenix, AZ and Mountain View, CA. You can see a video of the R2 in action here:

Nuro’s technology is certainly coming to market at the right time. The global pandemic has more people staying at home and thereby ordering more restaurant meals and groceries for delivery. Nuro’s vehicle can carry a full load of groceries directly to a customer’s curbside around the clock. The autonomous nature of the Nuro also means that delivery is contactless, an important feature as people look to reduce human-to-human contact in order to stem the transmission of the virus.

Nuro isn’t alone in the autonomous last-mile delivery space. Other players range from the small cooler-sized robots of Starship to the larger three-wheeled REV-1 from Refraction to the cargo vans of Udelv.

In other words, autonomous delivery is coming, and Nuro now has more money to assert its place when it arrives.

Uber Expands Grocery Delivery to Manhattan

Uber is expanding its nascent grocery delivery program into New York City, The New York Post reported this morning with confirmation from Uber.

According to the Post:

New Yorkers who open the Uber or Uber Eats apps will now see a grocery shopping tab, which will use their delivery address to show them what participating shops are available to them. In addition to chains like Gristedes, D’Agostino’s and Westside Market, the app will also be able to send couriers to smaller shops like Sullivan Street Bakery and Dickson’s Farmstand Meats in Chelsea.

Uber has been slowly but steadily adding grocery delivery to its Uber Eats business around the world over the past year. In October 2019, Uber announced it was acquiring a majority stake in Cornershop, a grocery delivery service that covers Central and South America. Earlier this year, Uber entered into a number of grocery delivery partnerships in France, Spain and Brazil. Uber’s grocery ambitions hit the U.S. in July of this year, when Cornershop started delivering groceries in Miami, FL and Dallas, TX.

Online grocery shopping and delivery has seen record numbers this year, thanks to the pandemic. And though the numbers came down from their record highs earlier this summer, the pandemic is surging once again throughout the country as we head into winter and the holidays. This resurgence plus cold and flu season could see those grocery e-commerce numbers tick back up again.

As grim as the thought is, the pandemic’s gaining strength could explain why Uber hopped over most of the East Coast to provide delivery service to New York. During the early days of the pandemic, as grocery stores there struggled to keep up with acute demand for grocery delivery. If COVID hits New York again with any severity, the city will definitely need as many grocery delivery options as it can take.

Uber isn’t the only third-party delivery company getting into groceries, however. DoorDash launched its own on-demand grocery delivery program in August of this year. And, of course, there is Instacart, which raised another $200 million this month (and is suing Uber over Cornershop’s grocery listing) to help solidify its lead in grocery delivery.

Of course, with the ride hailing market depressed by the global pandemic, Uber is more reliant than ever on its Eats business. Growing its grocery business should help Eats grow its much-needed revenues.

Shipt Adding 100,000 Shoppers in Time for the Holidays

Shipt, an independent unit of retail giant Target, announced this week that plans to add 100,000 Shoppers to its delivery force, bringing the total number of Shipt Shoppers to 300,000 in time for the holidays (hat tip to Supermarket News).

Shipt Shoppers are the gig workers who actually go into the store, choose the items on an order, and make the deliveries. Shipt now works with 120 of retail partners to deliver groceries and other household goods. Unlike other delivery services — Walmart+, Amazon Prime, etc. — Shipt doesn’t require a subscription commitment to use the service, instead allowing Shipt users to pay per delivery.

That Shipt is swelling its ranks isn’t that surprising. As noted, the holidays are approaching, and with the pandemic still going strong, many people will be eating at home instead of celebrating with nights out on the town. COVID-19 has spurred record amounts of online grocery shopping this year, and the whole grocery e-commerce sector is expected to grow to $250 billion by 2025.

As such, Shipt isn’t the only delivery service bulking up. Instacart, which increased its Shopper ranks to 750,000 to meet our pandemic grocery needs, also bolstered its warchest this week, raising another $200 million in funding. Add to that other retailers like Walmart and Amazon making aggressive same-day grocery delivery moves. Shipt needs to ensure it has a sizeable enough workforce to fulfill any influx of orders and keep people from looking elsewhere for delivery slots.

The grocery delivery battle was already cutthroat enough, but the holidays could intensify that situation even more. I’m sure it’s a topic we’ll be discussing with Shipt CEO, Kelly Caruso, as she joins us for a chat at next week’s virtual Smart Kitchen Summit. Get your ticket today and get a glimpse at the future of food delivery!

Instacart Raises Another $200M as Online Grocery Shopping Trends Upwards

Online grocery shopping service Instacart announced today that it has raised another $200 million as part of a new financing round led by existing investors Valiant Peregrine Fund and D1 Capital Partners. This brings the total amount raised by Instacart to roughly $2.3 billion, and the company says its valuation now sits at $17.7 billion.

This new funding comes just months after Instacart raised $225 million back in June . But it also arrives at a time when COVID-19 has accelerated and normalized online grocery shopping. While grocery e-commerce has leveled off from its record highs earlier this summer, online grocery sales are expected to hit $250 billion by 2025.

Throughout the pandemic, Instacart has made numerous moves to keep up with demand for grocery e-commerce, including scaling its gig Shopper ranks (the people who do the actual picking and delivery) to 750,000 (not without some controversy, it should be noted).

But Instacart hasn’t just spent the past six months raising money and scaling its workforce. The company has partnered with Walmart to provide grocery delivery, expanded into the convenience category through a deal with 7-Eleven, and filed an intellectual property lawsuit against Uber’s Cornershop.

In a corporate blog post today announcing the funding, Instacart wrote:

We expect to deploy the new capital in a number of ways, including: product development focused on introducing new features and tools to enhance the customer experience, continued investment in Instacart Enterprise to support retailers’ end-to-end ecommerce needs, and further investment in Instacart Ads to help connect Consumer Packaged Goods (CPG) brands of all sizes to customers shopping online from their favorite local retailers.

As noted, online grocery is on track to do big business over the next five years. However, even with its massive warchest, Instacart’s success isn’t guaranteed as there are a number of players both entrenched in and entering the grocery delivery space. Amazon is expanding its real world grocery store presence, Kroger is busy building out big automated delivery centers across the country, and both Uber and DoorDash are getting into grocery delivery.

This is all good news for consumers. As these big well-funded names duke it out, they will all be improving their infrastructure and systems to make delivery easier, faster and better.