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The Spoon

Daily news and analysis about the food tech revolution

grocery

Mercato Raises $26M to Help Indie Grocers Sell Online

Mercato, an online platform that helps smaller groceries establish e-commerce stores, has raised a $26 million Series A round of funding. TechCrunch was first to report the news today, writing that the round was led by Velvet Sea Ventures with participation from Team Europe and returning Seed investors Greycroft and Loeb.nyc.

As we have covered extensively over the past year, the pandemic accelerated consumer adoption of online grocery shopping. And while the number of people using grocery e-commerce has come down from the record highs of last summer, the most recent data from Brick Meets Click showed that U.S. consumers spent $6.1 billion on grocery pickup and delivery in February of 2021.

As a result, the big retailers in the space have ramped up their spending to keep up with demand and eventually encourage online grocery shopping. Giants like Walmart and Albertsons have and are investing in automated e-commerce order fulfillment and expanding curbside pickup and delivery options.

That’s great for big, publicly traded grocery retailers, who have the money to implement multi-faceted online shopping experiences. But what about the smaller, local, independent grocers without a huge market cap? That’s where Mercato comes in.

Mercato’s platform handles all the operational functions of running an online store for the smaller grocer. Mercato takes care of order management and processing, online marketing and even connects stores with a network of delivery drivers across the country. During the pandemic’s first big wave last year, Mercato launched a rapid on-boarding process that it now says can get grocers online in as little as 24 hours.

Mercato told TechCrunch that it has 1,000 merchants across the country on its platform, up from 60 in March of last year. The company said it will use its new funding to expand its team and its data analytics services.

Trax Raises $640M for its Computer Vision-based Grocery Inventory Management

Trax, a computer vision company that helps physical retailers and CPG companies with inventory management, announced today that it has raised a $640 million Series E round of funding. The round was led by SoftBank Vision Fund 2 and funds management by existing investor BlackRock. Other investors include OMERS and Sony Innovation Fund by IGV. This brings the total amount of funding raised by Trax to more than $1 billion.

The Trax system uses a combination of camera installations, shelf-scanning robots and computer vision to monitor products on store shelves. Product Images are sent to Trax’s cloud-based machine learning system to analyze and identify when inventory is low on store shelves, or when items are misplaced.

Trax is also used by CPG companies to help them audit store shelves to ensure they are getting the placement they paid for.

Trax, which launched its Retail Watch service in the U.S. back in October of 2020, isn’t the only company using computer vision to help stores manage inventory. Cashierless checkout systems like Grabango and Trigo promise similar, constant shelf monitoring and visibility through camera installations and advanced computer vision. And robots from Simbe and Bossa Nova offer less installation-intensive solutions.

Trax is certainly striking while the funding iron is hot. Grocery related startups have raised a bunch of money in 2021. In addition to the raft of grocery delivery startups that have secured big raises, companies that are helping physical grocery retailers are also raking in cash. Stor.AI, which helps grocers deploy online shopping services, and Shelf Engine, which helps grocers with inventory forecasting, both raised significant rounds last month.

Takeoff Technologies to Have 40 Automated Fulfillment Centers Operating This Year

Takeoff Technologies launched its first grocery automated fulfillment center in the fall of 2018. Needless to say, a lot has happened in the grocery space since then, including a global pandemic that abruptly pushed record amounts of grocery shopping online. To keep up with this wave of grocery e-commerce, more grocers have accelerated and adopted the use of automated fulfillment centers like Takeoff’s.

We last checked in with Takeoff during the first wave of the pandemic in 2020. At that time, the company had six centers operational and another 20 under construction. Since it has almost been a year since then, we checked back in with Max Pedró, Co-Founder and President of Takeoff Technologies this week. Pedró said that Takeoff now has 13 sites that are live now, and will have more than 40 by the end of this year. Takeoff has partnerships with retailers such as Albertsons, Ahold Delhaize, and Carrefour, with sites running on both coasts of the U.S., as well as in Canada, Australia and in Dubai.

The latest market survey from Brick Meets Click showed that grocery e-commerce dropped between January and February of this year. Usage fell particularly among those over 60, who were among the first groups of people to get vaccinated. Online grocery shopping is expected to go through a market correction this year as vaccinations allow people to move more freely outside of the home.

But Pedró believes that customers have developed new habits after a year of lockdowns and e-commerce is here to stay. He’s not alone in that belief. Mercatus forecasts grocery e-commerce will hit $250 billion by 2025, taking up 21.5 percent of total grocery sales.

Obviously, Pedró has a horse in the automated fulfillment race, but he outlined his reasoning for why he believes the technology is here to stay. First, Pedró said that automated fulfillment makes the online grocery business model more economical. Part of the reason it can become more economical is because automated fulfillment creates more throughput — grocers can pick and pack more orders, faster. Finally, Pedró said that automated fulfillment allows independent grocers to better compete with giants like Walmart and Amazon, which offer free two-hour delivery to their members.

Along with all this opportunity, Takeoff is also facing increased competition in the automated fulfillment space. Swisslog is providing fulfillment to regional Texas grocer H-E-B. Walmart has enlisted the help of Alert Innovation, Dematic and Fabric to build out dozens of automated fulfillment centers. And Kroger is starting to open up its own, standalone automated Customer Fulfillment Centers powered by Ocado.

There are still questions over how many customers will continue to use e-commerce for groceries after they’ve been vaccinated, and the overall efficacy and economics of automated fulfillment. But for now, it appears that Takeoff’s technology is taking off with retailers this year.

If you’re curious about the future of robotics in grocery, be sure to attend ArticulATE, our virtual food automation conference on May 18!

Grocery Apps Remain Popular with VCs as Everli, Nice Tuan and Zapp Raise Money

Given the frothy state of funding, it feels like there is a giant online supermarket stocked full of grocery-related startups and VCs are just wandering the aisles, filling up their baskets with companies promising to revolutionize the way we get our food.

At the beginning of March, we wrote about a single 12-hour period in which four grocery startups got funding (Instacart, Crisp, Rohlik and Flink). And it seems that VCs were just getting warmed up. Since that day, we’ve seen a number of grocery startups raise money including Stor.AI, Fridge No More, Jiffy, Shelf Engine, Weee!, Gorillas, Getir and GoPuff.

That list has grown once again this week as three more grocery startups have raised rounds of funding:

Everli, which is kind of like a European Instacart facilitating grocery pickup and delivery from local stores, raised a $100 million Series C round of funding led by Verlinvest (hat tip: TechCrunch).

Nice Tuan, a Chinese app that focuses on community grocery shopping received a $750 million investment round led by Alibaba Group Holding and DST Global (hat tip: Deal Street Asia).

Zapp, a London-based operator of delivery-only stores has received an undisclosed round of funding, TechCrunch reports from multiple sources.

There are couple things of note from this round of news. First is that European speedy delivery startups remain popular with investors right now, especially London-based ones. Zapp faces competition from the likes of Weezy, Jiffy, Getir and Gorillas.

Second is that these funding rounds are no joke. Nice Tuan’s $750 million haul follows fellow Chinese grocery app Xingsheng Youxuan’s $2 billion funding round in February. In the U.S., goPuff raised $1.5 billion, In Europe Gorillas raised $290 million and Getir raised $300 million (evidently startups starting with the letter “G” are also popular).

How long with this frothiness continue? That’s unclear. Will startups like Weezy or Fridge No More, whose funding is only in the double digit millions feel pressure to raise more to compete? And what about the overall grocery delivery space? The pandemic forced record amounts of grocery e-commerce, but a market correction is predicted for this year bringing those numbers back down to earth. But many of these startups are looking to change the way we grocery shop altogether by turning it into more of an always-on utility. Will people adopt speedy delivery as their new norm?

We don’t have a particular crystal ball for that, but we at The Spoon will chronicle it all as the market unfolds.

Google and Albertsons Partner for Shoppable Maps, Predictive Grocery Lists and More

Google and Albertsons announced a wide-ranging, multi-year partnership today that will see a range of high-tech features added to consumer grocery shopping across more than 2,200 Albertsons stores.

According to the press release, Albertsons has been working with a number of different teams across Google over the past year. In a corporate blog post, also released today, Google outlined new grocery delivery and pickup features that have been integrated into Google Search and will be coming to Google Maps later this year:

Delivery and curbside pickup have grown in popularity during the pandemic — they’re convenient and minimize contact. To make this process easier, we’re bringing helpful shopping information to stores’ Business Profiles on Maps and Search, like delivery providers, pickup and delivery windows, fees, and order minimums. We’re rolling this out on mobile Search starting with Instacart and Albertsons Cos. stores in the U.S., with plans to expand to Maps and other partners.

Other fruits of this partnership weren’t specified, but the companies said forthcoming innovations include: Shoppable maps with dynamic hyperlocal features, AI-powered conversational commerce, and predictive grocery list building.

That Albertsons has hopped into the virtual shopping cart with Google actually makes a lot of sense. The pandemic pushed record numbers of people into online grocery shopping last year, and while those online sales figures have cooled recently, grocery e-commerce is predicted to hit $250 billion by 2025. So integrating high-tech features from a trusted and ubiquitous brand like Google to grab more of those online dollars is a no brainer.

As a result of all this money flowing into grocery e-commerce, retailers are locked in a fierce battle to be your grocer of choice. A partnership with Google isn’t a nice to have — at this point it’s a need to have for Albertsons. Albertsons is up against deep-pocketed giants like Amazon, which is building out its own chain of physical supermarket stores, and Walmart, which is expanding its delivery options and adding more automated fulfillment. Albertsons could also find it is getting squeezed on the smaller end by a cohort of new, urban grocery startups that promise delivery in 10 minutes.

But Albertsons isn’t being caught flat-footed. It has proved itself to be a very tech-forward retailer, and its innovation has only accelerated since the pandemic. The grocer is expanding the use of automated micro-fulfillment, piloting smart lockers and robotic curbside pickup kiosks, and is even testing out remote controlled grocery delivery robots.

For its part, Google continues to be a bit of a sleeper in the foodtech world. Over the past few years, the company has been rolling out a number of features that transform the way we find, order and get our food delivered.

While we don’t know the full extent of what its partnership with Google will bring, these first steps are a smart play by Albertsons. By getting inserted into Google Search and Maps results, Albertsons can more seamlessly integrate with consumers’ everyday routine, and create a more frictionless shopping experience for customers.

Turkey: Getir Raises $300M to Get People Groceries in Ten Minutes

Turkish on-demand grocery delivery startup Getir announced on Friday that it had raised a $300 million Series C round of funding. The new round was led by Sequoia Capital and existing investor Tiger Global, and comes just months after Getir finalized a $128 million Series B investment round. The company has raised $470 million to date.

Getir is part of the current crop of startups that promise super speedy grocery delivery. Getir operates a number of smaller distribution centers that are set up in different neighborhoods within a city. Users order items via an app and couriers are dispatched to complete deliveries in roughly 10 minutes.

In February, Getir expanded to offer delivery in London, and the company says it will use its new funding to expand into The Netherlands, Germany and France. But it will face competition as it does so, as a number of speedy grocery delivery startups in Europe have received funding recently. In London, Weezy and Jiffy offer similar services. And in Germany, Gorillas just closed a $290 million round last week for its own Euro expansion.

As we covered last week, all of these startups (plus the ones in the U.S. like GoPuff and Fridge No More) are all angling to change the way consumers view grocery shopping. By providing delivery in 10 minutes or less, companies essentially turn groceries into a utility that is available on tap. Shoppers could literally get groceries multiple times a day to fulfill a need or even just on a whim because they want something.

It’s still very early stages for all of these startups however, and it remains to be seen if and how customers will respond to such a service, and how far these types of services can scale. Can speedy delivery only work in dense urban environments? And as more players compete, how many micro-groceries stores does one neighborhood need? Given the rate of funding in the space, I assume we’ll find out pretty fast.

Germany: Gorillas Raises $290 Million for its Dark Grocery Store Chain

Gorillas, which operates a chain of dark grocery stores that offer fast delivery, has raised a $290 million Series B round of funding, according to TechCrunch. The round was led by Coatue Management, DST Global, and Tencent, with Green Oaks, Fifth Wall, Dragoneer, and Atlantic Food Labs also participated. Gorillas raised a $44 million Series A round of funding in December of 2020.

The Berlin-based Gorillas is among a cohort of startups building out small, delivery-only grocery stores deep inside residential neighborhoods. Thess dark stores carry a limited inventory (that can be customized per neighborhood location), and have a limited delivery radius, so orders can be fulfilled and dropped off, usually in less than fifteen minutes. Gorillas currently operates stores in more than 12 cities across Europe including Berlin, Munich, Amsterdam and London.

A funding round this big and this fast following a recent Series A for a grocery related startup is not at all surprising. As noted, Gorillas is just one player in the speedy grocery delivery space. Similar startups in Europe that have recently raised funding include Weezy, Jiffy, and Flink. Here in the U.S., DoorDash is building out a chain of DashMart stores, Fridge No More is making deliveries in New York City, and GoPuff, which delivers many household items in addition to groceries, raised $1.5 billion this week.

As we have written a lot lately, the big question for these stores is whether they can scale. On paper, the ability to get last-minute groceries delivered in just minutes is great. But it also needs a certain population density to make the economics work, and we have yet to see those economics scale on a national level. If Gorillas can use its funding to do so, then it could become, well, an 800 lbs gorilla in the space.

New Speedy Grocery Delivery Startup, Jiffy, Raises $3.6 Million

Jiffy, a new superfast grocery delivery service, announced today that it has raised £2.6 million ($3.6 million USD) in Seed funding. The round was led by LVL1 Group, with participation from AddVenture, TA Ventures, Vladimir Kholiaznikov, and angel investors Oskar Hartmann, Alexander Nevinskiy and Dominique Locher.

Jiffy’s hyperlocal stores will carry roughly 2,000 SKUs and offer 15-minute delivery with no minimums. Jiffy will launch this month in the London neighborhoods of Westminster, Waterloo, Lambeth, Battersea, Clapham Town, Shoreditch, Bethnal Green, Hackney, Whitechapel, Stepney Green, with another 20 stores planned to roll out across the U.K. later this year.

Rather than building out big or even medium-sized grocery stores, hyperlocal markets are small, delivery-only stores that are tucked away deep inside a neighborhood. They carry a limited inventory and have a small delivery radius, ensuring that orders can get to homes in minutes. Additionally, being hyperlocal means that products carried can be tailored to that particular neighborhood, making inventory management easier.

Hyperlocal delivery markets are becoming quite the trend. Jiffy is just the latest in a string of funding announcements for such companies. Weezy, also in the U.K., raised $20 million in January. Germany-based Gorillas raised $44 million at the end of last year. And just this week, Fridge No More raised $15.4 million for its hyperlocal stores in New York City.

The hyperlocal model is better suited to big cities, where a large population lives in a small delivery radius. Plus, delivering in compact urban neighborhoods means that orders can be fulfilled by someone riding a scooter or bike, rather than driving a full-sized car in traffic (and then needing to find parking).

If they catch on, hyperlocal markets are poised to change the way people shop for food (at least in cities). If they work as promised, they are essentially groceries-on-demand and reduce the need for weekly stocking up trips to the market.

Given the rate these types of stores are rolling out, we’re sure to find out if the hyperlocal approach works in a Jiffy.

Stor.ai Raises $21M for its Grocery Digital Commerce Software

Stor.ai (formerly Self Point), announced today that it has raised $21 million in an extended Series A round of funding. The round was led by Meitav Dash and Mizrahi Tefahot, with participation from Kli Capital.

The Tel Aviv, Israel-based Stor.ai offers a suite of tools that help grocers of any size deploy their own online shopping services. Stor.ai’s software helps manage customer data, inventory, payment and order fulfillment.

Stor.ai’s funding comes amidst a wave of capital being poured into digital grocery-related startups around the world. Since the beginning of the year we’ve seen the following raises:

In addition to startup funding, we’ve also seen increased investment in e-commerce operations from all the major grocery retailers. Walmart is working with three different vendors to add automated fulfillment to dozens of its locations. Albertsons is expanding its own use of automated fulfillment, testing robotic curbside pickup kiosks, and even piloting remote controlled robot delivery. And Stop & Shop is experimenting with its own locker pickup pilot in Boston.

The reason for all of this investment is the pandemic, which spurred record numbers of people into online grocery shopping. In January, grocery delivery and pickup hit $7.1 billion in sales. And while vaccines and warmer months may cause a market correction as people feel more comfortable shopping in-store, online grocery is projected to hit $250 billion in sales and be 21.5 percent of total grocery shopping by 2025.

For its part, Stor.ai says it will use the new funding to build out new features to its core offering, scale up its growth in North America and enter new markets in Latin America and Europe.

Kroger “Soft Opens” First Ocado-Powered Automated Warehouse

Kroger has “soft opened” the first of its Ocado-powered automated Customer Fulfillment Centers in Monroe, Ohio, Kroger CEO Rodney McMullen said during an earnings call this week.

According to Dayton 24/7, the new facility is 335,000 square feet, costs $55 million and employs 400 people. The new warehouse will use totes on rails to help assemble orders for delivery, pickup and distribution.

The opening comes almost three years after Kroger announced it was upping its investment in and bringing Ocado’s automation technology here to the U.S. In that time, it selected a number of additional sites across the U.S. that will be home to more fulfillment centers.

Grocery e-commerce and the need for more robust fulfillment logistics has exploded over the past year, thanks to the pandemic. As such retailers of all stripes have been investing in more automation to accommodate online grocery shopping. Albertsons has expanded its use of robotic micro-fulfillment and started testing automated curbside pickup kiosks. And Walmart has partnered with three different technology provides to expand its use of automated order fulfillment.

As the Biden administration accelerates the availability of vaccines and the warm weather of spring and summer fast approaches, the question of how much consumer behavior has changed remains. While industry watchers expect there to be a short-term correction in the use of grocery e-commerce, there is a sense that after a year of lockdowns and social distancing, new habits have set in. Online grocery sales are projected to hit $250 billion and take up 21.5 percent of total grocery sales by 2025.

Kroger’s new Customer Fulfillment Center in Monroe is expected to have an official, grand opening launch soon.

The Big-Box Ghost Kitchen Is Here

A couple weeks ago, college was the latest potential growth market for ghost kitchens. Today, it’s big-box retailers like Walmart.

Recently an Ontario, Canada-based company called Ghost Kitchens launched its first-ever location inside a Walmart store in the city of St. Catherine’s. It’s not the first-ever ghost kitchen concept from the company, but it is Ghost Kitchens’ first time to operate from within the four walls of a major retailer. And it further blurs the lines between the restaurant, the grocery store, and the convenience mart. 

Ghost Kitchens’ facilities carry a variety of items, all of which are relatively easy to prep and transport to customers. Those include CPG goods like Ben&Jerry’s ice creams, meals from QSRs like Salad Works, and shopping mall standards like Cinnabon. Customers can order these items through certain third-party delivery platforms or pick them up inside at the Walmart in which the facility is located. Additionally, customers can bundle different items from different brands into a single ticket.

And speaking of bundling, the Ghost Kitchens-Walmart deal is another example of a trend brought on by the pandemic but likely to stick around for the long haul: giving customers the option to digitally order multiple different food formats from a single place.

The idea got popular by necessity in 2020, after the pandemic forced restaurants to close dining rooms and businesses resorted to selling their food inventory as groceries to customers as a means of making extra money. 

Since that time, ghost kitchens have become a kind of norm in the restaurant biz, digital ordering has increased (and will continue to), food producers everywhere have launched direct-to-consumer e-commerce stores, online grocery shopping has grown, and convenience stores have inked deals with delivery companies. All of those factors have converged to underscore a single point: consumers ideally want to find the majority of their food items, whether it’s a burrito or a bunch of kale, in a single place, literally and digitally speaking.

Ghost Kitchens’ Walmart concept is a bit like a real-life illustration of the above factors coming together, but it’s not the only company helping to blur the lines between the restaurant, the convenience store, and the grocery market. ClusterTruck, a virtual-only restaurant company, operates ghost kitchens inside Kroger stores. H-E-B has a food hall for delivery meals. DoorDash has its own “ghost convenience stores” that are basically like 7-Eleven without the storefront.

Sticking a ghost kitchen inside a Walmart makes sense because Walmart does big grocery business, in addition to selling every other physical object imaginable. It seems like only a matter of time before retailers like Target, Sam’s Club, and others follow suite. 

To be clear, this won’t be the territory of high-end, or even sort of high-end meals crafted by chefs. Rather, it’s another example of the ghost kitchen’s ever-evolving role, which will eventually serve much more than the restaurant biz.

Restaurant Tech ‘Round the Web

There are drive-thru lanes, and then there are bike-thru lanes. Dunkin’ unveiled its first-ever version of the latter in Quezon City, Philippines, and has reportedly gotten rave reviews for it. The QSR says it will expand the concept to other Dunkin’ locations in the Philippines.

Yum Brands, parent company of KFC, Taco Bell, and Pizza Hut, acquired AI firm Kvantum for an undisclosed sum. Yum said in a statement the acquisition will allow it to improve its marketing campaigns and data analytics around consumer behaviors.

Many restaurant operators don’t expect to return to “normal business conditions” any time soon, according to new survey data from the National Restaurant Association. Thirty-two percent of operators think it will be 7-12 months, and 29 percent say it will be more than a year. Ten percent say business conditions “will never return to normal for their restaurant.”

Walmart Canada to Deploy First Automated Kiosks for Grocery Pickup

Walmart Canada is adding automated kiosk pickup to one of its stores in the Toronto area, which, the company says, will be the first of its kind in that country.

In a corporate blog post published yesterday, Walmart Canada outlined a number of moves the company is making to accelerate its e-commerce efforts, including:

  • Building out a 22,000 sq. ft. space inside the Scarborough West Supercentre that will automate online grocery picking and packing that is six times faster than manual order picking
  • Expanding grocery pickup to 60 more stores this year
  • Piloting “ring scanner” technology that allows workers to pick and scan items hands-free

But the new feature we are most interested in is the new automated grocery pickup. According to Walmart Canada’s blog post, these new automated kiosks will “serve as vending machines for online grocery orders and can serve up to five customers simultaneously.” To use the kiosk, customers pull into a dedicated parking spot, enter a code into the machine and their order will appear in under two minutes.

All of these new, automated features are being built in partnership with Dematic, and will launch later this year.

This isn’t the first automated kiosk we’ve written about. Albertsons debuted its own robot-powered kiosk for grocery pickup at a Jewel-Osco in Chicago. But to our knowledge, this is the first public mention of automated kiosk pickup from Walmart in North America.

In January, Walmart announced that it was partnering with Dematic, Fabric and Alert Innovation to deploy automated fulfillment centers to “dozens” of locations. Automated kiosks weren’t mentioned at that time, but it’s safe to assume that if Walmart Canada is testing them out, they will make their way to the U.S. at some point.

As we covered this week, a ton of resources are flowing into the online grocery sector. Smaller online grocery startups around the world are raising a lot of money, and big players like Walmart, Albertsons and Kroger are making big investments in their own e-commerce infrastructure.

The reason for this big push into grocery e-commerce is that online grocery sales hit $9.3 billion in January, and is projected to hit $250 billion and take up 21.5 percent of total grocery sales by 2025. Retailers are bolstering their e-commerce capabilities now, to accommodate the growth that is to come.