Close Ad

The Spoon

Daily news and analysis about the food tech revolution

grocery

Why It’s Time to Check Out Online Grocery

This is the web version of our weekly newsletter. Subscribe today to get all the food tech news delivered direct to your inbox.

The Safeway near my house finally got curbside pickup which, because we’re in a pandemic and find outsized joy in the little things, made me deliriously happy.

For the past year, I’ve eschewed in-person grocery shopping, opting instead to drive 30 minutes to the Walmart because it has reliable and easy curbside pickup. So having a curbside pickup option less than 15 minutes away is fantastic. And if the first three months of 2021 are any indication, there will be even more online grocery shopping options for me and you and many many more people across the U.S. (and the world).

First, there has been a tremendous amount of investment in the online grocery space so far this year. This activity seems to have culminated over a 12-hour period this week when four different online grocery startups from the U.S. and across Europe all announced significant funding rounds: Instacart ($265 million), Rohlik (Czech Republic, $230 million), Flink (Germany, $52 million) and Crisp (Netherlands, $36 million).

Even prior this week though, there has been a steady drumbeat of hefty online grocery investment over the past two months. Good Eggs raised $100 million, Weezy raised $20 million, Rosie raised $10 million, Imperfect Foods raised $110 million, and Chinese grocery app Xingsheng Youxuan raised a whopping $2 billion.

But it’s not just new funding that’s generating headlines for online grocery. Walmart is going hard after your grocery dollar. This week it eliminated the $35 minimum order for its Express two-hour delivery. In January, the retailer announced it was adding automated micro-fulfillment centers to dozens of its stores and that it was experimenting with temperature-controlled smart delivery lockers for home use.

Walmart’s not the only one. All the major retailers are gearing up to process more online grocery shopping orders. Albertsons is testing a new drive up automated pickup kiosk. Stop & Shop is piloting smart lockers in Boston for pedestrians and bike riders. And Kroger is getting ready to open up the first of its planned 20 smart, robotic warehouses for order fulfillment.

Why is all of this happening right now? Not to brag, but because of people like me. I’ve switched over almost entirely to online grocery ordering (for the aforementioned curbside pickup). At a time when the pandemic is still very much a part of our lives, it’s a simple thing that I can do to help mitigate any potential spread of the virus to myself and others. Even after the pandemic recedes I imagine that most of my grocery shopping will happen online, with less frequent trips into the store.

And I’m not alone. According to the most recent survey data from Brick Meets Click, U.S. online grocery sales hit $9.3 billion in January, with 70 million households placing an average of 2.8 orders across delivery, pickup and ship-to-home categories. Online grocery is projected to hit $250 billion and take up 21.5 percent of total grocery sales by 2025. So online grocery startups are bolstering their warchests to expand their footprints while industry stalwarts invest to solidify their leading positions.

Whether we’re in a pandemic or not, people will always have to eat. What they won’t have to do, however, is go into a grocery store to get their food.

More Headlines

Postmates X Spun Out of Uber to Become Serve Robotics – The new company will be headquartered in San Francisco and led by Ali Kashani, who headed up Postmates X.

Gotham Greens Heads West, Partners With University of California-Davis to Grow Better Greens – The California greenhouse is expected to open in 2021 and, like other Gotham facilities, will grow leafy greens that will then be sold to retailers and foodservice businesses.

Ocean Hugger Will Re-enter the Plant-Based Seafood Space Via a Partnership With Nove Foods – The venture comes after after the pandemic forced Ocean Hugger, which previously sold products primarily to foodservice businesses, to cease operations.

Gatik Gets $9 Million (CAD) to Winterize its Autonomous Middle-Mile Delivery Tech – Part of that money is coming from Ontario, Canada’s government.

Walmart Ditches $35 Minimum for Express Delivery

Walmart announced today that it is dropping the $35 minimum order requirement for its Express delivery service. The move comes during a time of record-breaking online grocery shopping and increased competition among retailers to grab consumer dollars.

Walmart launched its two-hour Express delivery service last May, during the height of the first wave of the pandemic. The speedy delivery lets customers order groceries, staples, electronics and more, and costs an additional $10 on top of the existing delivery charge (Walmart+ subscribers pay just the $10 Express fee).

This is the second time Walmart has waived a $35 minimum order. In December, Walmart removed the $35 minimum for Walmart.com orders for its Walmart+ subscribers, though that didn’t apply to groceries until today.

We’re a year into the pandemic, and while there are vaccines being deployed, online grocery is expected to remain sticky with consumers. Brick Meets Click estimated that online grocery hit $9.3 billion in sales during the month of January, with nearly 70 million households placing an average of 2.8 orders across delivery, pickup and ship-to-home categories.

Walmart’s removal of the minimum order for Express delivery is most directly a shot at Amazon, which offers free two-hour delivery for its Prime members (there’s a $4.99 fee if the order is less than $35). The two companies are locked in a pretty heated battle to win your grocery business. Walmart has been going after Amazon in the digital realm with the Walmart+ membership service that it launched last September, and Amazon has been expanding into the physical world with its line of real world Fresh grocery stores.

Though Walmart has vastly more retail locations than Amazon, Walmart+ has far fewer subscribers. One estimate has Walmart+ at roughly 8 million subscribers, while Amazon has an estimated 126 million Prime members in the U.S. Though to be fair, Walmart+ is only five months old, compared with the more than 15 years Prime has been around.

Today’s minimum order waiving it just the latest move by Walmart to grab a bigger chunk of our grocery e-commerce . In January, the company announced that it was deploying automated fulfillment centers to dozens of its stores to speed up order processing. The retailer is also testing out smart lockers for home delivery, grocery delivery via autonomous cars, and even delivery by drone.

Walmart’s Express delivery is available at roughly 3,000 stores, which, the company says, reaches nearly 70 percent of the population.

Could DS Smith’s “Greentote” Solve Grocery’s Plastic Bag Problem?

My online grocery shopping and curbside pickup with Walmart is pretty delightful except for one thing: all the plastic bags. I’m not sure if it’s corporate policy or what, but it seems like Walmart’s pick-and-pack employees give just about every item its own bag. The result is a ton of waste (and just as much guilt).

Perhaps Walmart should look into the Greentote, a new type of reusable and recyclable cardboard packaging from DS Smith. The Greentote is basically an open ended box, but, as the press announcement last week described, it is also “reusable, moisture-resistant, modular, 100% recyclable container made from renewable resources.”

The Greentote comes in two sizes, and DS Smith said it can hold more than three times the number of groceries than plastic bags. Plus, Greentotes can interlock with one another to ensure food safety during travel.

The press release didn’t say how much Greentotes cost, or whether they are strictly B2B or have a consumer sales component, but they are presumably more expensive than plastic bags. Unlike plastic bags, however, Greentotes, which are fully recyclable, won’t pile up in your home or end up in waterways. Additionally, a store opting to reuse Greentotes would also need to establish a new workflow to reincorporate returned boxes, rather than just dumping single-use bags into the world.

While cost will undoubtedly be a huge determining factor in adoption of recyclable containers like Greentote, Walmart, at least, seems to be admitting that it has a plastic bag problem. In a corporate blog post last week, Walmart announced nine winners of its “Beyond the Bag” innovation challenge and that Walmart Mexico y Centroamerica and one of its Vermont locations will go bagless (h/t Grocery Dive).

Hopefully these pilot programs prove successful, and my curbside pickup will feel a little less guilt-ridden.

U.S. Online Grocery Sales Hit $9.3 Billion in January

Total grocery e-commerce sales in the U.S. hit $9.3 billion this past January, with nearly 70 million households placing an average of 2.8 orders across delivery, pickup and ship-to-home categories, according to a new Brick Meets Click/Mercatus Grocery Shopping Survey.

January’s $9.3 billion in sales is up 15 percent over November 2020, and Brick Meets Click credits a large part of this growth to a 16 percent increase in the number of households that buy groceries online.

Among the survey’s findings:

  • Seventy-seven percent of all online grocery spending went to delivery and pickup.
  • Seventy-eight percent of households engaged with a delivery or pickup service (up from 64 percent in November).
  • Ship-to-home usage rate dropped from 56 percent to 46 percent during the same period.
  • Despite growth in other areas, the overall usage rate in January fell short of the record 76.7 million households that shopped online in April 2020 (at the height of the pandemic’s first wave).

Pickup and delivery’s share of orders grew roughly six percent from November, accounting for 66 percent of all online orders completed during January 2021.

While online grocery saw a lot of gains over the past few months, the overall satisfaction metric (the likelihood of using a specific service again) with online grocery dropped to 56 percent, down 32 percentage point from the record high ratings level in November. Pickup had the biggest drop, losing 35 percentage points.

“Even though many grocers remain capacity constrained – especially with pickup – others are growing market share as they staff up or expand pickup to a larger store base,” David Bishop, partner, Brick Meets Click said in today’s press announcement. “While throwing more labor at the issue isn’t ideal, this, along with improving assembling productivities via enhanced pick and pack practices, is vital to remaining competitive in the near term and not inadvertently giving your customer a reason to shop elsewhere.”

As a grocery industry watcher, it’s always fun when these types of market numbers come out to see if and how people are adopting online grocery. But these numbers are also important because grocer retailers are currently investing a lot of money in systems and infrastructure to fulfill online grocery orders. Ahold Delhaize and Walmart recently announced expanded automated fulfillment centers for their stores, and Kroger will start opening its automated customer fulfillment centers this year.

As vaccines arrive and the pandemic recedes (knocks on wood), the question will be how much people’s habits have changed thanks to COVID, and for how many online grocery shopping will become the new normal.

Mars Wrigley Launches Mobile Robotic Kiosk at ShopRite

The impulse aisle in the checkout line has long been the bane of many parents’ grocery shopping trips. While cashiers scan items and parents wait to pay, racks of candy and treats are within arm’s reach of bored kids sitting in carts.

But if you thought tempting kids with treats out checkout was rough, wait until there’s a shiny new robot wandering the grocery aisles, offering up candy.

Mars Wrigley and Wakefern Food Corp. announced last week that they are working with robot company Savioke to deploy a mobile robotic vending kiosk at ShopRite store in Monroe, NY.

According to Kiosk Marketplace, the robot, dubbed “Smiley,” plays music and dances (doing the robot, we assume) (sorry!), while offering up treats and such for sale.

There aren’t a ton of details, such as how many treats Smiley can hold, or the mechanics of how the treats are dispensed and paid for. (We reached out to Mars Wrigley for more information.)

We’ve seen these types of robots before. Self-driving robots can wheel around inside existing retail spaces to act as promotional, err, vehicles, or direct avenues. In China, FANBOT is already scurrying around cinemas, malls and hotels, selling drinks, snacks and more. And Pudutech’s robot, which is basically a series of shelves on wheels, cruise around grocery stores in Japan and the Netherlands, showcasing items that are on sale.

At the risk of tooting my own horn too loudly, automated mobile kiosks was a trend I said to look out for in 2021. So I think we’re going to see a lot more robots roaming store aisles trying to sell us stuff. Maybe their LED faces will need to show a scowl though, to keep the kids away.

Report: Chinese Online Grocer App Xingsheng Youxuan Raises $2B

The Chinese online grocery app Xingsheng Youxuan has raised $2 billion in new funding, Reuters reports. According to Reuters’ sources, investors in the round include FountainVest Partners, Primavera Capital Group and KKR & Co. The new funding values Xingsheng Youxuan at $6 billion, but companies involved did not confirm details with Reuters.

Founded three years ago, Xingsheng Youxuan fulfills online bulk orders to grocery stores in or near residential areas. Xingsheng Youxuan operates in 13 provinces and covers more than 6,000 counties and 30,000 towns. The company gets more than 8 million daily orders.

As with the U.S., online grocery shopping in China skyrocketed last year thanks to the pandemic. While there are vaccines being distributed and (hopefully) the pandemic will recede this year, online grocery shopping is expected to remain sticky with consumers. Grocery e-commerce is predicted to hit $250 billion and take up 21.5 percent of all grocery sales in the U.S. by 2025.

While Xingsheng Youxuan’s new round is by far the biggest single funding round into a grocery company we’ve seen, a lot of investor money has poured into the grocery space around the world over the past year:

We are also seeing increased investment by established players to bolster their online ordering and fulfillment infrastructure. Walmart and Ahold Delhaize recently made moves to expand their use of automated fulfillment centers, for example. And Kroger is set to open up the first of their 20 planned automated customer fulfillment centers across the U.S. this year.

All of this is to say that 2021 is shaping up to be a transformational year for grocery all around the globe.

Ahold Delhaize Launching Automated Fulfillment Center in Philadelphia

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

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

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

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

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

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

Founders of PeaPod Launch Sifter, a Grocery Site for People with Dietary Restrictions

The founders of one of the earliest online grocery sites, PeaPod, announced this week the launch of a new grocery platform called Sifter (hat tip: Grocery Dive). The new platform is essentially an online shopping cart that allows customers to put together grocery lists based on dietary preferences, allergens, and medical conditions, and send that list on to partner retailers for fulfillment.

On Sifter’s website, shoppers select different “SiftTags,” which allow them to select different dietary and allergen filters. If you are managing a health condition, like IBS or diabetes, for example, the site then populates items that are identified as acceptable for these conditions. The RecipeSifter feature on the site enables a customer to paste in the URL of different recipes, and the site will determine if the recipe is acceptable for your dietary preferences, allergens, medical conditions, etc. Sifter will then show all of the ingredients listed in the recipe, and allow you to add these items to your cart.

Once grocery items are selected on the Sifter’s site, the customer is then directed to the retailer’s site to complete the purchase. As of right now, Sifter has partnered with retailers like Stop & Shop, Giant Foods, Walmart, and Amazon to fulfill the grocery orders. Though, it should be noted, a single retailer might not be able to fulfill all of the items on a particular list.

Since the start of the pandemic in early 2020, the use of online grocery shopping has seen a spike, and it is predicted that by 2024 that online grocery shopping will be adopted by 55% of consumers in the US. Sifted is one of a crop of new companies looking to help people with dietary restrictions get their food. Through Dinner Daily, customers are offered personal meal planning and can shop for ingredients through stores like Kroger, Ralph’s, and Fred Meyers. eMeals partnered with Albertsons and Safeway to fulfill groceries needed for the meal recommendations it provides.

Sifter is available now throughout North America.

Stop & Shop Pilots Locker Pickup at Boston Location

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Foodspace is Using AI to Create Better CPG Data So You Find That Spicy Cheese Faster

You ever search for a food product online or at the grocery store but can’t find that exact something that perfectly matches your taste, dietary or nutritional preferences? You’re not alone. One of the big reasons searching for food products can be so frustrating is they are often bucketed under data categories that are holdovers from existing category management systems built fifteen or twenty years ago.

A new startup called Foodspace wants to eliminate this annoying experience by helping the CPG and food retail industry update their old-school category management systems with technology that makes sure that every conceivable product attribute a consumer may be searching for is documented and assigned to products headed to a physical or digital shelf.

The Boston-based startup plans on doing that by using machine vision technology that analyzes scanned images of new product packaging introduced by CPG manufacturers and uses AI to synthesize and assign attributes based on its understanding of the product packaging and label data. The attributes go beyond the typical high-level product categories such as organic or gluten free, and factors in things such as sensory preferences (creamy, grainy, etc) and consumer taste and lifestyle archetypes. All told, Foodspace’s system can assign nearly three thousand different attributes to a product.

The end result should be faster, more personalized searches for consumers. If, for example, a person who likes cheese, loves spicy food, and has a gluten allergy heads to the deli section of an online grocery store, they shouldn’t have to drill down five categories deep within the deli category to find that gluten-free habanero cheddar. With Foodspace’s AI-powered synthesis and matching of different attributes, a consumer finds a product match much faster, perhaps almost immediately, depending on the understanding the online grocer has about the shopper.

Of course, this move towards more granular, highly-consumer centric data is something that CPG and retail industries recognize is important, but have been slow to evolve away from because of the huge magnitude of switching towards systems that have thousands of product attributes. The Food Industry Association (which goes under the acronym FMI), has been working on a new framework called Shopper Centric Retailing that would update product information in the more detailed way, and this week at FMI’s annual midwinter meeting, the industry consultant who developed Shopper Centric Retailing framework, Winston Weber, announced Foodspace as a “premier” strategic solution partner to help food product companies transition their products to the new format.

In short, Weber sees Foodspace’s technology as an enabling platform to help food brands migrate to the future.

Foodspace’s technology is “helping translate products in the online space, to the benefit of brands, retailers and the end consumers,” said Weber CEO and namesake Win Weber in the press release. “Their technology is the conduit for which the Shopper-Centric Retailing business model can optimize consumer satisfaction.”

As I thought about better product data that could personalize my food product searches, I started to wonder if this could help usher in the personalized food profile concept that I’ve been thinking about ever since I heard Mike Lee talk about the idea at Smart Kitchen Summit in 2017.

Foodspace CEO Ayo Oshinaike thinks so. “The universal data set that enables that is not there,” Oshinaike told me via Zoom. “That’s the piece that’s in the middle that Foodspace is trying to solve with the breaking down of the information accuracy and how we’re able to relate products to consumers.”