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The Spoon

Daily news and analysis about the food tech revolution

grocery

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.

Will Removing the Minimum Order Give Walmart+ a Boost with Grocery?

Walmart announced today that starting Dec. 4, it will remove the $35 shipping minimum on Walmart.com orders for its Walmart+ members.

An answer to Amazon’s Prime Membership, Walmart+ launched in September of this year. With today’s announcement, Walmart+ members will get free next-day and two-day shipping on items from Walmart.com no matter the size of their shopping basket.

Normally, we wouldn’t cover this type of announcement because it has to do more with the shipping of non-grocery goods ordered through Walmart’s website. In its press announcement, Walmart even specifically said that grocery deliveries will still carry a $35 minimum.

But we are covering it because Walmart and Amazon are currently duking it to grab your grocery dollars. Both Walmart+ and Amazon Prime offer free grocery delivery as part of their member perks, but the war between the two companies has steadily escalated.

By some accounts, Amazon has more than 120 million Prime members in the U.S. This is a massive base to which it can upsell its grocery services. Of course, Amazon has been building that user base for years, but over the past year, the company has also been building out its grocery infrastructure. In addition to owning Whole Foods, Amazon has launched its real-world Go Grocery stores and Fresh supermarkets, as well as expanded its free grocery delivery for members to provide services like in-garage delivery.

But it’s in that real world where Walmart has its biggest advantage over Amazon. Walmart already has a gigantic, nationwide footprint of more than 4,700 stores in the U.S. Walmart+ members already get free unlimited grocery (though, as noted, there is an order minimum), but Walmart can tie in other real world services like curbside pickup, discounts on gas and mobile scan-and-go cashierless shopping.

In short, if Walmart can attract more people to its Walmart+ offering, that will help it stave off Amazon from gobbling up more of the grocery biz. It’s still a big if, but removing the minimum order amount as Walmart did today could help it sway more users to join Walmart+ and use the service for more grocery delivery.

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.

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.

SNAP Participants Can Now Use Benefits to Pay for Grocery Delivery with Instacart

Instacart announced today that it has partnered with grocery retailer ALDI to allow those on Supplemental Nutrition Assistance Program (SNAP) to use their Electronic Benefits Transfer card to pay for and get groceries delivered.

The pilot program is launching first in Georgia where, according to Instacart’s announcement, 12.5 percent of the population is impacted by food insecurity, disproportionately affecting communities of color. The program will begin with 60 ALDI stores in Georgia before a planned expansion to more than 570 stores across Illinois, California, Florida, Pennsylvania in the coming months.

SNAP participants will be able to shop from ALDI through Instacart’s website or mobile app. When creating a profile, they can enter their EBT card information and a payment method, which will cover the cost of SNAP-approved food items. Taxes, tips and fees cannot be paid for with the EBT, so a second form of payment will also be needed. Once all that is set up, SNAP participants can shop for items and schedule their grocery delivery.

Online grocery shopping took off during the pandemic, as people were concerned about venturing into public places like grocery stores. Those fears have subsided somewhat, but grocery e-commerce is still projected to hit $250 billion in sales by 2025.

Instacart’s partnership with ALDI is the latest effort to bring more equity to the online grocery world. Low income communities are often food desserts that lack access to fresh food. The ability to shop online and have groceries delivered is one way to help those impacted by food insecurity eat more healthily. For the past couple of years, the startup All_EBT has been using Facebook Messenger and virtual Visa cards to allow SNAP participants to shop online. And both Amazon and Walmart have expanded their EBT online grocery shopping to more states.

The only downside to Instacart’s program is that it still requires SNAP participants to pay for taxes, fees and tips. Those three items alone can add up and that seems like it might be a barrier to get more people to use the program. While the EBT card couldn’t be used to cover these costs, it’s a little disappointing that Instacart, which has raised $2.4 billion, isn’t doing more to supplement them for the end user. It seems like Instart’s gig workers who do the actual packing and delivery, might skip jobs that don’t offer a healthy tip, especially since the pandemic has yet to subside in this country.

Simbe Robotics Announces New Tally 3.0 Shelf-Scanning Robot

Simbe Robotics today announced the Tally 3.0, the company’s latest generation of inventory management robot that now features better optical capabilities and more computing power on the edge.

Simbe’s Tally is an autonomous robot that wanders grocery store aisles to monitor product levels and detect misplaced items. By automating this task with robots, Simbe says stores get a more accurate, closer-to-real time snapshot of on-shelf inventory to make more informed stocking decisions.

Improvements to the Tally include added Intel RealSense depth and RGB cameras to help the robot “see” more products on shelves and stacked in coolers. The new camera system can read data from up to 30 inches away, which, according to the press announcement, brings the robot’s recognition accuracy to almost 99 percent without needing to slow down.

The Tally 3.0 has also pushed its computer vision and AI algorithms to the device itself. By running this additional processing on the edge, the new Tally can capture and provide data to store managers more quickly without needing to send as much information to Simbe’s cloud platform. This can be especially helpful for stores that may not have a lot of internet bandwidth at their location.

Simbe claims that its Tally detects up to 10x more out-of-stock items than manual audits, and averages a 20 percent reduction in out-of-stock items at the store level.

Brad Bogolea, Simbe Robotics Co-Founder and CEO,told me by phone earlier this month that his company saw a massive uptick in interest around August and September, spurred in part by the COVID-19 pandemic and subsequent panic buying outages. As Bogolea explained to me during an interview in August, stores experienced those outages because of bad supply chain data. As we wrote then:

The bad supply chain data, according to Bogolea, is a result of the manual inventory checks that stores currently carry out. If robots are used, shelf inventory count is more accurate and up to the minute (basically) because the robots can run multiple shelf audits throughout the day. More accurate data means that stores can respond faster when there is a sudden run on particular products to speed up replenishment.

While Bogolea obviously has a horse in this particular race, we’ve definitely seen broader adoption of robots to help maintain retail inventories. Bossa Nova’s shelf-scanning robot is being deployed to 1,000 Walmart locations, and Badger Technologies’ robot is being used at Woodman’s Markets across the Midwest.

Schnucks Markets recently announced that it expanding the use of Simbe’s Tally to 62 of its locations, and Giant Eagle is trialing Tally as well. Simbe offers the Tally for a monthly subscription costing between $2,000 and $4,000 a month per store, depending on the number of stores. Though when I spoke to Bogolea this month, he said that through better sensor technology and improved manufacturing, the company is continuing to bring that cost down.

Albertsons Pilots Temperature-Controlled Lockers to Expand Pickup Options

Albertsons announced today that it will pilot temperature-controlled lockers as an added pickup option for its grocery customers.

The lockers, delivered by Bell and Howell, are modular, can be installed either inside or outside and feature dynamic temperature control to accommodate various items placed in them. Customers will see this new “PickUp” option from participating stores when they shop via Albertsons website or mobile app. Customers placing an order will receive a unique code they use to unlock the self-serve locker.

Grocery retailers could soon be facing a double whammy of demand, given the continued use of e-commerce, thanks to the pandemic (and flu season!) and the impeding holidays. During the early days of the pandemic, we saw the strain as retailers couldn’t keep up with demand for grocery delivery. Though those systems seem to have improved, grocers like Walmart and Target have vastly expanded curbside pickup options to provide more flexibility for customers. Adding self-serve lockers gives customers even more options for getting their food while relieving increased demand pressure placed on the grocers.

Delivery lockers like the ones Albertsons is installing are starting to become a trend. The winner of last week’s Smart Kitchen Summit Startup Showcase was Minnow Technologies, which makes IoT-enabled food delivery lockers for places like offices, residential buildings and restaurants.

Amazon pioneered the pickup locker, many of which were at grocery stores, ironically. Though those were for general Amazon packages, it wouldn’t be a surprise to see Amazon adding similar temperature-controlled pickup lockers at its new chain of Amazon Fresh and Go Grocery stores.

The first Albertsons PickUp lockers will be installed at select Jewel-Osco locations in Chicago, with more coming to San Francisco Bay Area Safeways later this year.

Alibaba Spends $3.6 Billion for Controlling Stake in Chinese Supermarket Sun Art

Alibaba announced yesterday that it is shelling out $3.6 billion for a controlling stake in Chinese grocery store chain Sun Art. The investment will increase Alibaba’s stake in Sun Art to 72 percent.

The deal ups Alibaba’s existing stake (from 36 percent), and reinforces how the grocery sector is hot around the globe. As TechCrunch reported:

All of Sun Art’s 484 physical retail locations in China are now integrated into Alibaba’s Taoxianda and Tmall Supermarket platforms for groceries, as well as Ele.me and Cainiao, its on-demand food demand delivery app and logistics businesses, respectively. For customers, this means faster deliveries and larger selections, while giving Alibaba more sources of data it can use to improve its supply chain and business operations.

As they are both online retail giants, Alibaba and Amazon are often compared with one another, and it appears that the comparisons won’t end with grocery. Amazon, which purchased Whole Foods back in 2017, is also rolling out its own branded markets packed with technology meant to speed up the grocery shopping process — and gather more data as you shop to make it even faster.

As noted, the grocery sector overall has garnered a ton of interest since the pandemic. Online grocery shopping is projected to continue to grow to hit $250 billion in sales by 20205. Grocery delivery service, Instacart, has raised a ton of money and swelled its grocery gig worker “Shopper” ranks. Shipt has grown its delivery worker ranks as well in anticipation of the coming holidays. And third party delivery services like DoorDash and Uber Eats are expanding from restaurants into the grocery category.

With coronavirus cases back on the rise both in the U.S. and in Europe, it’s a safe bet that the spotlight on grocery won’t be going out any time soon.

Tweet at Kroger’s Chefbot to Find Recipes for Ingredients You Have on Hand

The last day before you go back to the grocery store can be a difficult one when you’re trying to make a meal. What you have left in your pantry is often a random assortment of odds and ends that may or may not go together.

To help consumers avoid giving up and getting restaurant delivery, or, much worse, letting those random items go to waste, Kroger launched its new Chefbot today. Found @KrogerChefbot on Twitter, Kroger says this AI-powered tool will help you discover recipes that put those odds-and-ends foods to tasty use.

To use Chefbot, take a picture of three ingredients and tweet @krogerchefbot. The bot replies with what it thinks is in your picture. If it’s correct, it gives you a link to a page with recipes for your ingredients.

With the pandemic still keeping restaurants closed and winter being on its way, chances are good a lot of us will be eating at home a lot more in the coming months. So another easy meal discovery tool could be pretty useful.

However, at least based on my first test this morning, I’m not sure Kroger’s Chefbot is that tool. To give it a spin, I took a pick of tofu, penne pasta and an avocado and tweeted that pic to Chefbot. Maybe it’s first-day jitters, but Chefbot could only identify one item — penne, and that could be because the box had a giant “penne” written on the side. Chefbot also guessed that I had salmon, which… I’m not sure where it got that one as you can see from the picture below.

https://twitter.com/AlbrechtChris/status/1315660912024403969

I thought I had even cheated a little bit by including the barcode and the tofu label.

Since it didn’t recognize my items, I listed them for Chefbot in a follow up tweet. It then sent me to recipe page that said “Sorry, your search for “avocado penne tofu” did not return any results,” so it gave me a bunch of recipes for chicken dinner recipes.

Kroger’s Chefbot is a lot like Whisk’s Cook Magic, though that service uses texts instead of Twitter, and it doesn’t try to identify pictures (it also seems like it might work better).

We are all for tech tools that help people make better meals at home and reduce food waste. But it seems like Kroger’s Chefbot may need to go back to culinary school to make its AI a little smarter.

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!