Close Ad

The Spoon

Daily news and analysis about the food tech revolution

grocery

First Amazon Fresh Grocery Store Opening in Woodland Hills, CA

The first Amazon Fresh grocery store is finally opening in Woodland Hills, CA, the company announced via blog post early this morning.

This Amazon Fresh is the first of many planned physical grocery stores for Amazon. The store will feature free same-day delivery for Amazon Prime members, curbside pickup and will even let you pickup your Amazon packages at the store.

Unlike Amazon’s other subsidiary, Whole Foods, which doesn’t sell products with things like artificial flavors or preservatives, Amazon Fresh will carry all manner of CPG products.

Amazon was supposed to open the Woodland Hills store in April of this year, but the COVID-19 pandemic altered those plans. Over the past five months, Amazon used the location as a “dark store” to fulfill online orders as the company desperately tried to keep up with a surge in demand for grocery delivery.

Though this Woodland Hills Amazon Fresh won’t feature Amazon Go-like cashierless checkout, it does have the recently announced Amazon Dash Cart. These carts basically enable cashierless checkout by automatically keeping track of whatever items are put in it.

The opening of this Amazon Fresh comes during a time of record online grocery sales, thanks to the pandemic. But a recent Coresight survey found Walmart is now the leading retailer for online grocery shopping, while use of Amazon for grocery e-commerce has declined. Part of Walmart’s ascendancy could be attributed to its vast network of retail stores across the country that allow easy access to curbside pickup of e-commerce grocery orders.

The new Amazon Fresh isn’t open to the public yet. That will happen “in the coming weeks,” according to today’s blog post. In the meantime, select customers in Woodland Hills will be invited to come in and shop during this soft opening.

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

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

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

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

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

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

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

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

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

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

DoorDash Now Does On-Demand Grocery Delivery

DoorDash continues to expand beyond its restaurant roots with the announcement today that it has partnered with a number of retailers to offer on-demand grocery delivery through the DoorDash app for the first time.

From a DoorDash blog post announcing the new service:

Customers in the Bay Area, Los Angeles, Orange County, Sacramento, San Diego and the Central Coast can order from Smart & Final. Meijer and Fresh Thyme are available to customers in Chicago, Cincinnati, Milwaukee, Detroit and Indianapolis. In the coming weeks, we will be adding selection across the country with grocers such as Hy-Vee, Gristedes / D’agostino and more — providing more than 75 million Americans access to a grocery store on DoorDash.

The service will offer more than 10,000 grocery items available for on-demand delivery in less than one hour. In addition to getting a week’s worth of groceries, customers can also get more immediate meals like heat-and-serve or ready-to-eat meals from participating grocers.

There’s a big difference between getting a single burrito delivered to your door in an hour and getting a week’s worth of groceries, though. It can take the average person more than an hour to complete a grocery trip, so how will DoorDash be able to pick out all that produce and cereal and milk and whatever and whisk it off to a customer for a speedy delivery? According to TechCrunch “‘Embedded shoppers’ hired from a staffing agency handle the shopping in each store, and the groceries are then delivered by DoorDash’s Dashers.” (Sidenote: Between DoorDash and Instacart, it feels like grocery stores will soon only be filled with human avatars doing the shopping for other people at home.)

This isn’t DoorDash’s first foray into the world of grocery delivery. Through the company’s Drive white label service, it has fulfilled grocery orders for Walmart, Hy-Vee and more.

Honestly, DoorDash has been working up to this all year. The company launched convenience store deliveries in March, partnered with Walgreens for drug store deliveries in July, and then launched its own brand of ghost convenience stores earlier this month. So adding full-on groceries stores is a logical next step.

It makes even more sense when you consider that the restaurant industry, DoorDash’s meat-and-potatoes business, is being devastated by the global pandemic. Yes, delivery could be called a lifeline for restaurants, but the high commissions that DoorDash and Uber Eats (which is also getting into the grocery game) charge restaurants can negate any assistance its delivery provides. But the bigger issue, of course, is that an alarming number of restaurants are closing down permanently, so DoorDash must find new markets.

Will DoorDash be able to migrate its massive user base into the new grocery vertical? There will need to be some education, as people currently associate DoorDash with restaurants and Instacart with groceries. But as we continue to hunker down because of this pandemic, new habits are quickly becoming the new normal, and no one will care who brings them their groceries as long as there is a delivery window available.

Heinen’s Market to use Afresh’s AI-based Grocery Managment Software

Afresh announced today that its artificial intelligence (AI) platform for grocery retail management will be used by Heinen’s markets. Afresh’s software will be used in the fresh departments across Heinen’s 23 stores in Cleveland, Ohio and Northern Chicago.

Fresh food inventories (produce, bread, etc.) are trickier to manage for grocery retailers because of the perishable nature of those products. For stores, the goal is to have enough inventory on hand so they don’t run out (and lose sales), but not so much that the food goes bad on the shelves.

Afresh’s platform promises to use machine learning to analyze customer data and predict demand. With that knowledge, retail managers can better stock and manage their inventory.

Heinen is the latest public customer to adopt Afresh’s software, and the deal comes just one month after Afresh raised $12 million in funding.

Afresh isn’t the only company using AI to better manage grocery inventory. Crisp also uses data and AI to help grocers keeps their shelves stocked, and Farmstead is a Bay Area-based online grocer that is built around just-enough inventory managment.

Given that Afresh’s platform looks at consumer data, and that the COVID pandemic abruptly shifted grocery buying habits on a national scale (food shortages, record online grocery shopping), I asked Afresh CEO Matt Schwartz by phone this week if and how his product was affected.

“In some ways COVID was a test case for our overall structure,” Schwartz said, “Ultimately we’re building the system for edge cases and supply interruptions.”

Schwartz said that Afresh’s overall mission is to help grocers maintain steady inventory and weather sudden shocks to the system, so there aren’t barren shelves and people can get food, especially fresh food, when they need it most. Perhaps in a couple months Heinen’s will let us know.

Walmart Brings on Instacart for Same Day Grocery Delivery

Walmart has teamed up with Instacart to provide same day grocery delivery in four markets across California and Oklahoma, reports CNBC.

Instacart users in Los Angeles, San Francisco, San Diego and Tulsa will be able to order groceries, alcohol and more from Walmart stores for delivery in as little time as one hour.

The move is of note because this is the first time that Walmart has enlisted the help of Instacart for its main stores in the U.S. (Instacart delivers for Walmart Canada as well as Walmart-owned Sam’s Club). As Grocery Dive points out, the agreement comes just a week after Walmart reportedly delayed the launch of its Amazon Prime-like service, Walmart+, which will include same-day grocery delivery.

The timing for such a partnership is certainly right. The COVID-19 pandemic has spurred record amounts of online grocery shopping, which entails either curbside pickup or delivery. As it was deluged with demand, Instacart raised another $225 million in June and ratcheted its number of gig Shoppers (who do the picking and delivery) to 750,000 to keep up.

What’s somewhat curious about this deal is why Walmart is choosing to do it. Obviously the big reason to help fend off Amazon, which saw its grocery sales triple year-over-year, from gobbling up marketshare as it starts rolling out its own real-world grocery stores. Plus every player in the grocery retail space has bulked up its delivery options. But unlike Instacart’s other grocery store partners, Walmart is a logistics machine. I’m not sure why it would want to hand over the customer relationship to a third-party.

Perhaps this is indeed more of a stopgap to help retain and gain customers while Walmart ramps up its own delivery mechanisms. Or perhaps Walmart is finding more customers use its curbside pickup offering (a service it was pushing hard at the beginning of the year).

Regardless, the pandemic has forced all kinds of acceleration and adaptation in the grocery space, and this deal from Walmart and Instacart is just one more story that will keep going throughout the year.

Food-X Gets $2.6M Grant to Build Out its E-Commerce Platform

Food-X Technologies, which creates a software platform to help retailers facilitate their online grocery shopping and delivery, announced last week that it had received a $2.6 million Canadian (~$1.95M USD) from from the Digital Technology Supercluster.

The Digital Supercluster is a collaboration between the Canadian government and private businesses including Microsoft, Adaptech and AltaML. The $2.6 million is basically like a grant and there is no equity in Food-X involved. (There is also no relation to the Food X accelerator here in the U.S.)

Food-X Technologies provides a platform that helps retailers throughout the entire e-commerce process: from the integrating with consumer-facing ordering through back-end fulfillment across all food categories (frozen, fresh, etc.), to inventory management and delivery route optimization.

The company is similar to U.K.-based Ocado, which builds out massive robot-powered warehouses. In the U.S., Ocado has partnered with Kroger to build out a number of fulfillment centers across the U.S.

Food-X has been doing online grocery since its early days as a CSA in 1997. The company has grown since then and now serves Western Canada and has a partnership with Walmart for grocery fulfillment.

The new money comes at an opportune time for Food-X. The COVID-19 pandemic has spurred a boom in online grocery shopping. Here in the U.S., grocery e-commerce hit $7.2 billion in sales during the month of June. Up in Canada, the CBC recently reported that online food buying is up 107 percent since the beginning of the pandemic.

As the pandemic continues to wax and wane in different parts of the world, the question now is how much of this online shopping is the new normal for people. Food-X now has a bigger warchest to find out.

Weezy Raises $1M for Speedy Grocery Delivery

London-based grocery delivery startup Weezy, came out of stealth today and announced it has raised a $1 million pre-seed round of funding. TechCrunch was first to report on Weezy and its news, writing that the round was led by Heartcore Capital with participation with from former execs from grocery-related companies like Tesco, Ocado and Sainsbury’s Chop Chop.

The hook with Weezy is that it promises to deliver your groceries in 15 minutes. It does this through a combination of “strategically located fulfillment centers” in different neighborhoods along with a fleet of electric scooter and bicycle couriers, according to TechCrunch.

Customers use the Weezy app to shop for groceries, which because the fulfillment centers are tucked in neighborhoods, also features goods from local bakers and butchers. Weezy then delivers the order in less than 15 minutes between the hours of 10 a.m. and 10 p.m., charging £2.95 per delivery. Weezy currently serves the Fulham and Chelsea districts of London.

From the sounds of it, Weezy seems to be a speedier Farmstead, which also uses a more localized fulfillment center approach to grocery delivery here in the U.S. (though doesn’t promise 15 minute delivery). This distributed network of smaller fulfillment centers is also what robotics companies like Takeoff and Fabric are looking to build.

Not living in London, we haven’t had a chance to try out the service, but one question we’re curious about is how large a Weezy grocery order can be. If they are delivered via bike and scooter, that means a week’s worth of groceries for a family is probably out of the question. But then again, this type of quick service is probably geared more towards last minute items or nice-to-haves rather than replacing full-on shopping trips.

Weezy is certainly launching at an opportune time. The COVID pandemic has spurred record amounts of online grocery shopping as people limit trips to physical stores. With the pandemic’s waves, Weezy’s speedy delivery will certainly make it an attractive option for families still stuck at home.

Woodman’s Market Adds Badger Technologies’ Robots for Shelf Scanning

Badger Technologies announced yesterday that its shelf-scanning robots will be roaming the aisles of Woodman’s Markets throughout Wisconsin and Illinois come the end of the year.

According to a press release sent to The Spoon, the robots will “monitor product availability, verify prices and deliver precise location data for more than 100,000 items at each location.” The plan is for the robots to be present in all 18 Woodman’s locations by the end of 2020.

The last time we wrote about Badger was January of 2019, when Ahold Delhaize ordered 500 of them for its GIANT/MARTIN and Stop & Shop stores. Those robots however, were being brought on to detect spills and other messes. (The robots didn’t even clean those up, they just alerted staff when there was a mess.)

Unlike that previous use case, Woodman’s, is using Badger’s robots to help automate inventory management. Woodman’s is far from the only store using robots for this purpose. Giant Eagle and Schnuck’s stores use Simbe Robotics’ Tally robot. And Walmart expanded the use of Bossa Nova’s shelf-scanning robot to 300 locations last year.

Pre-COVID, robots in grocery stores were seen as a threat to human jobs. Retailers like Walmart typically defended the increased automation because robots can do the manual, repetitive tasks — like monitoring inventory on store shelves — faster and more accurately than a human. Badger claims that its robots can detect out-of-stock items with more than 95 percent accuracy, and incorrect or mispriced products with 90 percent accuracy. Additionally, robots can work all day without getting and don’t need to take breaks.

During and post-COVID, however, those labor arguments may be shunted to the side as retailers and customers alike seek to cut down person-to-person interactions. Robots don’t get sick, don’t cough and can be easily sanitized by wiping them down.

Another argument in favor of more robots could be more accurate, real-time inventory data for stores and customers. With a robot roaming the aisles providing more precise item stocking information, retailers can better manage product flow and provide more accurate inventory data for people shopping online (which is happening in record numbers).

Robots are having a bit of a moment, thanks to this pandemic. Elsewhere today, online grocer FreshDirect announced a robot-powered micro-fulfillment center that is being built out by Fabric. With the coronavirus surging and re-surging around the world, robots and automation are likely to continue their march into retail throughout the rest of this year and into next.

FreshDirect to Use Fabric’s Robots for Grocery Fulfillment in D.C. Area

Online grocer FreshDirect announced today that it has partnered with Fabric to build out an automated, robotic grocery e-commerce facility in the D.C. Metro Area. This is the first public U.S. partnership announcement for Fabric.

Using a system of totes and racks, Fabric creates automated systems for shuttling grocery items around a warehouse to fulfill e-commerce orders. Fabric will be building out an existing 10,000 sq. ft. When it opens later this year, the new FreshDirect facility in which it will be able to process 500 – 1,000 orders per day. Each order will take just minutes to fulfill, enabling FreshDirect to have a two-hour delivery window for customers in the D.C. area.

While this is the first U.S. facility for Fabric (née Common Sense Robotics), the company has two operational fulfillment centers running in Israel. Steve Hornyak, Chief Commercial Officer at Fabric, told me during a phone interview this week that his company has many more partnerships that will be announced soon, and that Fabric has seen a surge in demand.

“We got thrust five years into the future,” said Hornyak, adding that customers that had planned on implementing automation for e-commerce fulfillment in 2021 or 2022 are accelerating those timelines and starting the projects now.

There are 7.2 billion reasons grocery retailers are rushing into automation right now. The pandemic and subsequent stay-at-home orders pushed grocery e-commerce into multiple record-setting months in a row, hitting $7.2 billion in June. FreshDirect itself was hit hard in NYC during the height of the pandemic, at the beginning of the e-commerce surge, with delivery windows near impossible to get for most people. The inability to accept as many orders presumably translated into lost business for FreshDirect.

Hornyak said that the biggest issue for retailers Fabric is talking with is capacity. How do they increase the number of e-commerce orders they can fulfill? “Doing it manual sort-and-pick is arguably unprofitable,” said Hornyak. And while Fabric definitely has an incentive to bemoan the cost and speed at which humans move when picking items for an online grocery order, he has a point. Robots can just fulfill orders faster and for longer.

That’s why there are so many retailers investing in automated fulfillment. ShopRite and Albertsons both have programs with Takeoff Technologies, which builds micro-fulfillment centers in the backs of existing grocery stores. Walmart has a trial going with Alert Innovation. And Kroger is building out standalone automated warehouses powered by Ocado’s automation technology.

While we don’t know what permanent impacts the pandemic will have on buying behavior, large swaths of consumers have now had five months of new habituation, including buying their groceries online. As more automation gets built out, theoretically, delivery and curbside pickup options will get faster, which will attract more consumers, and an automated virtuous cycle will be born.

Misfits Market Raises $85M Series B for its Online Oddball Food Marketplace

Online grocery subscription service Misfits Market announced today that it has raised an $85 million Series B round of funding. The round was led by Valor Equity Partners with participation from Greenoaks Capital, Third Kind Venture Capital, and Sound Ventures. This brings the total amount of funding raised by Misfits to $101.5 million.

Founded in 2018, Misfits Market started out selling imperfect or “ugly” produce boxes via subscription. The company has since expanded into other categories. It now sells all manner of packaged food considered imperfect because of things like inventory trucks being sent to the wrong location or labels printed backwards on items.

You may think that you can’t build a business on misprints, but as Abhi Ramesh, Founder & CEO of Misfits Market explained to me phone last week, you’d be wrong.

“There are a ton of manufacturing errors,” Ramesh said, “We purchased 50,000 units of olive oil because [the] label was printed backwards. Things like that happen constantly in the food system — manufacturing errors, mislabels, short coded items.”

Misfits claims that customers who buy these imperfect items save an average of 25 – 50 percent of retail prices. The catch however is that these imperfections are not consistent. That particular brand of olive oil isn’t going to misprint labels every month. Ramesh told me that while there may not be brand consistency, there are enough manufacturing issues across the industry that his market can still offer olive oil, it will just be a different brand from month to month.

Like so many other grocery related businesses during the COVID pandemic, Misfits Market has seen a surge in usage. According to today’s press announcement, the company has seen a 400 percent spike in consumer demand and has made 400 new hires since March.

Misfits Market isn’t the only company in the ugly food game. Imperfect Foods and Hungry Harvest do much the same thing.

Right now, Misfits Market only delivers to zip codes across the eastern half of the U.S. Consumers sign up for the service by choosing one of two different box sizes for produce, with the smaller one costing $22 and the larger going for $35. From there, they can access the other imperfect items in the marketplace. Ramesh said that eventually, Misfits Market will become more like Costco, where you pay a monthly membership that gives you access to the full store.

With $85 million now in the bank and a bigger customer base, they’ll be able to buy up even more misprinted product misfits.

Afresh Adds $12M in Funding for its AI Approach to Fresh Food Stocking at Grocery

Afresh, a startup that uses artificial intelligence (AI) to help grocery retailers manage fresh food inventories, announced today that it has raised a $12 million follow-on to its Series A round of funding. The round was led by returning investor Innovation Endeavors with participation from Food Retail Ventures, Maersk Growth, Impact Engine, Better Food Ventures and existing investor Baseline Ventures. This brings the total amount raised by Afresh to $20 million.

A grocery store’s fresh food sections (think: produce, bread etc.) are trickier to manage than the aisles of CPG products as fresh foods have a limited shelf life and expire. The goal is to keep a store stocked with enough product that they don’t run out, but not so much that there is a lot that goes to waste.

That’s where Afresh says its technology can help out. As we wrote previously:

Afresh’s technology uses machine learning to analyze customer data and forecast product demand. Retail managers can then use the Afresh software to order the exact amount of fresh food that they’ll need — no more, no less.

Of course, maintaining fresh food stocks in-store has only gotten trickier since COVID-19 hit in full force. When the pandemic first started here in the U.S., panic buying translated into lots of empty store shelves. Since then buying habits have shifted too, with record numbers of people buying groceries online. All of these new buying patterns need to be taken into account as we adjust to this current pandemic and brace for any resurgences of the virus.

Afresh isn’t alone in its mission to cut down on food waste and help grocery retailers better manage their inventories. Crisp uses data and AI to offer a similar service to grocers. And online grocer Farmstead is built around algorithms that help it predict and better manage its inventory.

Though the world seems to be in a continuous state of unpredictable flux, we all still need to eat. Hopefully technology like Afresh’s can help mitigate any future shocks to the food system.

Good Eggs CEO Thinks with COVID the Line Between Grocer and Restaurant Will Continue to Blur

There has been pretty much nothing but bad news for the restaurant industry since the COVID pandemic went global. In-store dining widely shut down (then re-shut down), third-party delivery services have continued their parasitic practices, and an alarming number of restaurants have permanently closed.

But in this crisis, Bentley Hall sees an opportunity for restaurants — in the grocery aisle. Hall is the CEO of Good Eggs, an online grocer serving the Bay Area. I spoke with him by phone last week, and during our chat he explained why he thinks we’ll see more restaurant food pop up at grocery stores.

“There’s no reason that the top ten restaurants in a category can’t have SKUs on Good Eggs,” Hall told me by phone last week. “Send us a pallet of your best meals!”

Hall said he has a number of friends who own restaurants and added that they all have kitchens and staff that want to work. Food delivery is a lifeline, but with the high commission fees, it’s also a bit of a double-edged sword for restaurants.

A grocery store like Good Eggs can place bulk orders for either prepared meals or meal kit components. So, for instance, Taqueria X could bundle up its tortillas, sauces and slow-cooked pork as a taco kit and sell it via Good Eggs. That may not have the same satisfaction as getting one fully prepared and brought to you, but you’re still helping out the restaurant (without the commission fees), and not all food delivers well, or as Hall put it making that taco at home is “better than taking a taco that was cooked an hour ago.”

These types of kits can also extend to bars, which are going through as bad if not worse times than restaurants. After all, being at the bar is more important than what is being imbibed at a bar. Hall said that through Good Eggs, bars can put together cocktail kits for sale, providing at least some revenue while they are shut down.

Another reason Hall likes restaurants as food suppliers is their ability to ramp up production. Restaurants are used to adapting to rushes of demand, so if Good Eggs has a run on a particular item or meal kit, it’s easy to pick up the phone and ask them to crank out more that same day.

This blurring between grocery and supermarket has already been accelerated by COVID. Restaurants have been turning themselves into grocery stores, H-E-B started selling food from local restaurants in April, and Cheetah added prepped local restaurant meals to it grocery pickup service last month.

For its part, Hall said that Good Eggs has doubled its revenue and added 400 new people to its headcount in the past 90 days. The long-term ramifications of the pandemic have yet to be seen, but between the surge in online grocery shopping and the decimation of the traditional restaurant biz, it’s a good bet that we’ll be seeing more restaurant items for sale at your grocer of choice.