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The Spoon

Daily news and analysis about the food tech revolution

online grocery

Study: Online Grocery to Hit $250B, Account for 21.5 Percent of Total Grocery Sales

There are a lot of questions around the lasting impact the pandemic will have on the way we get our food. A new report out today from Mercatus and Incisiv attempts to answer some of those questions as they pertain to the way we’ll shop for groceries.

In the report, titled “eGrocery’s New Reality: The Pandemic’s Lasting Impact on U.S. Grocery Shopping Behavior,” Mercatus and Incisiv predict that by the year 2025, online grocery will hit $250 billion and account for 21.5 percent of all grocery sales.

Worth noting is how the pandemic has altered and shaped the online grocery landscape. Of the 60,000 American shoppers across the country surveyed for the report, 62 percent of respondent said they were shopping online because of COVID-19. And it seems like this new e-commerce behavior has become normal for many people. The 21.5 percent adoption in 2025 is a post-COVID data point, and is up 60 percent over pre-COVID projections.

Another finding from the report is that while 40 percent of online shoppers are likely or very likely to continue buying groceries online, the vast majority — 78 percent — still prefer going to the physical grocery store either to shop or do curbside pickup.

Who is shopping online may surprise you, as Mercatus/Incisiv found that older populations (45-plus years old) made the biggest shifts towards technology. In that group, 46 percent adopted new fulfillment options like curbside pickup and 35 percent ordered groceries online for the first time.

The report also found that 43 percent of respondents have shopped online for groceries in the past six months, up from 24 percent two years ago.

The one caveat with this report is that it was backed by Mercatus, which sells a grocery e-comerce platform. So it has a horse in this online grocery race. But Mercatus has also backed research by Brick Meets Click, which has helped provide a barometer of online grocery adoption both pre- and during this pandemic.

Speaking of, that Brick Meets Click survey was released last week and showed that online grocery shopping had fallen to $5.7 billion in August from its record peak in of $7.2 billion June. That $5.7 billion, though, is up from $5.3 billion in April, so there is still plenty of inertia behind the move to online grocery shopping.

Mercatus/Incisiv seem to have taken this slowdown into account, writing:

Growth of online grocery will slow in the immediate term, as shoppers return to stores due to reduced concern for COVID-19 risks. Retailers will be required to invest both in technology and re-alignment of operating models (store labor, forward deployment etc.) to improve customer experience and drive the next wave of growth, while ensuring profitability. Growth is expected to pick-up again in early 2022.

Of course, none of these projections are set in stone. We still have one full quarter in what has been a tumultuous year, and literally anything could happen to impact the meal journey. So all our questions won’t be answered for quite some time.

H-E-B to Use Swisslog for Automated Micro-Fulfillment

Even though everything is bigger in Texas, the San Antonio-based H-E-B grocery chain is going small. Today, the chain announced it has partnered with Swisslog to install automated micro-fulfillment centers at an undisclosed number of stores (tip of the hat to Grocery Dive).

According to the press announcement, H-E-B will make use of Swisslog’s AutoStore solution, which will use a combination of bins and robotics to shuttle grocery items around. Swisslog says that it has more than 170 AutoStore installations worldwide. H-E-B has 400 locations across Texas.

Swisslog’s micro-fulfillment centers will help H-E-B speed up the processing of online grocery orders for delivery and curbside pickup. Keeping up with the crush of new e-commerce customers was something retailers across the country struggled with throughout a good part of this year as pandemic fears pushed people into online grocery shopping.

While the first few months of the pandemic saw record amounts of online grocery shopping, recent survey data from Brick Meets Click shows that grocery e-commerce dropped in August to $5.7 billion, down from its peak of $7.2 billion in June. Having said that, August’s online grocery numbers were higher than the the $5.3 billion in April.

Swisslog is among a number of companies angling to bring more automation to grocery e-commerce fulfillment. Alert Innovation is being used by Walmart, Fabric is working with Fresh Direct, Takeoff Technologies has lined up Albertsons, ShopRite, and Loblaw’s, and Kroger is building out its own centers using Ocado.

While we’re still waiting to see exactly how many people stick with online grocery shopping (FWIW, even Whole Foods’ CEO thinks a lot of people won’t go back into grocery stores), H-E-B’s announcement shows that retailers continue to make big investments in micro-fulfillment. Will these micro-moves yield Texas-sized returns?

Survey: Online Grocery Falls in August, Though Majority Will Continue E-Shopping

What goes up must come down, especially, in this case, when people feel safe enough to go out. New survey data from Brick Meets Click/Mercatus shows that U.S. grocery delivery and pickup sales for August dropped to $5.7 billion, down from June’s record high of $7.2 billion.

This pullback in online grocery isn’t a huge surprise. Between March and June of this year, online grocery shopping had seen one record month after another, but that growth was artificially inflated, fueled by the pandemic.

According to Brick Meets Click, the fall in online grocery dollars correlates with increased ease about COVID-19, with 38 percent of U.S. households expressing high levels of concern about the virus in August versus the high of 47 percent in April.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” David Bishop, a partner at Brick Meets Click, said in a press release announcing the August results. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

This larger base is actually good news for those investing in online grocery services. Brick Meets Click said that roughly 37.5 million, or 29 percent of all U.S. households, are monthly active users of grocery delivery and pickup. That’s an increase of 133 percent over August of 2019, when that number was just 16.1 million.

August wasn’t without its own record setting, however. Brick Meets Click found that spending per order hit a record $95 in August, up 32 over a year ago. Active shoppers placed 1.6 orders per month versus 1.0 orders during the same time last year.

Additionally, more people are developing new online grocery shopping habits. According to the survey, 75 percent of customers said they are “extremely or very likely” to online grocery shop through their retailer again within the next 30 days. This desire to continue shopping online, said Brick Meets Click, was likely because of improved online shopping experiences.

Considering that people have been living under pandemic conditions for half a year (!) now, new habits have definitely set in. One thing to look for is the change in the weather. Now that people have experienced online grocery shopping, will they return to it when the weather outside is frightful (and delivery and pickup can be so delightful)?

Walmart to Launch Its Walmart+ Membership Service on September 15

Walmart today announced it will launch its own membership service, Walmart+, on September 15. The service will be available for $98/year or $12.95/month and include free same-day delivery from Walmart stores, fuel discounts, and other perks.

A Walmart+ membership gets you free, unlimited delivery “on more than 160,000 items” from Walmart stores (with a minimum order of $35), access to the company’s Scan & Go tech that lets customers skip the checkout line, and discounts on fuel. Walmart said in today’s press release that “the list of benefits will continue to grow over time.”

Walmart has been testing free delivery through its Delivery Unlimited program since last year. When Walmart+ launches across the company’s stores nationwide, current Delivery Unlimited subscribers will automatically become members of Walmart+.

Walmart+ was first revealed in February of this year in a move that immediately invited comparisons to Amazon and its Prime membership service. Speaking to TechCrunch today, Walmart said it was “not launching Walmart+ with the intent to compete with anything else.” And the service is by no means a mirror image of Prime, especially considering that Prime includes free access to streaming movies, music and more.

At least initially, Walmart+ seems to be focused more on groceries and household items (along with some toys and electronics), an area the company is already strong in. This focus on grocery makes sense given the record amounts of online grocery shopping still happening because of the pandemic. A recent survey showed that Walmart has actually overtaken Amazon as the leading retailer for online grocery shopping, and adding Walmart+ could help solidify its lead.

Walmart and Amazon have actually kind of switched places over the past week with their announcements. With today’s news, Walmart, which has a vast network of real-world stores, is announcing it’s Prime-like service. Last week, Amazon, the online retail giant, announced the opening of its first full-on real world supermarket in Woodland Hills, CA. Both moves help illustrate how important the grocery category has become for each company.

Another thing to watch with Walmart+ is how many customers will adopt the Scan & Go technology, which allows shoppers to skip the checkout line by scanning product barcodes with their phones. Walmart’s approach is more manual than that of an Amazon Go store, which uses cameras and sensors to automatically track what shoppers are buying. Will the extra scanning step inhibit adoption of Scan & Go? Also, in the pandemic era, where contactless payments are increasingly table stakes, will Walmart incentivize more people to use Scan & Go, and will customers like the system?

We’ll mark our calendars and see.

Additional reporting by Chris Albrecht.

Barn2Door Raises $6M for Platform that Connects Farms and Consumers

Barn2Door, an online platform that lets farms sell directly to consumers, has raised a $6 million Series A round of funding. Geekwire was first to report the news, writing that Bullpen Ventures led the round with participation from Quiet Capital, RAINE Ventures, Lead Edge Capital, Global Founders Capital, Sugar Mountain Capital, and others. This brings the total amount of funding raised by Barn2Door to $11.6 million.

Barn2Door’s software helps independent farms through just about every step of the e-commerce process: inventory, fulfillment, packing, invoicing and support. A Barn2Door software subscription costs anywhere from $59 to $149 a month, depending on the scale of the farm operations.

This is certainly an opportune time for Barn2Door to raise additional capital. The COVID-19 pandemic, and subsequent shuttering of dine in restaurants and general stay-at-home suggestions, has spurred people to adopt online grocery shopping in record numbers. This rising tide has lifted a number independent farm-related boats including a spike in Community Supported Agriculture (CSA) memberships, and an increase in sales for sites like CrowdCow and Grass Roots, both of which sells craft meats.

Barn2Door’s tool is also helping usher in a new wave of direct-to-consumer sales. Big brands like Pepsi and Impossible Foods each launched D2C channels this year. Chipotle launched a service allowing consumers to buy direct from its farm suppliers like Niman Ranch and McKaskle Family Farm. And smaller players like regional restaurant suppliers and startup CPG snack brands like Pig Out! and Renewal Mill are selling direct to consumers.

As this pandemic continues here in the U.S., there’s a good chance that buying direct from more sources will become the new normal for people, creating more opportunity for software services like Bar2Door’s.

Food Tech News: Virtual Derby Fare Is Upon Us

The Kentucky Derby is around the corner! Not that I or many other folks will be physically present for the famed event this year. We will, however, be cooking up some classic Derby fare, courtesy of the internet. Read on for more on that as well as other food tech news bits from the last week.

Virtual Derby Menu 2020

Churchill Downs Racetrack, home of the Kentucky Derby, is once again offering an at-home Derby menu for couch-bound attendees of the famous event — of which there will be many more this year, given the venue’s reduced capacity requirements. For the event, taking place September 5, Churchill Downs has created an at-home menu fans can access online and create in their own home kitchens. 

Africa’s First High-Tech Greenhouse

Van der Hoeven Horticultural Projects has started construction on the first fully automated glass lettuce greenhouse in Africa. The greenhouse, outside Cairo, Egypt and roughly 2.5 hectares in size, will grow herbs and lettuce, while automation technology will regulate climate and plant density for more optimal growing in desert conditions.

The Profitability of Plant-Based Eggs

Eat Just, maker of the famed JUST plant-based egg, is on track to profitability, according to a report this week from Reuters. The company aims to turn an operating profit before the end of next year is also considering and initial public offering.

Target All-In on Online Grocery

Target announced this week that its grocery pickup service is now available across the U.S. The service is now available in about 85 percent of its stores. For now, only Target’s most popular items (about 750 of them) are available for pickup, though the ongoing popularity of online grocery could change that in the future.

Food Tech News: New Meals from Sun Basket, a Dr. Pepper Shortage, and Virtual Concession Stands

These days, food tech news is flying by at breakneck speed — sort of like how I’ll be doing this weekend on my paddle board. Before that can happen, though, here are a few last bits of intel from the past week to keep you up to date on your food tech, whether you’re spending the weekend lakeside, curbside, or on your couch. Just don’t plan on a Dr. Pepper to go with it.

Sun Basket launches no-prep meal kits.

Meal kit company Sun Basket this week launched its Fresh & Ready line of products, which the company says can go straight into the microwave or oven and be ready in as little as six minutes. This new line is available as part of Sun Basket’s weekly meal plan subscription, and maintain the company’s focus on fresh, organic ingredients sourced from family-owned farms.  

Refill brings virtual concessions stands to Ohio high schools.

Refill, a company that makes virtual concession stand technology for things like sporting events, announced this week it is testing out its platform in Ohio high schools. The system uses features like contactless ordering and payments to make the process of grabbing grub during a ballgame more efficient and socially distanced.

Kroger is launching a marketplace strategy.

Kroger will double its online grocery inventory through a new digital marketplace strategy. The move, which is an obvious bid to compete with Target, Amazon, and other online heavyweights, will initially focus specialty retailers with natural, organic, and international products. The launch will also include housewares, toys, and other items.

There’s a Dr. Pepper shortage. 

Hang tight, soda lovers. Dr. Pepper had to reassure fans this week that its products would be back on store shelves in full force soon. “We’re doing everything we can to get it back into your hands,” the company tweeted, adding that it’s working with distributors to do so.

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.

Chinese Online Grocer, MissFresh, Adds $495M in Funding

MissFresh, a Chinese online grocer, announced yesterday that it has raised a $495 million funding round led by China International Capital Corp., with participation from new investors ICBC and the Abu Dhabi Capital Group, as well as existing investors Tencent, Goldman-Sachs ans Tiger Global. This brings the total amount raised by MissFresh to $1.4 billion.

That is a lot of money, even by today’s frothy standards, and reportedly gives MissFresh a pre-money valuation of $3 billion. For comparison, here in the U.S., grocery delivery startup Instacart has raised a total of $2.1 billion with a valuation of $13.7 billion.

This funding also highlights how online grocery shopping isn’t just big business in the U.S. The COVID-19 pandemic has forced lockdowns around the globe, spurring massive adoptions of online grocery shopping. In the U.S. online grocery shopping has experienced month after month of record customers and sales since the pandemic began, hitting $7.2 billion in June.

It’s worth pointing out MissFresh’s business model, which foresakes big, centralized warehouses in favor of smaller distribution centers. There are 1,500 of these smaller distribution hubs located closer to residential areas allowing for faster delivery and a a reduction in cold chain costs. We see this type of centralized versus distributed distribution models playing out between companies like Kroger, which is building large robotic fulfillment warehouses that cover large geographic areas, and Takeoff Technologies, which builds micro-fulfillment centers inside existing supermarkets, closer to where people actually live.

The question now is exactly how much consumer behavior around grocery shopping has permanently changed because of the pandemic. Will convenience and lingering fears over the virus continue to push grocery e-commerce even higher? MissFresh, at least, now has the money to find out.

Online Grocery Sales Climbed to $7.2 Billion in June

U.S. grocery e-commerce sales continued to break records as they hit $7.2 billion in June, up 9 percent from May (which saw $6.6 billion in sales), according to a new Brick Meets Click/Mercatus Grocery survey announced today.

The survey, conducted between June 24 – 25, also found that 45.6 million households used delivery and curbside pickup for a larger portion of their grocery needs, and order frequency grew to 1.9 orders per month, up from 1.7 in May.

Online grocery shopping has had a big year, spurred on by the COVID-19 pandemic and people sheltering in place. I was particularly interested to see what the June numbers would bring, as many states relaxed their lockdowns restrictions. However, despite re-openings, the coronavirus still loomed large over people’s shopping in June. From the Brick Meet Clicks press announcement:

In June, 44% of all households reported high levels of concern about someone in their household contracting COVID-19, up two percentage points from the previous month. The increase was almost entirely driven by a 9% increase among shoppers in the over-60 age segment since May.

Brick Meets Click noted that retailers of all sizes have been aggressive in expanding capacity to meet the demand for all this increased e-commerce. Anecdotally speaking, I’ve seen this play out where I live, as grocery stores big and small have both launched new online ordering platforms and carved out more space in the parking lot to fulfill pickup orders.

Will record-setting grocery e-commerce continue into the summer? There’s a good chance it will as the pandemic shows no signs of slowing down and restaurants are forced to shut down again. With three full months of pandemic quarantining in place, new habits have definitely formed. And all the confusion around opening/closing/partial opening, people could just force people to throw their hands in the air and stick with online grocery shopping for the rest of the year.

Purple Carrot Launches Frozen Meals at Whole Foods Stores

Purple Carrot, best known for its plant-based meal kit subscription service, is getting into the retail game. The company today announced the launch of a line of frozen, single-serve meals that are now available at Whole Foods stores in the U.S.

Like the rest of Purple Carrot’s offerings, the meals are 100 percent plant based and developed in partnership with CPG company Conagra Brands, which owns Health Choice, Earth Balance, and Gardein, among other names. 

These frozen meals will be available for purchase at “nearly all” Whole Foods stores in the U.S. this week for $5.29 each, according to the company press release.

The move to retail is a first for Massachusetts-based Purple Carrot. It has long been known for its subscription-based meal kit company, which specializes in plant-forward, vegan-friendly meal kits. The company was acquired by Tokyo, Japan-based Oisix ra daichi Inc. in 2019. 

Purple Carrot’s launch in physical retail outlets comes at a time when more people are ordering their groceries online thanks to the pandemic. And recent research suggests the pandemic is also causing something of a resurgence in the previously struggling meal kit sector. Finally, COVID-19 may be ushering a new trend into the food world: frozen food as medicine. Given Purple Carrot’s plant-forward, healthy menu, the new line of products is a prime contender for this category.

One might wonder why Purple Carrot is focusing on physical retail stores right now. But despite what the headlines would have us believe, not everyone is avoiding the brick-and-mortar grocery store. Presumably online shoppers will still be able to purchase Purple Carrot’s frozen meals along with any other item they throw in their virtual cart. And with more people working from home, these single-serving meals could easily become a regular staple of someone’s freezer, and a quick way to grab a healthy bite in the middle of the workday.

Innit Teams With SPINS to Add Personalization, Guided Cooking and Shoppable Recipes to Grocer Websites

Smart kitchen software startup Innit announced a partnership with SPINS today that will bring the company’s personalized nutrition, guided cooking and shoppable recipe technology directly to grocery retailers’ websites.

The deal comes against a backdrop of a pandemic and surging online grocery shopping. Consumers, many for the first time, are increasingly shopping for their groceries online. According to Innit CEO Kevin Brown, online grocery buying experiences can often feel like a trip back in time.

“A lot of ecommerce interfaces are 1.0,” said Brown, whom I spoke to by phone this week. “Shoppers used to be able to walk through the store and everything was nicely laid out. Now they’re searching through thousands of products.”

SPINS and Innit hope to take this old Webvan-like experience and bring it into 2020 by making shopping results more personalized and relevant.

To do so, each company brought something to the table. SPINS product data has traditionally been used by grocers and CPG brands to understand product purchasing trends. With this deal, the SPINS product metadata has been mapped to Innit’s personalized nutrition and shoppable recipe engines. These engines are now directly accessible through an API for grocery retailers to embed directly into their websites.

This deal marks the first time Innit’s personalization technology is accessible outside of its own suite of apps and available through grocer websites, but it’s far from the first time the company has shown interest in the grocery shopping. The company acquired Shopwell a few years ago, an app that allows consumers to scan barcodes and get nutrition data about products while in-store, and last year the company partnered up with Basketful to power shoppable recipes.

I expect online grocery shopping to be a trend with real staying power. In this sense, it’s good to see personalization platforms like those from Innit come directly to grocer websites to bridge the shopping part of the meal journey and the planning and cooking portion.