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Daily news and analysis about the food tech revolution

online grocery

Instacart, Crisp, Rohlik, Flink. Online Grocery Gets Funding in the U.S. and Europe

Apparently investors have been shopping for online grocery startups, as there was a spate of funding news in the sector across North America and Europe over the last 12 hours.

Grocery delivery service Instacart raised another $265 million from existing investors including Andreessen Horowitz, Sequoia Capital, D1 Capital Partners, Fidelity Management & Research Company LLC, and T. Rowe Price Associates, Inc. This brings the total amount raised by Instacart to roughly $2.6 billion and values the company at $39 billion.

Over in the Czech Republic, online grocer Rohlik raised €190 million (~$230 million USD) in a round led by Partech with participation from Index Ventures, the EBRD, Quadrille Capital, J&T Bank, R2G, and Enern. According to TechCrunch, Rohlik offers items that it buys itself wholesale, as well as offering goods in concert with existing retailers. The company will use the funds to expand across its existing service areas (the Czech Republic, Hungary and Austria) and into new markets (Germany, Poland, Romania).

In the Netherlands, Dutch grocer Crisp announced that it has raised a €30 million (~$36 million USD) Series B round of funding led by Target Global with participation from Keen Venture Partners and others. EU-Startups reports that Crisp offers fresh seasonal ingredients sourced locally and delivered in one hour across the Netherlands. This brings the total amount raised by Crisp to €46 million (~$55 million USD) since 2018.

And finally, German delivery-only grocer Flink announced that it has raised $52 million in seed funding. TechCrunch writes that Target Global led this funding as well, along with participation from Northzone Cherry Ventures and TriplePoint Capital. This brings the total amount raised by Flink to $64 million, as the company is expanding beyond Germany and into France and the Netherlands.

Investment in the online grocery space has been frothy since the start of the year. In the U.K., Weezy raised $20 million. Here in the U.S., Good Eggs raised $100 million and Imperfect Foods raised $110 million. But all these deals pale next to Chinese grocery app Xingsheng Youxuan, which raised $2 billion.

Why so much money? Partly it’s because the pandemic and limited trips outside our homes pushed people into record amounts of online grocery shopping last year. But as we’re a year into this pandemic, new habits around online grocery have formed. In the month of January, U.S. consumers spent $9.3 billion on grocery e-commerce, and online sales of food and beverages is projected to hit $143 billion by 2025. In other words, the market for online grocery markets is looking pretty super right now.

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.

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.

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.

GrubMarket Raises $90M to Make Its Food Delivery Service Available Nationwide

Virtual food marketplace GrubMarket announced today it has raised $90 million in an oversubscribed Series D round, up from $60 million when the round was first announced in October 2020. Participants include “funds and accounts” managed by BlackRock, ACE & Company, Celtic House Venture Partners, Sixty Degree Capital, The Strand Partners, Reimagined Ventures, Trinity Capital Investment, Madison Bay Capital Partners, Marubeni Ventures, GGV and others.

GrubMarket connects consumers with farmers via an extensive online marketplace where customers can shop for grocery items and some household goods. GrubMarket also has a B2B component through which it sells wholesale goods to grocery retailers, restaurants, corporate offices, and other business settings. The company counts Whole Foods, Kroger, Hello Fresh, Blue Apron, and many other companies among its customers.

Meanwhile, its WholesaleWare platform, which is a software platform food companies can use to manage their businesses. That includes anything from inventory and financial management to HR tasks and driver routing.

Mike Xu, GrubMarket’s CEO, said in a statement that the Series D round was originally intended to be no more than $30 million, and that the company has made “efforts to keep this round $100 million.” He said the new capital will allow the company to invest more in talent, technology, and acquisitions in the future. The company also plans to “expand to most regions of the country” over the next 12 months. In October of 2020, Xu said his company plans to go public, but did not give an exact timeframe for an IPO.   

Online grocery as a category is expected to account for 21.5 percent of all grocery sales by 2025, and companies currently offer all manner of takes on the concept. Right now that includes big-box retailers like Walmart, those like Rosie that are focused on independent grocers, and those like Imperfect Foods, which cater to specific niches of the buying public. GrubMarket’s “farm-to-pantry” approach certainly serves a demand, since buying direct from farms has increased among consumers.

But Grubmarket’s focus more and more appears to be on reinventing the supply chain and doing away with some of the inefficiencies there, hence the WholesaleWare platform and the growing B2B customer base. Expect that portion of the business to grow substantially from the new infusion of capital. 

Sustainable E-Grocer Imperfect Foods Increases Series D Round to $110M

Imperfect Foods has increased its recently announced series D round to $110 million, up from $95 million. The increased round now includes two additional investors, Hamilton Lane and Blisce, and brings Imperfect’s total funding to $229.1 million.

The company says it will increase the production capacity of its online grocery store and improve the shopping experience for customers. 

Imperfect Foods’ evolution from food redistribution service to full-stack online grocer started in 2019 when the company began offering “rescued” foods beyond produce items: meats, pantry staples, and dairy, for example. The idea was to extend Imperfect’s original modus operandi — rescuing surplus food and selling it to consumers for a discount — to any type of food, whether an avocado or an unused cheese plate rescued from an airline.

Rescuing food is one tactic in the fight against food waste. Surplus and so-called “ugly” groceries, inventory at restaurants, and, yes, cheese plates and other food items from airplanes, would typically go to the landfill, contributing to the world’s multibillion-dollar food waste problem. Redirecting that cosmetically imperfect but perfectly edible food to consumers also informs the business models of Misfits Markets, Flashfood, Too Good to Go, and several others.

More investment dollars for Imperfect and these other companies suggests U.S. consumers are receiving the concept of ugly-food redistribution more in 2021 than they have in the past. Historically, the category has been more popular in Europe. However, with online grocery projected to be 21.5 percent of total grocery sales by 2025 and awareness of our food waste problem increasing, more folks are willing to pay less for their food items, even if they come with imperfections.

Imperfect said in a press release sent to The Spoon that the Series D round, including the add-on investments, will help the company build “the most sustainable online grocery service.” Currently, users in parts of the U.S. can sign up at the company’s e-commerce storefront to receive deals on grocery delivery. Imperfect currently serves the West South Central, Midwest, and Northeast regions and the West Coast. 

Kroger Building Ocado-Powered Warehouse in Phoenix, AZ

Kroger announced on Friday that it will build out its next automated customer fulfillment center (CFC) in Phoenix, AZ. This marks Kroger’s first robot-powered warehouse in the U.S. Southwest region.

These CFCs use robotic technology from UK grocery Ocado (which Kroger is an investor in). Online orders are assembled automatically inside the center through a series of totes on rails, and packaged up for delivery.

Kroger announced a few years back that it would build out 20 such warehouses across the U.S., and has since started work on sites in a number of different locations including: Monroe, OH, Groveland, FL, Forest Park, GA, Dallas, TX, and Pleasant Prairie, WI, Frederick, MD, Romulus, MI, as well as the Pacific Northwest, Great Lakes and West Regions. The first Kroger CFC is expected to open in Monroe this year.

Ocado Robotic System For Kroger

Grocery e-commerce, which got a boost last year thanks to the pandemic, is expected to become the new normal for many shoppers. Online grocery is projected to grow over the coming years and take up 21.5 percent of overall grocery sales by 2025.

As such, grocery retailers are building out a variety of automated systems to keep up with that increased demand. While Kroger is building out these centralized delivery warehouses that serve large areas of customers, others are taking a more local approach. Albertsons built out micro-fulfillment centers in the backs of two of its Bay Area stores, and is expanding to more. And Texas grocery chain H-E-B is adding automated micro-fulfillment to a number of its locations.

Kroger’s CFCs are the opposite of “micro” fulfillment. The forthcoming Phoenix facility will be 200,000 sq. ft., and will open 24 months after groundbreaking to support customers across Arizona.

Imperfect Foods Raises a $95M Series D Round

Imperfect Foods, a national online grocer that specializes in selling surplus and cosmetically “imperfect” foods, announced today that it has raised a $95 million Series D round of funding. The round was led by Insight Partners and brings Imperfect’s total amount of funding to $214.1 million.

Imperfect Foods (formerly Imperfect Produce) aims to reduce waste in our current food system by “rescuing” so-called ugly foods — think misshapen carrots or potatoes — and selling them directly to consumers at a discounted prices. Without these rescues, such food would go straight to the landfill, further contributing to the world’s multibillion food waste problem.

In 2020, Imperfect transitioned from a regional produce delivery service into a national full-service grocer, expanding its catalog to include pantry items, meat, seafood, dairy and other products. Items sold are surplus, cosmetically imperfect, or sourced from sustainable partners. Some examples from last year include buying up allotments of cheese plates going unused by airlines and popcorn kernels from empty movie theaters. Imperfect also released a holiday snack box at the end of 2020 that featured cosmetically imperfect but otherwise perfectly edible snack items.

Imperfect said in today’s press announcement that it has a growing customers subscriber base of more than 350,000 customers. But it’s not alone in the “ugly” food space. Misfits Market, which does much the same thing, has raised more than $100 million in funding.

That money is flowing into Imperfect and Misfits is not too much of a surprise. The global pandemic pushed record numbers of people into online shopping. Even though vaccines are now out, and we may be seeing the pandemic recede, grocery e-commerce is projected to remain sticky with consumers and grow to gobble up 21.5 percent of overall grocery spending by 2025. So having an established grocery delivery infrastructure right now is far from an imperfect business idea.

Plant-Based E-Commerce Site PlantX Expands To US and Israel

Vancouver-based PlantX, an e-commerce site for plant-based groceries, recently announced its expansion into the US and Israel as well as new brick-and-mortar locations. I had the opportunity to speak this week with Sean Dollinger and Alex Hoffman, the co-founders of PlantX, to discuss the details of the company’s expansion news.

PlantX launched this year and has been operating its e-commerce site in Canada, and now the service is expanding to sell groceries to consumers in the United States and Israel. To accommodate these new channels, the company will be opening brick-and-mortar stores that will serve as shipment fulfillment centers. The US location will be based in San Diego, California, while the Israel location is currently undisclosed.

Hoffman emphasized that the stores will be much more than a grocery store or fulfillment center though; their primary focus will be to provide a learning center that educates consumers on a plant-based diet. The physical location will also include onsite kitchens for meal delivery service and a coffee shop serving plant-based items. To encourage the continued use of its e-commerce site, PlantX customers can actually go shop in these physical locations and can use their phones to scan QR codes and have the groceries delivered to their house.

The demand for purchasing groceries online has certainly soared during the pandemic; online grocery shopping hit a record of $7.2 billion in sales over the summer. PlantX is among a number of smaller e-commerce sites for plant-based only products like GFTO it’s Vegan, Billion Vegans, and Vegan Essentials; however, none of these companies offer physical locations that customers can visit.

Dollinger said that it is the company’s goal to have a brick-and-mortar location in every country, enabling consumers to use the e-commerce site throughout the world. In addition to the main flagship locations in each country, PlantX will be opening smaller franchise locations that will serve as grocery stores, fulfillment centers, and learning centers sometime in the future.

Self Point and Tortoise Team Up to Offer Grocers a Robot Delivery Option

Self Point and Tortoise announced today that they have partnered up to make same-day robot delivery available to local grocers.

Self Point makes digital commerce software that allows grocery retailers to build their own websites that integrate point of sale, inventory management and order fulfillment. Tortoise makes a teleoperated electric cart built for transporting heavy loads like groceries. With the Tortoise integration, Self Point’s grocery customers can add robots as a delivery option on orders.

You can check out a video of the Tortoise in operation here:

Tortoise Cart TikTok

Tortoise sets itself apart from other players in the last mile robotic delivery space such as Starship, Refraction and Nuro in a couple of ways. First Tortoise is proudly not autonomous. All Tortoise robots are teleoperated remotely by human drivers. By taking this approach, Tortoise believes it can get to market faster by avoiding some of the hesitations some local governments have with the safety self-driving robots on city sidewalks.

Tortoise is also not positioning itself as an on-demand delivery service. Tortoise is not meant to get you groceries in under a half hour. It’s meant to be scheduled ahead of time. Though it does appear that with Self Point, Tortoise robots will be available same day.

The Self Point + Tortoise partnership is certainly coming at the right time. Earlier this year, the pandemic pushed online grocery shopping sales, and by extension grocery delivery, to record-shattering new heights. Though those numbers have come down in recent months, grocery e-commerce is expected to represent 21.5 percent of total grocery by 2025.

As such we’ll see more grocers going online and needing more options for order fulfillment. Walmart has been doing automated grocery deliveries with Nuro in Houston, TX. Refraction has been doing grocery delivery in Ann Arbor, MI, and in Modesto, CA. And Save Mart is using a fleet of 30 Starship robots to make deliveries.

The robotic delivery market is definitely heating up, and it’s not to hard to imagine through deals like the one with Self Point, Tortoise could arrive in a bunch of neighborhoods rather quickly.

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.

Virtual Farmer’s Market Grubmarket Raises $60M

Grubmarket, a kind of virtual farmer’s market, announced today it has raised a $60 million Series D round, according to TechCrunch. The round included participation from BlackRock, Reimagined Ventures, Trinity Capital Investment, Celtic House Venture Partners, Marubeni Ventures, Sixty Degree Capital, and Mojo Partners. It also included participation from existing investors GGV Capital, WI Harper Group, Digital Garage, CentreGold Capital, and Scrum Ventures. It brings Grubmarket’s total funding to roughly $180 million.

Grubmarket founder and CEO Mike Xu also told TC that his company, which is profitable, plans to go public but did not give an exact time for an IPO.

Grubmarket runs a virtual farmer’s market, sourcing food directly from farmers then selling it online to businesses and  individual consumers. Customers can choose from a range of food items from local farms, fisheries, and even some restaurants and meal kit companies. Just as they would on other food delivery marketplaces, customers order their items via the Grubmarket app or website and can either pick them up or have them delivered for a small fee.

The company also operates the WholesaleWare platform, an all-in-one platform for food businesses to manage everything from their inventory and customer relationships to their drivers’ routes and payroll reports. Xu told TC that since the COVID-19 pandemic, sales of WholesaleWare “have seen more than 800% growth over last year.”

That growth shouldn’t surprise too much, as online grocery sales continue trending up in response to the pandemic’s effect on in-store grocery shopping habits. Additionally, we’ve seen an uptick in e-commerce platforms connecting consumers directly to farmers. Chipotle, for example, launched a direct-to-consumer virtual farmer’s market in June, and there are plenty of smaller, regional players, like Good Eggs in San Francisco and Farmdrop in the U.K.

For now, Grubmarket is available to customers in parts of the San Francisco Bay Area as well as Seattle, Michigan, Texas, Boston, and New York, among other places.