online grocery
Auto Added by WPeMatico
HDS, from the Borders and Webvan founder, raises $3M as it gears up to launch its robot-run grocery and general merchandise play
The online grocery market is poised to get a little more crowded in the next several months, with the launch of a startup led by a veteran founder who has taken big hits from Amazon in the past, but now hopes to come back swinging with the help of an army of robots.
Home Delivery Services, a delivery startup founded by Louis Borders that plans to sell groceries and general merchandise online using a massive, automated system to power the fulfillment and logistics, is today announcing funding of $3 million to finalize the finishing touches on an AI-based robotic demonstration center outside of Indianapolis.
The plan is for the center to showcase the technology that HDS Global has been building over the last several years (plans first emerged as long ago as 2014), robots and other automation under the name RoboFS, that will power a wide fulfillment system extending from stocking, sorting and picking items that will then be delivered, mostly by humans, to consumers, to take on what Borders describes as a $1 trillion grocery market in the U.S.
“The $1 trillion grocery in the U.S. is not well penetrated,” he said, comparing the opportunity to the one that Walmart seized 20 years ago in physical stores. “We want to offer a complete selection of groceries and general merchandise in one order.” The idea is to build warehouses that cover some 150,000 square feet to do $200 million in revenue over millions of SKUs for one-hour deliveries.
A funding round of $3 million — which is coming from Bob DiRumualdo, the chairman of Ulta and CEO of Naples Ventures — might sound a little modest, especially considering the hundreds of millions of dollars that have been collectively raised by online grocery players in the last several months — all of them racing to scale up their businesses in the wake of huge consumer demand for online shopping alternatives to visiting stores in person in the wake of the COVID-19 pandemic.
Borders said in an interview that this small round is primarily to kick off the demo center to show off RoboFS to help bring on new investors and new partners with the proof of concept. It already has a few investor partners (Ingram Micro and Toyota), and the idea will be to add more.
And he confirmed that HDS — which will unveil a different name when it launches commercially, he added — is also working on a much bigger round of funding, likely to close in the next 15 months, to fuel that wider commercial launch. It has raised $38 million to date, he said.
Borders’ name will ring a bell to many in the worlds of retail and technology: He was the founder and head of the Borders book superstores and later started Webvan, a very early mover in the world of online grocery ordering and delivery. Both companies crashed hard in their times and became case studies, and more specifically cautionary tales, around how to build businesses in the digital era: Beware the specter of Amazon, of innovating too early or too late, of being less agile, too inefficient and of not correctly identifying where the puck was going and skating to it.
This time around, the idea is that he’s focusing first and foremost on technology to try to head off those problems in ways that his previous ventures did not. This is one reason why HDS has spent so many years on building the technology: automation, specifically in areas like picking groceries, is one area that has foxed a lot of companies to date — Amazon continues to work on this, and Ocado, a leader in the space, has yet to launch robotic picking, although it says this is coming soon. Borders estimates that bringing in automation can bring down the cost of labor by two-thirds, with people instead focused on delivering and selling at people’s doors.
“When we went out to buy the tech we didn’t see what we wanted,” Borders said. “We’re trying to be smart about technology but the tech was just not there when we decided to build this five years ago. So we started with building that system. This became our opportunity.”
The interesting opportunity is not just to build services that don’t quite exist yet, but to provide a set of infrastructure that can be a viable alternative and supply chain to Amazon — a common goal that brings together players from a lot of disparate yet interconnected areas in the grocery value chain. This is one reason why companies like Toyota and Ingram have come on board to work with the startup.
Given that it’s been so many years in the making and has yet to see the proof of concept, there will continue to be a lot of factors that could not come together, but it’s a play that HDS, Borders and their partners are willing to make.
“Ecommerce has become an essential component in people’s daily lives but what many don’t realize is that it can be exponentially better than what is offered today,” said DiRumualdo in a statement. “I was attracted to working with Louis again and to the company’s big idea approach – an all-new robotic fulfillment system purpose-built for ecommerce – which can deliver a vastly improved experience at lower cost. I am excited to be a part of bringing this vision to life.”
Powered by WPeMatico
DST Global pumps $35 million into Asian e-grocer Weee!
Coronavirus stay-home orders have sparked an unprecedented demand for grocery delivery around the world. Now investors are clamoring to bet on promising players in the field.
That includes DST Global, the investment firm helmed by Israeli-Russian billionaire Yuri Milner. Most recently, it poured $35 million into Weee!, a California-based startup that from its own warehouses delivers to major cities across the U.S. Asian groceries like fresh kimchi and Japanese desserts. The funding boosted the five-year-old startup’s total raise since launch to more than $100 million.
Weee! declined to share its post-money valuation, but the figure likely surpasses $500 million, given it’s widely known that DST Global does not generally back companies whose valuation is less than $500 million.
Online grocery is a capital-intensive business with thin profit margins, so it’s unsurprising to see many contenders — in both China and the U.S. — operating in the red. Against the odds, Weee! turned profitable earlier this year and went cash-flow positive.
That means the startup was in no rush to fundraise, probably giving it more bargaining power in negotiating terms with a storied investor like DST Global, whose portfolio spans Spotify, Twitter, Airbnb, Slack, Didi and Gojek, just to name a few.
Weee! certainly matches DST Global’s investment target as a high-growth startup. In June, the company recorded 700% year-over-year growth in revenue and was on course to generate revenue in the lower hundreds of millions of dollars in 2020, it told TechCrunch at the time.
Since the U.S. began winding down lockdowns and people returned to supermarkets, some grocery delivery services have seen their revenue growth slow. Weee!, however, is currently growing 15-20% more than its March peak. CEO Larry Liu explained the sustained boom stems from the service’s product differentiation: Asian specialties that one can’t even find in Chinatowns.
“People don’t want to pay extra if [an online grocery] only provides convenient delivery but no product differentiation,” said Han Shen, founding partner of iFly.vc, a California-based fund that backed Weee! in its Series A round.
In addition, Weee! tries to streamline every step of its operations, from product procurement, warehouse management, staff allocation, through to door-to-door delivery. The result is zero food waste thanks to fast inventory turnover.
“There is no secret tactic that we can’t talk about, nothing more than achieving efficiency throughout the entire process,” Shen observed.
In the meantime, Weee! works to keep prices down by cultivating direct relationships with suppliers like local farms and opting for next-day delivery rather than the more costly 30-minute standard expected in China, where he grew up. Earlier this year, former chief operations officer of Netflix Tom Dillon joined the board to help beef up Weee!’s operational efficiency.
With the new proceeds, the Asian e-grocer hopes to hire new talents and expand its delivery service from eight key regions to 13-14 cities across the U.S. by the end of this year.
Powered by WPeMatico
What grocery startup Weee! learned from China’s tech giants
When Larry Liu moved to the U.S. in 2003, one of the first challenges he experienced was the lack of Chinese ingredients available in local groceries. A native of Hubei, a Chinese province famous for its freshwater fish and lotus-inspired dishes, Liu got by with a limited supply found at local Asian groceries in the Bay Area.
His yearning for home food eventually prompted him to quit a stable financial management role at microcontroller company Atmel and go on to launch Weee!, an online market selling Asian produce, snacks and skincare products.
Like other players in grocery e-commerce, the five-year-old startup has seen exponential growth since the coronavirus outbreak as millions are confined to cooking and eating at home. Nearly a quarter of Americans purchased groceries online to avoid offline shopping during the pandemic, according to Statista data. Online grocery giants Instacart and Walmart Grocery boomed, both hitting record downloads.
In a Zoom call with TechCrunch, Liu, who’s now chief executive of Weee!, said that COVID-19 played a “very important role” in his company’s recent growth, and paved its way to profitability.
“It happened a lot faster than we expected, but we were growing rapidly with even more ambitious plans for expansion prior to COVID-19,” he said. “People are buying more because restaurants are closed. Many are first-time users of grocery delivery.”
The startup’s revenue is up 700% year-over-year and is estimated to generate an annual revenue in the lower hundreds of millions of dollars.
Online grocery, the WeChat way
Powered by WPeMatico
Grocery delivery apps see record downloads amid coronavirus outbreak
As the COVID-19 pandemic spreads across the U.S., grocery delivery apps have begun seeing record numbers of daily downloads, according to new data from app store intelligence firm Apptopia. On Sunday, online grocery apps, including Instacart, Walmart Grocery and Shipt, hit yet another new record for daily downloads for their respective apps, the firm says.
Comparing the average daily downloads in February to yesterday (Sunday, March 15), Instacart, Walmart Grocery and Shipt have seen their daily downloads surge by 218%, 160% and 124%, respectively.
Typically, these apps (except for Shipt) see tens of thousands to as many as 20,000+ downloads per day. But on Sunday, Instacart saw more than 38,500 downloads and Walmart Grocery saw nearly 54,000 downloads, the firm says. Shipt, though hitting record numbers, saw only 7,285 downloads on Sunday. To some extent, its lower figures could be due to Target’s move to integrate Shipt’s grocery delivery service, which it owns, into its main app.
In fact, the Target app has also broken records for daily downloads, the report found. On Sunday, Target’s app saw more than 53,100 daily downloads; a month ago, it was seeing 25,000+.
Walmart very recently announced it would merge its grocery delivery service into its main app, as Target has done. But for now, consumers are still seeking and downloading its standalone grocery app at record levels.
These grocery delivery apps are in demand more than ever during this health crisis.
With government mandates to practice “social distancing,” U.S. consumers have been stocking up for long weeks to be spent at home. Stores were cleared of key supplies, like toilet paper, and several also saw long lines and crowds as panic-buying set in. Grocery delivery and pickup, meanwhile, presents an easier option — as well as one where you could limit your exposure to other people. With grocery pickup, consumers only have to interact with a single store employee from their curbside parking space. And with grocery delivery, most orders can simply be left on the doorstep with no person-to-person contact required.
Several grocery delivery services, including Instacart and others, promoted the fact they would add a “contactless” delivery option, which helps contribute to the huge sales boost. On Thursday, Instacart said its sales growth rates for the week was 10 times higher than the week before, and had increased by as much as 20 times in areas like California, New York, Washington and Oregon.
Apptopia’s report didn’t analyze the impact of the coronavirus outbreak on Amazon’s grocery delivery business, which includes Amazon Fresh and Whole Foods deliveries. This is more difficult to do because Amazon grocery orders aren’t placed inside a dedicated app, as with Instacart. However, Amazon confirmed a technical glitch on Sunday affected online orders through both its grocery delivery services, which the company attributed to the increase in online shopping.
“As COVID-19 has spread, we’ve seen a significant increase in people shopping online for groceries,” an Amazon spokeswoman explained, in a statement shared with Bloomberg. “This resulted in a systems impact affecting our ability to deliver Amazon Fresh and Whole Foods Market orders [on Sunday night]. We’re contacting customers, issuing concessions, and are working around the clock to quickly to resolve the issue,” they added.
Amazon Prime is also expected to experience delays and shortages as consumers stock up on non-grocery household items, the company says.
But even as grocery delivery booms, the market for food delivery apps has not seen the same results.
Despite promises for contactless delivery from several providers, including Uber Eats, food delivery apps are not experiencing a similar surge in daily downloads. According to Apptopia, the food delivery market earlier in March was starting to cool off. It later began to pick up but then cooled off again as consumers realized the expense of ordering food compared with home cooking, and because some consumers view restaurant delivery as not being as safe as cooking at home.
Powered by WPeMatico
Online grocery GrubMarket breaks even, and wants to go public in 2018
Despite the copious amounts of venture funding that have flowed to them in recent years, food tech startups haven’t had an easy time of it especially in the food delivery game. Since 2015, GoodEggs, Zesty and Munchery have shuffled their executive decks, meal kit delivery darlings Blue Apron struggled with worker safety, and logistics providers Postmates struggled to lock in a new… Read More
Powered by WPeMatico
Good Eggs raises $15 million to expand across the U.S.
A San Francisco startup that many people assumed was toast, Good Eggs, has raised $15 million in a new round of venture funding led by Index Ventures to expand its online, organic grocery business first in the San Francisco Bay Area, and later across the U.S. In recent years, Good Eggs tried to ramp up its eco- and farm-friendly grocery business only to face logistics problems, high costs… Read More
Powered by WPeMatico