Published on November 19th, 2014 | by Eddie Leblanc0
GrubMarket Disrupts San Francisco Grocery Market With Free Home Delivery Of Local Produce
Grocery delivery services from AmazonFresh, Google Express or Instacart are flourishing around the country, delivering everything from fresh produce to bottled water to toilet paper from nearby stores.
Despite the fierce competition with these online giants, Grubmarket is set out to disrupt the $600 billion grocery industry with a unique and innovative home-delivery service.
Unlike its larger competitors, which charge consumers a fee to deliver products from mostly big-box retailers, the Fremont, Calif.-based early stage startup is launching the very first totally-free delivery service of produce coming from local farms and retailers in the San Francisco Bay Area.
BayLive caught up earlier this month with Grubmarket CEO and founder Mike Xu to discuss his company’s strategy, future expansion plans beyond the San Francisco Bay and his vision of the home delivery market.
BayLive: What is Grubmarket? Your mission, coverage area?
Mike Xu: GrubMarket is an online farmers’ market platform connecting people who are passionate about creating and consuming locally produced fresh food including farm produce.
GrubMarket’s mission is to facilitate the direct sale of fresh local foods (including farm produce) to local consumers, cutting the middle-man such as wholesalers and grocery stores. With this online direct sale approach, consumers can shop for specialty gourmet foods, fresh farm produce and seafood at a very affordable price, 24 hours a day and 7 days a week, and then receive the ordered food directly delivered to their door.
The coverage area includes San Francisco County, Marin County, Contra Costa County, Alameda County, San Mateo County, Santa Clara County.
BayLive: How is it different from the other home-delivery services like AmazonFresh, Instacart, SixDoors, GrubHub…
Mike Xu: GrubMarket stands out as the only delivery service provider doing direct farm-to-door or door-to-door delivery service covering all counties of the San Francisco Bay Area.
InstaCart is a grocery-to-door delivery service. It is not farm-to-door, so the food may have been stored in a warehouse for days/weeks, instead of being freshly picked from farms. Also they may not cover all counties of the Bay Area. Same for Google Express, Good Eggs or SixDoors.
Grubhub is only a restaurant-food delivery service. It mostly covers San Francisco and few cities in the Bay Area.
Amazon Fresh is a grocery-to-door delivery service. It is not farm-to-door so the food may also have been stored in a warehouse for days/weeks. Also it surely does NOT cover all counties of Bay Area, only San Francisco, and a few rich areas in Silicon Valley such as Palo Alto and Los Altos.
BayLive: Can you share your perspective on how you see this market evolve over the next 10-12 months
Mike Xu: The local food market is a huge under-served market with no dominant player. It is a hard marketplace for eCommerce players and it is difficult one to be disrupted. However, this means this market rewards those who do the hardwork and grow really solidly in terms of customers and vendors, instead of growing only for VCs’ eyes and fundraising. So far, for those eCommerce players who started in this market, everyone only gets probably less than 2% of the market so this market is huge enough for every player to grow for a long while before clashing with each other. For players like InstaCart, AmazonFresh – despite a lot of funding – their growth may be hindered by the operation cost and may stumble in scaling up the demographic areas.
This market also needs a lot of innovation in technology and business models in order to be disrupted, and so far I have not seen much happening. I envision that GrubMarket has the potential to be a disruptor like Amazon in 1990s when it disrupted the book industry despite huge players like Borders or Barnes and Noble.
BayLive: What’s next for Grubmarket?
Mike Xu: GrubMarket has raised about $500,000 and will close a $1 million seed round of funding by the end of this year. We have recently released a new product called Grub Box which will increase the “stickiness” of GrubMarket customers. It is a subscription-based ordering of seasonal farm produce, seafood, meat, snacks, and specialty food boxes with free-delivery service to customers.
GrubMarket is also developing disruptive technologies and business models which are confidential yet to further disrupt the local food market in the next 6 to 12 months.
GrubMarket has received many inquiries from people in other regions in California and other states, to expand to their cities. And we do have a plan to at least a couple of other cities in California in the first quarter of 2015.