Tagged: farmigo

Online groceries bag big time investments in 2013

Image courtesy of Shopping Bargain Blog

Image courtesy of Shopping Bargain Blog

If recent announcements are anything to go by, the e-commerce industry expects big growth in the global online grocery sector this year.

From start-ups to large-scale supermarket chains, the online retailing of groceries has won substantial investments for infrastructure and international expansion over the next few years.

In the US, Farmigo, an online grocery channel founded by Benzi Ronen in 2009, received $10 million in Series B funding led by Sherbrooke Capital, RSF Social Finance and Series A lead investor Benchmark Capital last year. The funding will be directed towards improving their online ordering system (Source: Upstart). Consumers can soon expect searching and buying meat and produce from local farms via the system to be easier.

Last April, Relay Foods, a direct competitor to Farmigo, raised $8.25 million to invest in advertising its service and creating new mobile applications. Relay Foods primarily sources its groceries from a select number of local small-scale grocery stores and subsequently delivering products to a few strategically placed drive-through pick up locations (Source: Wall Street Journal).

But the real proof that the supermarket industry endorses this direction is found in the long-term commitment of established grocery chains. UK supermarket giant Tesco recently launched its Bangkok online shopping service in April, and has announced that this service will expand to China this month, and to Turkey by early 2014. Tesco’s Chief Executive Officer, Philip Clarke, has also said that Tesco is committing $750 million this year to develop its online platforms and services as it caters to more tech-savvy consumers (Source: Bloomberg Businessweek).

As traditional sales channels weaken, more retailers are considering boosting e-commerce to improve their bottom line. Morrison, a major UK food retailer, has recently entered a discussion with Ocado, a British internet retailer specializing in groceries, to establish its online food business. The deal would involve Morrison capitalizing on the online retailer’s warehouse capacity and technology expertise.

Perhaps the biggest affirmation of all comes from British grocer ASDA, who announced a $1.07 billion investment for major e-commerce initiatives to improve its supply chain and roll out “click and collect,” to its 568 stores this year. “Click and collect” is an offering that allows customers to purchase items online and collect them at the stores.

ASDA, a subsidiary of Wal-Mart, is estimated to have generated $1.52 billion worth of web sales in 2012. As part of its e-commerce expansion, it will build a 120,000-square-foot fulfillment center in central England to further facilitate “click and collect.”

London-based trade group Institute for Grocery Distribution estimates that annual online UK grocery sales will increase by 108.4% to $17.86 billion in 2017, from $8.57 in 2012 (Source: Internetretailer).