In March of this year, I reported here that some expect online grocery sales to eventually account for around half of grocery sales in the developed world. The driver of that would be that the online grocer could become the cheapest source with the most selection. Back then, Reuters covered Amazon’s potential to move into groceries.
Now it is nine months later, and a company located in Louisville, Colorado is emerging as a successful model for online groceries. Called “Door to Door Organics”, the company has built an extremely efficient model of carrying out services even at very low volume levels. So far, it is operating in 30 cities that are located in 11 regional markets including Denver, Chicago, and Kansas City.
According to Arlon Group, a stake-holder in Door to Door Organics, this is one of the few companies in the online grocery business that has demonstrated profitability.
Both Amazon and Google are also trying to compete in the online grocery business, which had a 3.3 percent market share of the total grocery industry at the end of 2013. This is set to increase as much as five-fold in the next decade. So far online grocery sales are exceeding expectations in pace of growth. At $27 billion in dollar amount this year, the amount could increase to $123 billion in ten years.
Boulder County here in Colorado is a hot bed of food start up companies. In other interesting local news, an organic dried fruit company, Made in Nature, reports having difficulty finding apricot and fig suppliers. For this company, consumer demand exceeds available producer supplies.
A Boulder Ice Cream maker also reports a shortage of wholesale organic milk due to the overall strong Chinese demand for regular milk powder. As organic milk demand increases here in the U.S., apparently more U.S. dairy producers are abandoning organic production to cash in on the more lucrative sales of regular milk powder to China.
The company “Overstock” has recently announced that it would become a virtual farmers market. Overstock now has a “farmers market” webpage dedicated to orders of “straight from the farm” and “local delivery” products. The page includes categories such as “fresh produce”, snacks, preserves, dairy, and pickled products. This sounds like a great idea and I hope it is a useful outlet for producers without having killer overhead costs. There are quite a few online ventures attempting similar marketing ambitions, eventually a few will probably become the dominant outlets once they establish their name recognition and reliability.
Another interesting food innovation online company is “Plated”. This business prepares ingredients for meals and sends them to the purchaser’s doorstep, a bit like a catering service except that you do the cooking. Each week consumers can pick among changing menu options available in their zip code. Some people are apparently hoping this service will help them with weight control.
Are you thinking what I’m thinking? If more consumers order their food via the internet, then more can order directly from the small farmer-producer, and cut out the middle man. There could be many bright future opportunities for the young entrepreneurial farmer here. Already, I know a neighbor a few houses down from me who orders his organic soybeans from a farmer in Iowa, which he then uses to make his own soy milk.
Is it possible to have a trusted site for small farmer sales, similar to the platform Etsy provides for artists? Or is it too complicated getting food product certifications and approvals while weeding out the impostors such as those that appear under false pretenses at the farmers markets? Will one such platform eventually dominate from all those, including the USDA, who are currently trying?
Time will tell. Comments including other ventures similar to those mentioned above are welcome.
Photo credit: FlickrCC by Alden Jewell – 1954 Chevrolet Sedan Delivery.