US e-grocer Relay Foods has announced a common-stock capital infusion of $8.25 million as it brings its local food delivery service to Washington DC, Williamsburg, VA and Baltimore, MD.
Relay Foods partners with local farmers and vendors to offer flexible pickup and delivery of groceries. The company got its start in Charlottesville, VA and has been gradually expanding throughout the Mid-Atlantic region. It first launched in January 2009 as a bootstrapped startup before bringing on institutional backers.
The new cash will also be used to build out a new mobile site and application, coming this summer, and a new desktop site. Updates will bring additional information about Relay’s producers with sourcing and nutritional data and detailed vendor profiles.
Relay Foods is also investing heavily in marketing in order to take advantage of the fact that its current customer lifetime value is significantly higher than the cost of acquiring a new customer.
Founder Zach Buckner cited a study from market research firm Hartman Group that ranked Relay Foods as the top e-grocer in the nation.
Relay Foods business model is hyper-local, in that it works with farmers and local producers to source its groceries. As a result, the company’s expansion has been slower going than other e-grocery endeavors. However, Buckner says his firm still has national ambitions.
“We’re going to continue doing what we’ve already started, from four cities to eight, to 16,” he said. “We’ll continue expanding until we hit them all.”
Local food is all the rage right now, but Buckner says that he was pursuing the market before it was popular. While the claim may sound a bit hipster-esque, Buckner highlighted the fact that it makes sense from an efficiency standpoint.
“I started this before local was such a high-class thing…I wanted to do this because [the current method of buying groceries] was ridiculously inefficient.
“It’s as simple as this: a baguette baked at a bakery in a town, lovingly made for you that morning, is way tastier than something that was manufactured on some assembly line, and it doesn’t cost any more from a dollar standpoint. But, your average consumer isn’t going to head over to the bakery to get one baguette.”
Buckner says he approached the problem of e-groceries as an engineer, trying to think about it rationally in order to build an optimal system. He also had the advantage of learning from ecommerce players that had tried groceries and failed.
“It’s helpful to have all the insights that they paid for and then focus largely on the technology. Murphy’s law is pervasive in this business and you’ve got to have technology to handle these decisions.”
Affordable farm-fresh grocery deliveries is a tantalizing solution to the age-old problem of “What’s for dinner?” I’m hoping Relay Foods picks up enough momentum to expand to my area sooner than later.
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