Wednesday, August 12, 2015

really really hard?


At the end of the day, Good Eggs is a food logistics company. It manages hundreds of fresh, perishable goods from food artisans and farmers, which it packages and delivers to peoples’ homes. While technology enables it to accept customer orders, streamline fulfillment and optimize delivery routing, technology is not a silver bullet. It is highly cost intensive to build fulfillment centers, establish and manage a network of suppliers and maintain inventory. And every city is very different.

Here’s what Spiro told me Good Eggs would be doing to address these challenges in a 2013 interview:

“We’re scalable because we’ve cut out the usual things that drive costs up. One of the reasons that’s possible is because we’re using lots of custom software throughout the process. Producers know exactly how much to harvest and make, which reduces waste. We’re not warehousing anything, all the food that shows up in our Foodhub is pre-sold, and goes out to shoppers that same day – that reduces overhead and makes for a really streamlined process.”

Two years later, it’s clear that software and reduced inventory were not enough to make the model scaleable. Is this something that could have been learned from one city?

There is a reason it took Amazon and Fresh Direct so long to expand to new cities: “The Last Mile Challenge,” the cost of getting goods from a distribution center to a customer’s home. To address this challenge, Good Eggs originally focused on central pickup locations and managing its own fleet of trucks to deliver groceries to people’s homes for a premium. It has since dropped the pickup locations.

Some organic online grocers like Farmigo, which also serves the Bay Area and Brooklyn, rely solely on pickup to address the last mile issue. “I believe our business model of having an organizer in a neighborhood serve as a community pickup location is an extraordinary advantage in the category,” Farmigo founder and CEO Benzi Ronen tells me. “Our model allows us to avoid the massive costs associated with home delivery and can scale across regions in a way that is affordable for the consumer and economical from a business perspective.”

Others like Door to Door Organics do offer home delivery, but it manages the last mile by increasing the basket size of its shoppers. Subscribers sign up for a CSA-like vegetable and produce box subscription, and then are able to add groceries on top of their order. It seems like Good Eggs is also experimenting with bundles now.

they might want to look at ?

or perhaps this is more honest?

"The single biggest mistake we made was growing too quickly, to multiple cities, before fully figuring out the challenges of building an entirely new food supply chain."

from lizard's ghost

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