A Finnish software company helping grocery retailers launch online food delivery services has raised funding from EnterWorks, a data management company, and Black Dragon Capital, a Miami-based private equity fund. As part of the deal, Digital Foodie will establish North American headquarters at EnterWorks’ offices outside of Washington, DC.
According to Digital Foodie, its SaaS platform foodie.fm provides all the tools a retailer may need to run modern online operations, click and collect services, and facilitate home deliveries.
For consumers, Digital Foodie provides an online shopping service aimed at providing highly personalized food and product recommendations. Its services are currently available on web browsers, iPad, iPhone, Android and Windows Phone.
Currently operating in the United States, Finland, the Baltics, Russia, and the UK, the company boasts 2.4 million users in Finland and is currently rolling out its US platform with stores like Wynn’s Market in Florida.
“Unlike some other models, we actually want to embrace the brand that the retailer has been building,” Kalle Koutajoki, CEO and founder of Foodie Digital. According to Koutajoki, joining EnterWorks positions Foodie Digital to penetrate the North American markets.
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The investment is also designed to accelerate the development of Foodie’s omni-commerce cloud platform that powers on-demand ordering, personalized shopping planning, digital commerce, order management, and efficient fulfillment for enterprise and small grocers.
The duo intends to create a cloud model for grocers that offers an end-to-end solution addressing not only the consumer experience and store order fulfillment but also digital product information and collaboration with food and CPG manufacturers and distributors who supply the grocer with products and digital content. The platform can also support restaurants embracing food delivery.
According to the companies, the partnership may result in one of the first commerce offerings focused on all aspects of the grocery supply chain, including serving CPG and manufacturing companies with a food-focused product information management (PIM) solution.
In the US, digital transactions represent only one percent of grocery sales, far short of the six percent penetration in the more advanced European markets. Despite this, some sources report that the US digital grocery market is growing at 25 percent per year.
During a time when many food delivery startups and online retailers seem to be crashing and burning, Koutajoki highlights a few metrics that these companies ought to bear in mind if they want to survive the crowded food e-commerce market.
First, retailers need to select the right technology partner, he says, particularly when it comes to big cost factors like fulfillment and labor.
Efficiency is also critical. “Truck management, route planning, parallel picking—all of these accumulate very high efficiency for grocery retailers,” he explains.
The next piece involves the consumer interface and experience. “We have a behavioral platform that adjusts based on how the consumer uses the service. If for example, you like organic products, it will adjust to providing recommendations of organic things. This—paired with the data—is a really powerful combination.”
A few other metrics involve well-trained pickers, the folks who select the products. Picking efficiently and selecting the correct product price are essential. Retailers also need to select their delivery method carefully.
“Delivery works in urban areas, but if you go to a rural area, it may make more sense to have customers pick up their orders from a store,” says Koutajoki.
When asked whether one of these considerations outweighs the others, Koutajoki says a retailer must keep all of them in mind. “Now, with the partnership, I think we are the only one who has the formula to crack the online grocery space for the time being,” he says. “We believe we are going to be successful with this partnership and this funding.”
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