FreshDirect co-founder sees more changes than just new customers

New Yorkers were told early on that anyone over 70 or with pre-existing risks or conditions should confine themselves to their homes without even going out for groceries or to the drug store. That meant even senior hours at the grocery store once a week were not good enough for self-protection.

Fairway and others have been using Instacart shoppers who take a list from those individuals, shop on retail shelves (making substitutions as agreed), and deliver the groceries to their door. FreshDirect goes one step further. They have a large warehouse in the Bronx that doesn’t admit retail shoppers. As a result, when you order, FreshDirect is able to tell you immediately whether the specific items you want are available.

The trick with both approaches is that the delivery times book up quickly. If you’re one of those who Must have groceries delivered, however, alternatives to Instacart or FreshDirect are less convenient for normal food and goods shopping. Whether the frenzy for delivery slots will let up or whether people will get used to the convenience is uncertain. Personally, I find the quality at FreshDirect to be worth continuing there.

https://www.cnbc.com/2020/05/04/freshdirect-co-founder-said-surge-in-online-shopping-has-led-to-more-venture-capital.html

FreshDirect co-founder Jason Ackerman said surge in online grocery shopping has led to more venture capital deals

Published Mon, May 4 20201:11 PM EDT

Updated Mon, May 4 20202:03 PM EDT Melissa Repko@melissa_repkoKey Points

  • FreshDirect co-founder and former CEO Jason Ackerman said customers’ shifting grocery shopping habits have inspired “more deals in online grocery … than I’ve ever seen before.”
  • Grocers and delivery services, such as Instacart and FreshDirect, have struggled to ramp up to meet the increased demand for online grocery shopping during the coronavirus pandemic.
  • He said the struggles have underscored the need for more investments in infrastructure to speed up order fulfillment and provide a better customer service experience.

watch nowVIDEO05:41Former FreshDirect CEO on changing consumer habits

FreshDirect co-founder and former CEO Jason Ackerman said customers’ growing interest in online grocery shopping during the coronavirus pandemic has whet venture capital firms’ appetites.

In an interview with CNBC’s “Squawk Alley,” he said the surge of online grocery shopping has inspired more investors to look closely at the sector.

“I’m seeing more deals in online grocery … than I’ve ever seen before,” he said.

In the U.S., customers have been slow to adopt online grocery shopping. Only 3% or 4% of grocery spending in the U.S. was online before the coronavirus outbreak.

During the pandemic, however, online grocery shopping has quickly gained popularity as people look for ways to avoid the grocery store. Grocers and delivery services, such as Instacart and FreshDirect, have struggled to ramp up to meet that sudden increase in demand.

Ackerman said the challenges have underscored the need for more investments in infrastructure to speed up order fulfillment, lower costs and improve the experience for customers. He said some manufacturers are limiting production to popular items and grocers are slimming down their selection of online offerings to have fewer out-of-stock items and substitutions.

“A lot of people are moving towards a place of ‘Keep in stock what you can. Offer less choice, so what you do offer, you can keep on shelf,’” he said. “That is a very big concern, particularly online where out-of-stocks result in half orders.”

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