The VC analytics firm CB Insights looked at investments in the online food market:
We define grocery delivery startups as those delivering uncooked groceries, including meal kits. We define meal delivery startups as startups delivering cooked meals to consumers from restaurants or from their own centralized kitchens (e.g. Munchery). […]
For the first time in five quarters, the meal delivery segment attracted more deals than grocery delivery in Q3’16, with 30 deals to grocery’s 27. Grocery delivery jumped past meal delivery in Q2’15, and continued to attract more deals through Q2’16.
The most interesting part here is how different in kind the companies for grocery delivery are:
Meal delivery is straight forward. Middle men between consumers and restaurants.
On the grocery delivery side we have:
FreshDirect – ‘traditional’ online grocery shopping, close to supermarkets in UX, and meals and catering, and household goods; based in New York
HelloFresh – meal kit delivery
Instacart – Grocery deliveries from ‘favorite’ local stores
BigBasket – ‘traditional’ online grovery shopping; based in Bengaluru, India
Blue Apron – meal kit delivery
There is no clear dominating trend, as there shouldn’t be!, but a clear evolution towards a diversified online food market.
FreshDirect has the most funding but is also the most vulnerable to Amazon Fresh, being based in the US and having a similar offering to its customers. FreshDirect, which was founded in 1999, raised $189 million in September to grow beyond its home market in New York:
The investment comes as FreshDirect is facing competition in New York from a host of old and new competitors in grocery delivery, including AmazonFresh, Peapod and Instacart. Like Amazon and Peapod, FreshDirect warehouses its own food. […]
FreshDirect generates revenue through the traditional buy-at-wholesale-price and sell-at-retail model. It also charges delivery fees on individual orders and offers annual memberships of $119 for unlimited deliveries with no fees. It is known, among other things, for a wide selection of organic produce, meats and fish, as well as prepared meals.
Also interesting to note is how far less money the meal kit company No. 1 in the US, Blue Apron, has compared to US No. 2., (the far more international) HelloFresh.