Food Delivery Startup is Using AI to Take on the Grocery Giants
Farmstead raises another $2 million in the delivery groceries race
On-demand grocery delivery has really taken off. A Bay Area food delivery startup says it can deliver locally grown produce and other groceries in a timely matter and at a competitive price. Ordering groceries online is nothing new, but Farmstead thinks it has a model that makes it different. The startup, which just announced $2 million in funding from Resolute Ventures and Social Capital, bringing its seed funding total to $4.8 million, is placing its stock in artificial intelligence.
Company CEO and co-founder Pradeep Elankumaran says Farmstead’s edge lies in its ability to accurately predict consumer habits: Farmstead’s computer programs study inventory and sales data to come to their own conclusions, leaving Farmstead to place orders from producers like Cowgirl Creamery and Acme Bread accordingly. From there, the company stocks micro-hubs, or small delivery way-stations, and sends out couriers on optimized routes to customers. The sales pitch: $5 or less for delivery in under 60 minutes and prices that match local supermarkets with no minimum order.
Whether it’s farm-fresh produce or just-baked bread, Farmstead aims to answer the question of how to empower local farmers, bakers and food suppliers while making on-demand deliveries.
Right now Farmstead only delivers from San Francisco to San Jose, and parts of the East Bay and South East Bay. The food comes in bags that customers return for future use, with reusable ice packs to keep perishables cold, and dry ice for frozen items (ref.: Roberts Technology Group).
Delivery is guaranteed within 35 minutes in San Francisco, three hours elsewhere.
Farmstead launched this fall and has completed over 40,000 deliveries as of this week. It’s a drop in the overall bucket, but that bucket could get pretty big: According to some estimates, the grocery delivery market is expected to reach $100 billion in annual sales nationally by 2025, encompassing 20% of groceries at that time.