Homesome is helping independent grocers offer online ordering and same-day delivery to their customers, and aims to be like Shopify for grocery stores, Rahul Chabukswar, Homesome founder and CEO, told Crunchbase News.
Subscribe to the Crunchbase Daily
To support the company’s product development, the San Francisco-based e-commerce platform raised $6.7 million in Series A funding led by Itai Tsiddon, with participation from Rappi’s founders, as well as Stephane Kurgan and Ran Makavy. Prior to this funding round, Homesome had raised a small friends and family round to give it approximately $7 million in total funding since its inception in 2014.
A grocery store’s point-of-sale system will often include five times more products listed than are actually in the store, and doesn’t always sync with what’s actually on the shelf. This leads the average store to have a 30 percent to 40 percent out-of-stock rate, Chabukswar said. Combine that with online shopping and third-party shoppers, and customers will likely not get their entire list of items.
“Figuring out what is in the store is critical,” he added. “Many store owners only know Excel spreadsheets, but not many other tools.”
Homesome’s goal is to solve that problem by adding automation into the POS that determines a store’s inventory with up to 95 percent accuracy and, as new products are added to the store, the system automatically updates, Chabukswar said. The company is able to get grocery stores up and running on its platform within two weeks. It’s customers range from 3,000-square-foot markets to 100,000-square-foot stores.
Homesome started in 2014 with a warehouse and shipping products. When more customers began asking the company to build them an online ordering website, Chabukswar said he quickly realized how underserved grocery stores and markets were in only relying on their POS systems.
“They didn’t know their shoppers and didn’t even know their top-selling items or have an online presence and delivery options,” he added.
In June 2018, Homesome switched its focus to helping stores gain an online presence and saw 500 percent growth organically in 2019. Chabukswar expects to repeat that growth in 2020, especially after experiencing 15 times the growth in 12 weeks during the global pandemic. Today, he has approximately 60 grocery stores waiting to be online.
As such, the new funding will help the company meet that demand by hiring more quickly than it had been able to as a bootstrapped company, he said. In addition, the company is poised to go after larger stores. Its largest customer today has 14 locations, but Homesome is now talking to customers with 50 to 60 locations, Chabukswar said.
Future of grocery stores
In 2020, online grocery sales are expected to rise 40 percent due to the pandemic, according to Coresight Research. However, the trend toward online ordering began three years ago when Amazon purchased Whole Foods, said Tsiddon, lead investor in Homesome’s Series A round.
In a written statement, he said that deal “… sent a message to the industry that grocers needed to modernize and embrace the move to online retail, or risk becoming obsolete.”
While larger grocery chains had the financial means to bring in platforms like Instacart, small and medium-sized independent grocery stores “started to be left out.” Homesome fills that void and enables those stores to “take advantage of this monumental shift in consumer sentiment.”
One of those customers is Westside Market, a Manhattan-based grocery chain that has been in business for 50 years. George Zoitas, CEO of Westside Market, said in a written statement that its partnership with Homesome enables the market to be connected to its customers and offer them the brands and food options they want, especially during the pandemic.
“In March 2020 on the verge of lock-downs, we at Westside Market NYC needed an online ordering solution to ensure we could continue to serve over 100,000 New Yorkers,” Zoitas added. “Homesome answered the call, and took our stores online within 10 days. Thousands of shoppers immediately became our online customers and were grateful for the speedy response to the world changing events.”