Sometimes in the middle of making dinner, you realize you don’t have that one vital ingredient. Rather than race to the grocery store, Fridge No More will do it for you.
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However, the New York-based 15-minute grocery delivery service aims to be much more for its customers — a go-to replacement for your grocery store.
“We believe this space is important and will change the way people buy their groceries,” company co-founder Anton Gladkoborodov told Crunchbase News. “The idea is pretty crazy for markets, and some people don’t think they need something like this, but we think people will shift from ordering once a week to more.”
Fridge No More, which is available via your phone, received $15.4 million in funding to bring on additional staff and expand across New York City and the East Coast.
Insight Partners led the round, which also included existing investor Altair Capital. In addition to the new capital, the company previously raised $1.5 million nearly a year ago to build its first locations in Brooklyn, Fridge No More co-founder Pavel Danilov said in an interview.
The company’s concept was initiated a few years ago and formalized in March 2020. Then in October, Fridge No More made its first delivery.
Fridge No More has warehouse space with more than 2,000 SKUs and offers free instant delivery, no minimum order and prices that rival the supermarket, Danilov said. It also created a proprietary, data platform for inventory and order management that is optimized based on store-specific customer demand.
The new funding will be used to grow the engineering and operations team, as well as into marketing and expanding its locations. Fridge No More is in four locations and is targeting 40 more across Brooklyn, Manhattan and Queens.
Since delivering its first order last October, the company now has more than 2,000 customers and is averaging 200 orders per day at an average cart size of $40.
“Customers who make their first purchase become regular customers and are ordering weekly or a few times per week,” Danilov said.
E-grocery sales are expected to jump from nearly $35 billion to more than $250 billion, according to a study by grocery e-commerce specialist Mercatus and research firm Incisiv. Their study forecasts that online grocery sales are poised to reach 21.5 percent of total U.S. grocery sales by 2025.
In 2020, online grocery’s percentage of the $1.04 trillion grocery market was estimated at 10.2 percent, or about $106 billion, up from 3.4 percent, or $34.54 billion, of the $1.02 trillion market in 2019.
At the same time, 125 U.S. e-grocery companies have raised approximately $6.3 billion since 2017, according to Crunchbase data. Leading this group is Philadelphia-based goPuff, which delivers everyday essentials, including food and drinks, in minutes, raising $750 million in a 2019 venture round.
What investors have to say
Meanwhile, Rebecca Liu-Doyle, principal at Insight Partners, said in an interview that the firm was monitoring the e-grocery market for a while. Fridge No More was creating a new category within the space, and when customers try it out, keep using it, she said.
“We are tracking a lot of new entrants, and this space will get competitive over the next six to 18 months,” Liu-Doyle said. “It is a really complicated business to run. To Pavel and Anton’s point, they are dealing with warehouses, perishable inventory and trying to deliver on high consumer expectations. The consumer is unforgiving, you have to make count. We’ve looked at several of these, and what impressed us was Pavel and Anton’s real product intuition, and how maniacally focused they are.”
Illustration: Li-Anne Dias
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