The future of online grocery and our investment in Fabric

Online grocery growth is exploding…

One of the most visible trends is the explosion of e-commerce in the grocery industry and how it will shape how consumers buy food and CPG products going forward. While online penetration for grocery is still relatively modest at ~5%, online grocery purchases are expected to grow 3x in just the next 5+ years. Driven by shifting consumer preference for greater convenience and major investments by companies such as Amazon and Walmart, the way we buy groceries is changing quickly.

… but e-commerce sales remain unprofitable for retailers

To make this even more urgent, most of the existing e-commerce solutions that retailers are using today are not resulting in profitable e-commerce sales. Driven by high delivery costs and expensive fulfillment methods, on average retailers have a negative 4% margin on each additional dollar of online sales.

Changing methods of fulfillment

While Instacart changed the industry and helped make online grocery delivery possible for millions, we view this as just the beginning. Ultimately, relying on physical shoppers picking items in store will not be efficient enough for online orders.

The microfulfillment model can unlock profitability

This is where the microfulfillment centers (MFCs) come in and have the potential to finally unlock profitable online sales for retailers globally. MFCs, like the ones that Fabric provides, deliver the same level of automation and efficiency you see in large facilities like Ocado, but do not have the large real estate requirements that generally push them outside of dense urban areas. These facilities can utilize existing retail spaces and can grow vertically, making them economically viable in dense urban areas. They provide the automation necessary to materially lower fulfillment costs, while also keeping delivery costs low by being closer to the consumer.

Why Fabric?

On a trip to Israel last year, we finally got a firsthand look at the smallest MFC in the world at Fabric’s first site and simply were blown away. The utilization of advanced robotics and machine learning was nothing short of remarkable and stood out from anything we had seen. It was one of those moments where you see the future and know this could change an industry.

How Fabric’s microfulfillment platform enables profitable ondemand fulfillment

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Evolv Ventures

Evolv Ventures

$100m venture fund backed by Kraft Heinz to invest in early stage technology companies disrupting the food industry