Helping Offline Grocers Succeed Online
This year, the online grocery market surpassed $36 billion. And by 2023, it’s projected to reach $117 billion.
Locai Solutions is targeting this market with its Software-as-a-Service (SaaS) platform for online grocers.
This platform enables grocers to:
- Offer custom recipes to shoppers.
- Strategically place items on “digital shelves.”
- Better manage their inventory.
The company is headed by co-founders with more than 20 years of experience. CEO Mike Demko held a leadership position at FreshDirect, an online grocer with $600 million in annual revenue. And COO Scott DeGraeve previously worked in operations for Peapod, an online grocer that generates $375 million in annual revenue.
As online shopping grows in popularity, more grocers are turning to e-commerce. Currently, however, Amazon controls much of this market.
According to Forbes, as of 2018, Amazon’s share of the online grocery market stands at 18%. It brings in an estimated $2 billion in food and beverage sales. Walmart, its closest competitor, has roughly half of Amazon’s market share.
Small- and mid-size grocers have trouble competing with these giants. And historically, these grocers haven’t been able to offer the digital features that customers demand.
Locai is providing these grocers with an end-to-end solution to help meet their digital grocery needs.
The key to Locai’s software is personalization, both with its front-end digital commerce platform and its back-end fulfillment system.
On the front end, features include:
• CookIt: This provides personalized recipe recommendations, using data such as a customer’s past purchase history, dietary and cuisine preferences, and items already inside a customer’s basket.
Shoppers can simply click on a recipe and their cart is automatically populated with all of the necessary ingredients. CookIt takes into account pricing, serving sizes, and product quantities to minimize food waste.
• “Searchandising”: This is a personalized search-based approach to merchandising. It enables grocers to build digital shelves based on customer preferences and purchase history. Grocers can organize items by categories such as “sandwich staples” and “healthy snacks.”
Furthermore, grocers can promote seasonal items, or products on sale, in order to maximize revenue.
• Endless Aisles: This feature provides grocers with a way to increase the number of items they offer without adding additional carrying costs.
Through Locai’s network of partnerships, grocers can select additional items from third-party suppliers, set pricing, and collect their share of revenue. Shoppers, meanwhile, can complete a single checkout across all of these items, including ones carried by a third party.
All these features are built on what Locai calls a “cloud native microservices architecture.” This enables the company to scale with the grocer’s needs and offer more flexibility to its clients.
On the back end, Locai’s platform consists of the PowerPick System. This is an inventory management system that enables grocers to get a better sense of items that are running low on stock, and reduce over-ordering.
To make money, Locai charges grocers fees a tiered rate based on the volume of online retail sales done through its platform. On average, Locai charges a fee of 1.5% of the grocer’s total retail sales.
Small and midsize grocers, the company’s target retailers, represent roughly 40% of the $36 billion online grocery market.
Locai is projecting to bring in $282,000 in revenues in 2019, and $3.6 million in 2020.
Notable customers include Caputo’s Fresh Markets, a grocer in Chicago. Caputo's has used Locai to increase its average order size from $117 to $141. In addition, the company has developed a strategy for Lowes Foods, a regional grocer in the Mid Atlantic with more than 70 stores.
To grow its business, Locai has raised $2.2 million in funding, including an investment from Burris Logistics, a food logistics provider with clients such as BJ’s Wholesale Club (NYSE: BJ).
In September 2019, the company will add a new customer, ShopRite — a regional grocery store chain in the New York Metro area.
Mike has direct experience in the online grocery market, as well as areas including operations, marketing, product development, and financial planning.
Prior to starting Locai, he was CEO of Door to Door Organics, an online grocery company delivering organic produce.
Before that, he spent 10 years as Chief Operating Officer of GPShopper, a SaaS platform that enabled retailers to connect with consumers and increase customer engagement.
For two years, he served as Vice President of Operations for FreshDirect, an online grocery company that generates $600 million in annual revenue.
Mike earned a Bachelor’s degree in Engineering from Princeton, and an MBA from the University of Pennsylvania.
Like his co-founder Mike, Scott has domain experience in the online grocery industry.
He ran his own consulting business, focusing on the e-grocery market. He provided operational and strategic support to food retailers and companies in the consumer product goods industry.
Prior to that, he was Chief Operating Officer of Door to Door Organics, where he worked with Mike.
In addition, he spent 15 years with Peapod, an online grocery delivery service that generates $375 million in annual revenue. Scott served as Senior Vice President of Supply Chain/Operations, and SVP of Strategy and Business Development.
He earned a Bachelor’s degree in Accounting and Finance from Southern Illinois University and an MBA from Texas State University.
Kit began her career with a company that produces semiconductors. She initially focused on completing international Mergers & Acquisitions, and then moved to the company’s legal department.
From there, she founded a corporate law firm in New York, where she concentrated on legal and business development needs of startups in the technology industry.
A food logistics provider with notable clients such as BJ's Wholesale Club.