Thu March 7, 2013
Startup Wants To Redefine How Local Foods Get To Your Door
Originally published on Thu March 7, 2013 1:13 pm
Rising consumer demand for local foods has changed the job description for ranchers like Doniga Markegard.
Markegard, co-owner of Markegard Family Grass-Fed in San Gregorio, Calif., loves working with cattle, but she's not fond of the hours of phone calls and emails it can take to sell directly to a customer.
"What I want to be doing is the part I love — working with the animals and raising my kids on the ranch," says Markegard. "But I also need to be marketing our product, going to markets and talking with customers. There are a lot of administrative aspects to running a small family ranch, and they are time-consuming."
Now a San Francisco startup is looking to act as the middleman, handling the logistics of gathering and delivering local goods to consumers' doorsteps so small farmers like Markegard don't have to.
Good Eggs began a year ago as a place where local food producers could sell their foods directly to consumers online, says CEO Rob Spiro. But producers needed more.
"We kept hearing the same thing from the producers," Spiro tells The Salt. " 'This is great,' they told us, 'but as I become more successful, I'm becoming a full-time distributor.' "
So Spiro and his business partners decided to step in. "What we need is a last-mile delivery system for our producers," says Spiro.
The problem is that whether you live in San Francisco or Des Moines, Dallas or Wichita, the modern food system is based on economies of scale: To keep food inexpensive and delivered predictably, regardless of the season, you need mass production and the mass movement of goods from large-scale farm to national distributor to superstore.
But similar networks for moving locally produced foods to market are sorely lacking, according to a 2010 report from the USDA's Economic Research Service.
To that end, Good Eggs acquired three trucks and a warehouse and, as of last Thursday, it will now deliver fresh local fruits, vegetables, meats, seafood and prepared foods right to consumers' doors throughout the San Francisco Bay Area. It plans to create a similar food hub in Brooklyn this spring.
The Good Eggs system works like this: Consumers order from a wide variety of locally made, artisanal products online — from baby food to cheese, oranges to muffins. Items are then baked or harvested fresh to order and sent to the Good Eggs' warehouse, where each individual order is put together manually.
The idea is to keep costs down by using an Amazon warehouse model of efficient distribution — except nothing is stored there. The warehouse is used instead for aggregating goods on delivery days. By bringing all the products together in one location and distributing them together, Good Eggs hopes to relieve producers of the logistical headache of direct sales, while earning them higher profit margins than they get from grocery stores.
And while the price of jam on the Good Eggs site is far higher than a jar of Smuckers at Safeway, the cost of most goods is comparable to those at boutique markets like Whole Foods.
Yes, other companies have tried, with some success, to deliver groceries to homes and offices. Giant grocers like Safeway now offer home delivery. Fresh Direct makes home deliveries in the New York area, and Spud will drop off items to your front door in cities across the U.S. and Canada. But all of these companies function as full-scale grocers, and keep fully stocked warehouses full of nonlocal and nonfood items.
More similar is Farmigo, with a mission to also deliver only local produce and meats directly to consumers in New York and California. But Farmigo only delivers to offices and other group drop-off points. Home delivery, the company found, was too costly to make it work.
Good Eggs is looking to get around that problem by charging $3.99 for home deliveries. Depending on whether a customer orders from the Good Eggs site or from a producer's own website, the company also takes a percentage cut from each sale.
An impressive team of investors and advisers are working with Good Eggs, including Alice Waters of Chez Panisse, Michael Dearing of Stanford and Damon Horowitz of Google.
Even so, the challenges of reconstructing a 21st century local food delivery system are formidable. How the company will deal with the logistical complexity of coordinating 120-plus producers and potentially hundreds of drop-off points, and how consumers will react to limited drop-off days and times, remains to be seen. (Some also question how far a food can travel while still being "local.")
"Creating new distribution channels between farmers and consumers is no easy feat," says Melanie Cheng of Berkeley, Calif., author of Building Regional Produce Supply Chains and founder of FarmsReach, a community-driven platform for improving business operations on the farm.
Picky shoppers, low profit margins and complex distribution logistics are inherent challenges in the system. "Good Eggs," she says, "have their work cut out for them."