Farmstead, the first online grocer to offer fresh groceries, delivered for free, at better prices than local supermarkets, is expanding to the Carolinas after inking a first-of-its-kind partnership with Southeast grocery company Alex Lee Inc., parent company of grocer Lowes Foods and grocery distributor Merchants Distributors Inc. (MDI). The partnership enables Farmstead and Alex Lee to expand their reach in complementary markets without the need to open any physical stores.
Farmstead and Alex Lee revealed the partnership at Groceryshop 2019, Sept. 16-19 in Las Vegas.
Farmstead got its start in the competitive San Francisco Bay Area. It stood out from other offerings by leveraging proprietary technology and a microhub model—delivery-centric warehouses that serve a 50-mile radius—to hone efficiency and reduce costs. As a result, Farmstead is growing quickly, with plans to expand nationwide to a primarily mid-market audience.
In the Carolinas—Farmstead’s first expansion market—the company will open multiple microhubs, which ease entry into new geographies, reduce food waste by three to four times and help eliminate food deserts by making fast, inexpensive delivery available to a wider area. Most of all, they meet customers’ desire for perfect orders with no stockouts, delivered free, with no markups. With Farmstead, customers can get all of their groceries— local brands, national brands and fresh meats, dairy and produce—from one place.
Physical supermarkets can cost up to $10 million to build, take 18-24 months to construct and typically serve a five-mile radius. A Farmstead microhub, by contrast, can be constructed in under eight weeks for $100,000 and can serve a 50-mile delivery radius.
“When we learned about Farmstead’s microhub approach, we recognized it would be a great model for expanding into new geographies where we don’t have physical stores,” says Kimberly George, VP of communications and corporate citizenship at Alex Lee. “This partnership will help improve the reach of Alex Lee in the Carolinas, and boost revenue with little risk. We’re excited to be the first to partner with Farmstead on this innovative approach to grocery.”
“We built and perfected the microhub model in San Francisco, and showed that it’s possible to leverage technology and build strong supplier relationships in order to make online grocery profitable,” says Pradeep Elankumaran, founder and CEO of Farmstead. “Now we’re ready to expand it to other geographies. This partnership with Alex Lee is the first of many we’re planning with grocery chains and distributors across the country.”