It seems like the idea of a fresh-focused retail platform isn’t just a good egg but a golden egg. On Wednesday, ecommerce platform Good Eggs announced the close of a $100 million round of capital, an infusion that will help the company expand into a new geographic region, build out assortment and bring on more support for the growing business.
The round was led by Glade Brook Capital Partners, with additional investment by GV (the investment arm of Google), Tao Capital Partners, Finistere Ventures and Rich’s alongside previous investors Benchmark Partners, Index Ventures, S2G, DNS Capital and Obvious Ventures.
The company has raised $170 million since its restructuring in 2015, a move that resulted in CEO Bentley Hall taking the helm.
Founded in 2011, Good Eggs originally focused on delivering produce, meat and other fresh items, expanding from its base in San Francisco to Los Angeles, New York City and New Orleans. After a period of rapid growth, the business was overwhelmed with the complexity of building out supply chains in multiple markets.
Under Hall, the company scaled back to focus on the Bay Area, only expanding further from its headquarters to the East Bay with the opening of a second Oakland facility in early 2020. The company has also expanded its assortment, adding more pantry staples, meal kits, prepared meals and, most recently, alcohol. During his tenure, the company has achieved nine-figure revenues, the company reports, with “meal solutions” accounting for approximately one-fifth of total sales.
Good Eggs opened its Oakland facility last February, just weeks before California was shut down under a shelter-in-place order due to the pandemic. Hall said that while working the kinks out of a new location, which was built from the ground up and used new technology systems, while dealing with a pandemic and increased demand was intense, but ultimately helped prove out the model.
“It just set the tone for the whole year,” Hall said. “Like everyone in this space, the tailwinds are pretty large and the speed of the change, the magnitude of the consumer habit change, is such a fascinating thing to watch.”
During the pandemic Good Eggs not only saw new consumers come aboard as well as existing consumers upping their orders. In March and April 2020 the average basket size for Good Eggs shoppers roughly doubled, Hall said, and since then sales have remained elevated, with the average basket size 25% to 50% higher than pre-covid norms. The company also doubled its new customer acquisition and tripled its unit economics.
To support this growth, the company has added 400 staff members, largely in its warehouses and as delivery staff, since March 2020.
It’s a shift being seen across the country, but California is perhaps an ideal market given its dense cities. According to data provided by Good Eggs, Goldman Sachs projects that the US online delivery market will reach $150 billion in sales by 2026, with California’s metro markets expected to account for 10% to 15% of that number.
The pandemic also brought new types of shoppers onto the platform. Good Eggs, widened its target consumer base to include empty nesters who are concerned about venturing into stores as well as younger professionals who previously spent more on going out to eat, but are now looking for other culinary “adventures.”
The pandemic (and its resulting habit changes), Hall said, have meant that “expansion is both higher reward and lower risk.” It’s perhaps less of a surprise then that Good Eggs also announced this week that the company will expand to Los Angeles in 2021, with first orders shipping to consumers in the summer or fall. From there, the company will “thoughtfully” grow into the top five to ten West Coast metro markets, a move Hall says will take roughly five to ten years.
“We will always have a belief that having deeper roots in fewer geographies is better then spreading ourselves thin across the country and bragging about how many cities we launched in,” Hall said. “That’s partially driven by Good Eggs history but partially driven by this category: regional grocers are powerful.”
Helping with the expansion will be Vineet Mehra, who joined Good Eggs this week as Chief Growth and Customer Experience Officer from Walgreens Boots Alliance, where he was global CMO and chief customer officer. Hall said Mehra brings an ability to marry data with customer insights to help better understand and meet customer needs.
That help will be vital as the brand thinks about expanding its assortment. Consumer research also revealed that while customers appreciated Good Eggs’ curation — the site has under 7,000 SKUs — they would purchase more from Good Eggs if presented with more options. The company is considering opening up a “marketplace model,” Hall said, where companies — such as an alcohol distributor — could offer their products to Good Eggs shoppers. The platform would have to carry less inventory for these partnerships, but still manage the delivery aspect for the products.
“It’s about how do we work with partners that already have a longer tail of SKUs in a category that people are passionate about,” Hall said, “and how do we give our customers access to that inventory?”
Despite increased competition from both independent companies such as Imperfect Foods, Misfit Markets and Hungry Root as well as larger players such as Sun Basket, Freshly (which was recently acquired by Nestle) and even Amazon, Hall said by beginning with produce and always keeping an eye on quality, Good Eggs has built out a loyal customer base that is willing to follow the company into new categories such as alcohol.
“A lot of grocers when they have solutions, they either have a meal kit or they have prepared meals but they fail to recognize that it’s the same customer that sometimes wants to prepare an elaborate meal and sometimes wants a 15 minute dinner and sometimes can’t even heat a pan and just wants to stick it in the oven,” Hall said. “So we have breadth across all three of those because life, as we’ve all learned, changes every week.”
This story was originally published on NOSH.