Why Melbourne-based YourGrocer is taking on Australia’s supermarket duopoly
After almost 10 years of operation, Melbourne-based YourGrocer is looking to double its delivery capacity and build out its online offer via a mobile app in an effort to take on Australia’s grocery duopoly. The business, started in 2013 by Thankyou co-founder Morgan Ranieri, is launching an equity raise through crowdfunding platform Birchal on 17 November with the express purpose of scaling its operations up to provide an alternative option to the traditional grocery store. The Australia
tralian supermarket space is widely acknowledged as being particularly concentrated, with approximately 70 per cent of market share held by Coles and Woolworths.
In contrast to these retailers, YourGrocer acts as an intermediary to specialty grocery players, such as butchers, bakers and green grocers, enabling customers to order products from multiple providers and have everything delivered by YourGrocer in one of its refrigerated trucks later that same day.
The goal, Ranieri told Inside Retail, is to lower the barrier to good-quality, locally sourced fresh produce.
“Even when it comes to Coles and Woolworths, most people buying online are not getting their fresh produce delivered, because people don’t trust someone else to pick their own fruit. But we partner with owner-operators that are on the front line, and are going to the market everyday,” he said.
“Our theory is that fresh food should come from the local independents, which creates a more resilient food system overall.”
The business’ Birchal campaign already has over $700,000 in expressions of interest pledged.
“It’s all about setting us up for success next year,” Ranieri explained.
“We’re building a mobile app, which will make the experience of using YourGrocer much easier. You won’t have to log into a browser anymore – customers will be able to order their food directly from their phone.
“Plus, we’ll be doubling our delivery capacity next year. That’s going to involve setting up a new warehouse, putting more vans on the road, and increasing our team that helps to find and sign on new producers.”
The business currently operates only within Melbourne, and Ranieri said it would require a “serious amount of capital” to take the model to other cities.
“I think probably once we go public [in the future], we’d have the ability to raise that kind of capital,” Ranieri said.
Like other players in the grocery market, YourGrocer has also felt the supply chain sting over the last few years, with certain ingredients sometimes becoming impossible to source regardless if you were a large or small producer.
“There was a point where the only yeast factory in Australia had sold out, and no one could get yeast. Everyone felt that equally, and no one had considered that maybe we need a second yeast factory in Australia until then,” Ranieri said.
“During the pandemic, we were absolutely slammed, and we realised that you can’t just scale up overnight. There’s a ramp-up period, which we’re only just learning. We need vans that are fitted out to our specifications, so we couldn’t just go out and buy more vans to fill the demand.
“That’s why we’re working on our delivery fleet now. We weren’t ready, but the producers that we partnered with did really well out of the pandemic.”
While the majority of Australia’s grocery market is controlled by Coles and Woolworths, there are smaller, more independent players on the fringes, such as Aldi, Harris Farm and IGA.
This level of concentration can make it especially difficult for food producers to reach customers without making their way into one of the big two.
In particular, fishmongers, butchers, bakers, and green grocers, have been left behind as the modern supermarket environment has become one of pre-packaged, pre-prepared offerings., These skilled artisans have seen their jobs fade in scope, only able to serve a small, local customer base rather than serving a wider base from within these large, local supermarkets.
However, with fresh food and health being top of mind for many Australians moving out of the pandemic, these trades are coming back in vogue, with players such as Harris Farm Markets focusing on building local supply chains, and bringing butchers and bakers into stores to prepare goods for customers.
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