Online grocer door to door organics reaps $25.5 million to grow
One of those companies, Door to Door Organics Inc., has raised $25.5 million to expand. Door to Door delivers fresh, local, organic food to customers in five U.S. regions so far, and its funding, a Series B round, was led by Arlon Group, a global food and agriculture investor backed by Continental Grain Co. and Rabobank.
“We believe online grocery is at an inflection point and is ready for significant growth,” said Arlon Group Managing Principal Michelle Brooks, who joins the board. “We looked at several models and found Door to Door more attractive in its geographic focus and its asset-light model…It’s a more profitable model than others we’ve seen and is capable of going quickly into new markets.”
Door to Door was founded in Pennsylvania in 1997 by David Gersenson and survived the dot-com boom and bust despite Webvan’s collapse. Around 2005, Mr. Gersenson moved the company to Colorado for lifestyle reasons and reincorporated it, according to Chief Executive Chad Arnold, who joined in 2009.
But he said Mr. Gersenson had figured out how to run a profitable online grocery business, without raising funding, by keeping overhead low and focusing on customers. Door to Door didn’t raise its Series A, which was $3.25 million, until 2012. Revenue run-rate this year is expected to be about $35 million, Mr. Arnold said.
Door to Door’s competitors vary widely, from services like Amazon.com Inc.AMZN +2.26%’s Amazon Fresh, which is expanding outside of Seattle, to traditional grocery providers like Safeway Inc.SWY +0.03%, to startups like Nature Delivered Inc., doing business as Graze, which delivers boxes of snacks.
Door to Door develops highly regionalized supply chains, Mr. Arnold said, working with more than 200 farmers to deliver food in season and even helping farmers plan crops based on the demand that Door to Door sees.
It streamlines its supply chain by relying on regional distribution centres so that food can reach customers within a three-hour drive, and it assigns customers a regular delivery day. It also offers the ability to shop by recipe–pair eggplant with Parmesan, for instance–which in turn helps the company anticipate supply.
Maintaining quality is a challenge for all fresh food providers, Mr. Arnold said, but controlled growth also helps with that.
Door to Door’s current markets are in Colorado, the Kansas City region, the Chicago region, Michigan and an eastern region running from Virginia to New York.
The new money will be used to expand into new states, with a focus on the Midwest and secondary markets “that Amazon Fresh won’t even look at for the next three years,” Mr. Arnold said. “We can be profitable at 2,000 or 20,000 or 200,000 customers…. We don’t need to race to revenue and lose a lot of money along the way.”
Source: wsj.com
