Online driven home delivery of local food products spells opportunity

Source: Farmtario.com

COVID-19 has been challenging for many businesses but for some, the pandemic has also presented new opportunities. One such company is FreshSpoke, an online Ontario wholesale marketplace for local food that has expanded into home delivery and curbside pickup in response to consumer shopping behaviour changes. 

That expansion has also had positive impacts right back to the farm, creating new market opportunities for farmers.

FreshSpoke first launched in 2016 when founder and CEO Marcia Woods wanted to make local food more widely available to retail and foodservice. The company handles ordering, payment, and delivery as a single transaction on behalf of its suppliers and leverages excess backhaul capacity in the existing transportation system to coordinate its logistics. 

Last fall, driven by surging demand from home-bound consumers, FreshSpoke opened its first regional distribution centre in Barrie to deliver local food to Ontario doorsteps along the Hwy 401-corridor. To help make that vision a reality, the company closed a successful expansion round of private investment and grant funding, including a grant from the SmartGrowth fund administered by Bioenterprise, Canada’s Food & Agri-Tech Engine. 

Why it matters: Most retailers prefer to order through a single source instead of a series of smaller suppliers, and most farms are not large enough to sell directly to retailers or handle consumer home delivery logistics. 

“We opened a warehouse, retooled software and launched home delivery in only six months,” says Woods, adding that smaller suppliers can now start in the home delivery stream and gradually scale up into FreshSpoke’s larger retail accounts. 

“We can help local food producers expand their market share while also responding to consumer trends for new products. And we now have critical sales data that shows we have traction in the market when we approach a larger retailer, which helps derisk products for both sides,” she says. 

The company now has more than 100 suppliers on its home delivery roster and more than 40 brands on its wholesale side. 

Boreal Berry Farm is one of those suppliers, a relationship that started with a call from FreshSpoke looking for new farmers to join their marketplace. Located between North Bay and Sudbury, Boreal grows organic super-berries known for their health-boosting properties, like sea buckthorn, haskap, aronia and saskatoons. 

Although initially a fruit wine producer, the farm has evolved into a thriving frozen Ontario fruit business. A deal to supply Sobeys and Metro coincided with the start of the pandemic, and the company has struggled to keep up with demand. 

“We’re a small farm with limited staff and freezer space, and we want to service more people, but we don’t have the logistics or the resources to handle smaller orders,” says Steve Gruber of Boreal Berry Farm. “FreshSpoke is a perfect fit. They have the warehouse capacity and logistics to manage all of that, so they become the central point for us to service the smaller and mid-size market cost-effectively.”

FreshSpoke is also helping VG Meats get its products into the hands of more consumers. The Simcoe, Ont.-based family business started as an abattoir in 1970 and is today fully integrated from farm to retail, offering Canada’s first tenderness-tested beef, as well as local chicken, pork and turkey. 

FreshSpoke solved a logistics crunch to get their products into wider distribution beyond their own retail operation, says Kyle Van Groningen, who heads up sales and retail for VG Meats. 

“In all honesty, logistics is the hardest part of our business, so if there’s a company willing to do that, it makes a lot of sense to bring together resources,” he says.

Their decision to supply FreshSpoke’s wholesale customers was an easy transition when the company expanded into home delivery and offered the perfect opportunity to get their product to consumers eager to support local, he added.

“We’re always looking to increase our scale so that we can sell similar products to consumers instead of opening up stores, and this has done that,” he says. “It’s more economical to use FreshSpoke and hopefully, there is enough demand out there for our types of products that we can grow that program even more.” 

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