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Good morning! It's Thursday, February 8th. Today’s post breaks down GrubMarket, the fastest-growing online farmer’s market with a unique business model to beat the competition.

THE FEATURE

How GrubMarket Hit $1B Revenue and Beat the Competition

Consumer demand for healthy and organic food has doubled over the past decade, with organic food sales increasing from 29.02B in 2013 to $61.7B 

This spike in demand has resulted in an array of organic food distributors, but none of them are quite as successful as GrubMarket. 

GrubMarket is a food tech and e-commerce company delivering locally sourced organic food to customers across the United States and Canada, most recently valued at $2.2B!

The company has been on an acquisition spree in the past few years, seeing exponential growth and hitting the $1B revenue mark in 2022. 

So, What's the Business?

Selling organic produce directly to consumers isn't all that unique. It's been the basis of companies like Farmigo, LocalHarvest, Good Eggs, and Thrive Market. 

However, none of these businesses have had the same level of success as GrubMarket— Good Eggs recently had its valuation cut by 94% down to $15M. 

It's notoriously hard to succeed in the DTC food industry due to razor-thin margins and high operating costs, but GrubMarket's unique business model has kept it profitable since 2017. 

GrubMarket differs from its competitors in two primary ways: 

Operational Efficiency 

Large warehouses and processing centers are at the core of most grocery delivery services, which allows them to make same-day deliveries. The downside is that operating a centralized distribution network has massive overhead costs. 

GrubMarket bucked the industry consensus on the necessity for warehouses and same-day delivery. Instead, it primarily relies on its teams of drivers that pick up from local farms and then immediately go on their delivery routes. 

While this means that their typical delivery wait time is 1-3 days, it massively cuts on-the-groud costs and boosts GrubMarket's profitability. Plus, it reduces the risk of food spoilage (consumers purchasing organic food want it to be fresh). 

Hybrid Model

Hybrid models, which straddle the line between B2B and B2C, are rare in any industry, especially the food industry. GrubMarket has found a way to pull it off, delivering organic food to consumers and businesses like supermarkets and restaurants. 

GrubMarket's previously mentioned competitors operate via a pure online marketplace model tailored to consumers. But in doing so, those competitors severely cut down their addressable market. For instance, GrubMarket has scored B2B clients like Whole Foods and Costco, which generate massive sales volumes. 

How They Win: Vertical Integrating from Farm to Delivery

GrubMarket began as a way for consumers to purchase organic food and support local farms. Today, GrubMarket isn't just supporting local farms— it's buying them too. 

GrubMarket has acquired dozens of produce and livestock farms in states like California, Texas, Michigan, New York, and Massachusetts. To ensure those newly acquired farms do well, GrubMarket has also purchased an array of farming logistics companies like Organic Harvest Network.

Farms, crop planning firms, and competing organic distributors make up the 60+ acquisitions GrubMarket has made in the past four years. As a result, Grubmarket owns the entire food delivery pipeline and has increased revenue from $150M in 2019 to $1B+ today!

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