Starting — and Closing—a Pandemic Venture
Yesterday we officially closed down Grocery Outpost.
Over the course of our 6-months in operation, we went from a back of the napkin idea to serving 850 households and partnering with 12 Boston-based independent restaurants.
Here are a few reflections on our entrepreneurial journey.
Making Lemonade
Freshly unemployed by the pandemic, Emma Snyder and I met in mid-April over a shared interest in supporting restaurants during the pandemic.
After an energizing afternoon of outdoor conversation, we took a leap of faith and embarked on an adventure together.
Two days later, our website went live. Two weeks later, we served our first customers groceries from two partner restaurants.
We launched with a mission to help local restaurants, and two core business hypotheses:
1. Last Mile Grocery Fulfillment — the aggregation and delivery of grocery product to consumers is very difficult and expensive at scale.
Can we use restaurants as a distributed network of last-mile fulfillment stations, repurposing existing supply chain, facilities, and staff to aggregate grocery product and offer convenient pickup spots?
2. Restaurant as Marketing Channel — independent local businesses have robust loyal consumer bases.
Can we use restaurants as marketing channels to reach these hyperlocal, hyper loyal consumers and convert them into customers?
During our first four months in operation, we proved that both of these hypotheses are viable.
We gained over 75% of our customers through dedicated emails from our restaurant partners, and posts from their social accounts.
We were also able to successfully utilize pre-existing restaurant vendors to have them deliver pre-packed grocery product directly to our partner restaurants, and our restaurant partners were able to successfully fulfill these orders to Grocery Outpost customers.
This was our dream — a no-touch solution where Grocery Outpost could connect vendors and consumers, have the product delivered through pre-existing supply chain, and offer customers convenient local pickup.
Where Our Model Broke
Ultimately, there were two challenges that we weren’t able to overcome as a team: 1) the instability of partners, caused by the second wave of the pandemic, and 2) human error.
As fall slowly turned into winter, more and more of our partners started shortening their hours of operation or went into ‘hibernation’ entirely.
Additionally, as we introduced new products and vendors to the service (in order to increase order size and retain customers), we quickly became beleaguered by order errors — both from vendors delivering the wrong product, and restaurant staff making aggregation errors.
These errors were costly to correct and also reduced customer confidence.
At the same time, it became increasingly difficult to offer consistent pickup windows with our restaurant partners, due to shortened hours or closures.
Although our partners valued the revenue share we brought to the table, ultimately, it wasn’t enough to keep their doors open.
REFLECTIONS
Is it possible that we could have resolved these problems with sufficient capital, technology, and time? Perhaps.
But ultimately, in an unstable and rapidly changing market like grocery — especially given the pandemic — we decided against pursuing funding.
As one mentor put it, “When the winds fail you, don’t try to sail home, no matter how well built the boat or seasoned the crew.”
So much of entrepreneurship comes down to timing.
We’ve both gained incredibly valuable learnings from this venture that we will take with us, and nurture in new forms — but the timing isn’t right for us to continue pursuing this particular path.
As we look back at this journey, the most rewarding part for us has been what we’ve been able to give back to our community.
The words of one of our operators sums up the pinnacle of this endeavor for me:
“At the height of the pandemic, when we were at our lowest, you two came and gave us hope,” he told us over an outdoor meal. “You gave us something to focus on, a path forward, and enabled us to put our most financially at risk staff members back to work.”
Those words and the impact we had will continue to fuel me wherever my entrepreneurial path goes next.
