Farmstead Speeds Delivery as Expansion Looms

Bay Area online grocer Farmstead said is now providing customers with 2-hour delivery in a 50-mile radius. The new 2-hour window replaces its 3-hour window that had been the default for most customers since Farmstead launched in 2016.

Known for its fresh produce and mix of local and national brands, Farmstead is also eyeing expansion, starting with the Carolinas later this year. That expansion partnership comes in partnership with Alex Lee and Lee's Lowes Foods banner and and Merchants Distributors Inc. wholesaler.

Since California’s widespread shelter-in-place order, Farmstead reports its order volume increased fivefold in just a few days and that its average basket size doubled. In response, Farmstead doubled down on its Bay Area presence, moving to a larger warehouse that doubled its delivery area to east and south of San Francisco.

The company also fine-tuned its in-house operations software, which leverages artificial intelligence to help determine what and how much to stock, and optimize order picking, packing and delivery.

“Farmstead’s tech-driven approach to operations, and our knowledge of scale and density, have created a flywheel that’s helping continually improve our efficiencies, so we can lower fees and serve more customers,” said Pradeep Elankumaran, founder and CEO of Farmstead. “Farmstead’s warehouse-centric approach and low costs have helped make grocery delivery and hence fresh, high-quality food delivery accessible to a huge new swath of customers.”

According to Elankumaran, Farmstead is using what it has learned in the Bay Area to refine its playbook for geographic expansion. Its first expansion area will be the Carolinas later this year, and several other city launches are in the works. 

Farmstead has also announced that it is making its in-house grocery delivery software Grocery OS  available to other national and regional grocers, to help them compete with Amazon.

“Farmstead’s approach—combining sophisticated prediction models and software with micro-warehouses or ‘dark stores’—is a north star for the future of grocery,” said Elankumaran. “Large traditional grocers who want to adapt for the age of delivery, and do it profitably, will need to go this route in order to survive.”