Farmstead Looks to Help More Grocers Get Into Dark-Store Delivery

Online grocer Farmstead, based in Burlingame, Calif., launched with an eye toward reimagining consumers' grocery-buying experience, reducing food waste and "making high quality, locally sourced food accessible to everyone" via speedy grocery delivery from dark stores. On Thursday, the company announced new moves meant to help other grocers across the country do the same.

Farmstead said it has partnered with national real-estate companies and "multiple national last-mile delivery services" to take its Grocery OS software, which the company introduced in 2020, into "end-to-end solution" territory—with a goal of giving grocers access to all of the tools and partners they need to get a dark-store delivery operation up and running in a matter of weeks.

The Grocery OS stack, Farmstead said in a news release, is targeted toward "grocers wishing to improve operations and compete more effectively against dominant e-commerce players." The enhancements announced Thursday include warehouse space sourced via national real-estate players; guaranteed two-hour delivery service across a 50-mile radius with optional sub-one-hour delivery; and APIs for writing and centralizing customer orders into dark stores (and/or a retailer's existing stores) from a retailer's app as well as third-party marketplaces. 

"Grocery OS helps grocers vastly improve efficiency so they can eliminate fees and make money on e-commerce without passing fees down to customers and without relying on expensive third-party services," Farmstead co-founder and CEO Pradeep Elankumaran said in a statement. In a pilot of the upgraded stack with a top-3 national grocer, according to Farmstead, Grocery OS reduced delivery operational costs, improved delivery times to under two hours and significantly boosted customer satisfaction. 

Back in April, Farmstead announced a partnership with DoorDash whereby customers can order from Farmstead directly through the DoorDash app for one-hour delivery. The company's own dark-store facilities serve customers in the San Francisco Bay Area; Charlotte and Raleigh-Durham, N.C.; Austin, Texas; Nashville, Tenn.; and Miami. In June, Farmstead expanded its Bay Area-piloted Refill & Save program, which lets customers tag their most frequently ordered items and save 5% each time they reorder, to all of the company's markets. 

Farmstead head of business development Linda Lee said at the time that 80% of Farmstead users shop with the service weekly, calling the high weekly-order rate "a testament to really the ease and convenience" that customers find.

"One of the main learnings I think we're seeing, and we really believe will continue going forward," she said, "is that customers’ expectations will only continue to rise in terms of, one, the quality of product that they have access to online, and two, getting that on-demand, same-day delivery when they want it."