Illustration by Audrey Fukuman.
Only a few hours ago, the strawberry was sitting on a vine at a family-owned farm in Watsonville, about 90 miles south of San Francisco. But, a day before, at a computer somewhere in the Bay Area, an icon was clicked, a quantity was entered, and the berry's fate was sealed. As the city slept, the strawberry was picked, packed in a basket with others (all at peak ripeness), and driven up 101 to San Francisco and a warehouse in the Dogpatch, where it joined hundreds of other locally grown foods ready to be delivered to Bay Area residents.
It's 8 a.m. at Good Eggs, the local grocery aggregator and delivery service, and the company's airy, 10,000-square-foot headquarters is already bustling. One of the building's industrial garage doors is thrown open to the foggy morning, and a near-constant parade of farmers and food producers walk up to the receiving table to drop off their day's inventory. Members of the Good Eggs staff — a young, good-looking, idealistic bunch all around — greet producers by name, offer them a strawberry or two (they're too good today to pass up), and talk shop as they check in orders.
Most of the food coming in has been made or harvested within the past 24 hours, and all of it has been ordered by customers in advance from the company's 150-plus vendors: dozens of pastured eggs and chickens from Early Bird Ranch, flats of blackberries and raspberries from Yerena Farms, loaves of sesame bread from Josey Baker, tamales and tortillas from Primavera, salsa and guacamole from Nopalito, frozen baby food from Big Dipper, bouquets from Farm Girl Flowers. It will all be sorted and packed in the warehouse this morning, and by this evening will be delivered to homes from Fairfax to Palo Alto.
The Good Eggs "farm-to-fridge" business model turns the supermarket model on its head. Instead of having one or several physical locations stocked with a standard, unchanging inventory, the Good Eggs storefront is online, and calls on local farms to deliver only what customers have ordered that day. Good Eggs essentially stocks and empties a grocery store every day, and because its inventory is based entirely on what each customer is ordering, it's a different grocery store every day, too. The company has created an efficient new food system that's elegant in its simplicity.
Food aggregators like Good Eggs and high-tech grocery stores like the upcoming Local Mission Market are homegrown examples of how technology could change the way Americans shop for groceries. Add to that the fact that, this fall, Amazon's grocery delivery business AmazonFresh is coming to town. We all know what can happen when Amazon gets in the game. The supermarket may not be rendered as obsolete as Borders, Tower, or Blockbuster, but the new virtual model could force the bright, wasteful grocery store to become something else. What remains to be seen is if these new models are affordable enough for the average American family — or, if like so many tech innovations before them, they'll only be practical for a certain, affluent segment of the population.
The supermarket business model is ripe for disruption, to use the parlance of our times. As it is, the current system is almost absurdly inefficient. Grocery stores are huge — the average American store is around 46,000 square feet, approaching the size of a football field. Inside, nearly 40,000 products are housed under the buzzing florescent lights — no matter the season or the store's location, there are always piles of gleaming red apples, plastic clamshells of strawberries, vacuum-sealed bags of chicken parts, and aisle upon aisle of brightly colored boxes of nonperishables. The supermarket runs on abundance; when there's a worker strike or a major weather event, the empty shelves are eerie, psychically disturbing.
Of course, the price of all that abundance is a lot of waste: The USDA estimates that supermarkets lost about $15 billion annually in unsold fruits and vegetables alone, and throw away, on average, 12 percent of produce and 7 percent of meat and poultry.
We've heard all this before. The death of the supermarket has been predicted since at least 1999, when grocery delivery service Webvan burst on the scene and suggested in an annual report that year that e-commerce would provide an alternative to the "mundane and time-consuming task" of grocery shopping in a store. The company enjoyed early success but folded two years later, just another victim of the first dot-com bust, but also a test case that showed how hard it is to make money selling groceries online.
A decade later we've become used to buying books and clothes and electronics online, but e-commerce has come slowly to the grocery sector. Supermarkets have a razor-thin profit margin of about 1 percent, according to the Food Marketing Institute, and rely on volume sales to make their money. It doesn't help that so much of the grocery store's inventory is perishable. Bananas, sliced lunch meat, eggs, tomatoes, baguettes, milk, chicken breasts, jumbo shrimp, Lil' Smokies, yogurt, orange juice, Pillsbury cinnamon rolls: Pretty much the entire perimeter of the store will go bad in a matter of days. So while every imaginable durable good, like a third season DVD set of Party of Five or a copy of Liberace's autobiography, can just sit on a warehouse shelf until someone wants it, food perishability is a major obstacle in redesigning the supermarket model for the online generation.
Grocery delivery services since Webvan have mostly been about making food shopping more convenient than building new methods of food distribution. Some grocery chains like Safeway offer home delivery and say that it's "an important part of our overall sales strategy," but are merely building the new system on top of their existing infrastructure. East Coast delivery services like FreshDirect and Peapod sell a few local items, but mostly feature the same national brands you'd find in the grocery store. Other companies, like Instacart, hire someone to shop for you at Whole Foods or Trader Joe's, but then you have to place your trust in a stranger's ability to choose avocados.