SimonDelivers was first. Lunds and Byerly’s are famous local names. Is there room for a third player in the local Web-based grocery delivery market?
William Orkin believes there is. Two years ago, the Philadelphia-born Orkin, a former salesman for Procter & Gamble, launched Gopher Grocery, a St. Paul–based online delivery service, which he initially aimed at college students. In its first year, when Gopher Grocery was “open” only for limited hours, the company had revenues of $64,000. This year, Orkin—who has expanded his business beyond college campuses—projects sales of more than $1 million and predicts profitability. It also expects to fill more than double the orders it did in 2007.
“There is a giant market out there,” Orkin says. “Anyone who goes to the grocery store, has a credit card, and eats is a potential customer.”
Gopher Grocery covers a more limited delivery area than its competitors do—just Minneapolis, St. Paul, and some first-ring suburbs. It offers more than 10,000 items, roughly the same as SimonDelivers and about 5,000 fewer than Lunds.
Orkin’s chief selling point is price. Gopher Grocery charges a $2 delivery fee for orders less than $100, compared to about $7 at Lunds and SimonDelivers. Orkin believes that his competitors attract higher-end customers who are willing to pay extra for convenience. Gopher Grocery customers, he adds, tend to be urbanites who live in apartments and smaller homes and have smaller incomes.
Orkin says that his grocery prices are similar to those of Cub Foods (there’s a comparison on the Gopher Grocery site). He keeps them low by limiting overhead. Instead of stocking a warehouse full of groceries (the SimonDelivers model) or picking items from store shelves (the Lunds/Byerly’s approach), Orkin sources from a group of 10 local suppliers, which include both wholesalers and retailers. (He won’t name them for competitive reasons.) Gopher Grocery staffers pick up the food, sort the items into the separate orders, and make the deliveries.
Residential or business customers place their orders on line before midnight for a next-day delivery. The following day, Gopher Grocery compiles all of the customers’ lists and sources the items from its wholesalers and suppliers in time for delivery. Business clients, which include General Mills and the University of Minnesota, receive their groceries between 3 and 4 p.m.; residential customers get theirs between 4 and 10 p.m.
“I think there is a revival in online grocery sales,” Orkin says. “It’s kind of a slow, quiet one, but there’s no doubt there is a revival. People are still trying to figure it out. But it’s obvious it’s needed and it’s wanted. The question is, how can companies do it profitably?”
That’s a question that concerns all online grocers. Gopher Grocery may have one answer.
Meet more intriguing Twin Cities business people (and their businesses) at tcbmag.com/peoplecompanies.
