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Over the last year, Bay Area online grocer Good Eggs has experienced impressive growth, nearly doubling its customer base and achieving a nine-figure revenue.
While the company offers a full line of groceries, it is particularly well-known known for its “absurdly fresh produce,” which is 90-plus-percent certified organic and often delivered within 48 hours of harvest. Nearly all of Good Eggs’ customers’ orders contain produce, and the category accounts for a third of the company’s total revenue.
After COVID hit last March, Bay Area consumers flocked en masse to the online grocer as they looked for a way to stock up on groceries while minimizing their exposure to other people.
“It's been a little bit of a wild ride,” said Ben Hartman, Good Eggs’ senior category manager for perishables. “We saw just a tremendous amount of growth in a very short window—from mid-March until around the end of April. And the majority of that growth has stuck with us even after that initial surge.”
Ben Hartman, Senior Category Manager for Perishables, Good Eggs
In a stroke of good fortune, right before the Bay Area shelter-in-place orders started, Good Eggs had moved into a new warehouse in Oakland that was double the size of its previous location on the San Francisco Wholesale Produce Market.
“We could not have timed it better in terms of moving in just about a week before we suddenly had a huge increase in demand,” said Hartman. “We would absolutely not have been able to take on that additional demand if we hadn't just moved into our new warehouse. It's just been instrumental in allowing us to take on that growth.”
In a stroke of good fortune, right before the Bay Area shelter-in-place orders started, Good Eggs had moved into a new warehouse in Oakland that was double the size of its previous location on the San Francisco Wholesale Produce Market.
Hartman said the produce items with the strongest initial demand spikes were potatoes, onions, and other staple commodities with a long shelf life. “We couldn’t keep them in our warehouse if we tried,” he said, adding that meal kits were also extremely popular as people started cooking at home much more frequently.
To meet the massive demand increase, Good Eggs had to quickly scale up its labor force, hiring and training hundreds of new people. (The company has added more than 400 employees over the course of the past year.)
“We spent a good part of the spring getting used to a new reality. It was a challenge in terms of needing to rapidly increase our supply and internal capacity,” said Hartman. “We were really lucky to have a good number of direct relationships, kind of de-centralized relationships, with local growers. So we were able to right our ship in a pretty quick way, comparatively speaking at least.”
To meet the massive demand increase, Good Eggs had to quickly scale up its labor force, hiring and training hundreds of new people.
As Good Eggs adjusted to the influx of new consumers, it noticed that its customer demographics had changed.
“We used to service a lot of families who had two heads of household who were both working full-time and trying to balance family and kids and work and also trying to eat well,” said Hartman. “And one of the things we saw post-COVID is that there was just a much broader set of folks who were interested in being able to have groceries delivered to their home in order to be able to socially distance themselves from crowded spaces like supermarkets and to access fresh, healthy food during a challenging time."
In general—and especially since the onset of COVID—online grocery shopping has been sharply on the rise. In a report published last fall, Mercatus and Incisiv estimated that by 2025, online grocery sales will represent 21.5 percent of total grocery sales, a value of about $250 billion (which is 60 percent higher than pre-COVID projections).
In its own recent national survey, Good Eggs found that 68 percent of consumers have bought groceries for delivery online, and of those, 81 percent said they would continue to do so even after the pandemic ends.
In the wake of this rising demand, Good Eggs announced in early February that it would be expanding its reach into the Southern California region with a $100 million funding round led by Glade Brook Capital Partners.
In its own recent national survey, Good Eggs found that 68 percent of consumers have bought groceries for delivery online, and of those, 81 percent said they would continue to do so even after the pandemic ends.
“I feel really proud of what we've built here in the San Francisco Bay Area and the team of folks we have here,” said Hartman. “I feel really good about the spot that we're in and our ability to continue improving the customer experience in this region. And I’m now also very excited to be able to focus some of our efforts on another region.”
While there is not yet a firm date for Good Eggs’ SoCal rollout, it will be sometime during the second half of 2021.
“I feel really good about the spot that we're in and our ability to continue improving the customer experience in this region. And I’m now also very excited to be able to focus some of our efforts on another region.” -Ben Hartman
In terms of sourcing produce for the company’s new region, Hartman said he plans to expand the grower and distributor relationships he already has in Southern California with companies such as Cuyama Orchards, Kenter Canyon Farms, Frecker Farms, and Heath & Lejeune. In addition, Hartman said he’ll also source some produce from the Central Valley, noting that a number of the growers he works with in that area are roughly equidistant from the Bay Area and Los Angeles.
When it comes to building a robust selection of the hyper-local—and oftentimes specialty—organic produce that Good Eggs is known for, Hartman said he is in the early stages of that process.
“I've only spent a little bit of time in some of the LA farmers markets, but I know that's an entirely different world down there,” he said. “And everybody's got their favorite market and their favorite grower at their favorite market. So I’m really excited to get to know some of those folks and do the work that it takes to forge some of those relationships over time.”
He said he’s already had a few initial conversations with some smaller-sized growers in the region, and while he’s not ready to disclose any names just yet, that information will soon be available on Good Eggs’ forthcoming Southern California website (Good Eggs almost always displays source information below the produce it offers).
“I can't stress enough how excited our whole team is to enter another region,” said Hartman. “All of us are just so humbled and really excited to be able to bring amazing food to people. And we love supporting really amazing producers who are doing the right thing in terms of ecological practices and social practices. So we're just so excited to bring all of that to Southern California soon!”
