Consolidation in the Online Food and Grocery Delivery Space
The online food and grocery delivery space is witnessing increased consolidation. TechCrunch has learned that GrubMarket, a startup that has quietly built a B2B empire in produce and grocery logistics and is now valued at $3.5 billion, has acquired Good Eggs, a once-feted fresh food delivery startup that has faced significant challenges in recent times.
GrubMarket Acquires Good Eggs
The financial terms of the deal are not being disclosed, but sources with knowledge of the transaction informed TechCrunch that it was an all-stock acquisition that valued Good Eggs slightly higher than its previous valuation of $22 million. The sources also revealed that Good Eggs’ investors had proactively approached GrubMarket looking for a way out.
TechCrunch has confirmed that Good Eggs will be led by Keith Brewer, the COO of GrubMarket-owned Daylight Foods, who will take over as the new leader of the company. While a number of Good Eggs’ staff are expected to join GrubMarket, it is unclear whether Rodrigo Arévalo, the Uber alum listed as Good Eggs’ CEO, will remain with the company.
A Major Shift for Good Eggs
This development marks a significant change for Good Eggs, which was valued at $365 million in November 2020, per PitchBook data (a round announced in 2021), and had a prestigious investor list that included Benchmark, Index, Sequoia, and Thrive, among many others. However, as the COVID-19 tailwinds faded, Good Eggs encountered difficulties and was eventually marked down by an astonishing 94% last year, bringing its valuation to $22 million.
GrubMarket, on the other hand, is now valued at around $3.5 billion and has received over $560 million in funding from various investors that include Tiger Global. Its $3.5 billion valuation was reported by CNBC earlier this year.
The Evolution of GrubMarket and Good Eggs
Good Eggs and GrubMarket launched in 2011 and 2014, respectively, with a focus on B2C (business-to-consumer) delivery, specifically delivering boxes of fresh food to consumers and businesses. However, as Good Eggs continued to concentrate on the consumer market, GrubMarket shifted its attention to B2B opportunities, scaling rapidly to work with smaller grocers as well as major ones.
Whole Foods is GrubMarket’s biggest customer, while other notable clients include grocery stores, restaurants, and foodservice providers. In contrast, Good Eggs focused on delivering fresh produce and prepared meals directly to consumers through its mobile app.
Why the Acquisition Makes Sense
The acquisition of Good Eggs by GrubMarket makes sense for several reasons. Firstly, it allows GrubMarket to expand its B2B business while also leveraging Good Eggs’ expertise in direct-to-consumer delivery. Secondly, the deal enables GrubMarket to tap into Good Eggs’ existing customer base and network.
Moreover, with the growing demand for online grocery shopping and meal delivery services, this acquisition positions GrubMarket as a significant player in the online food and grocery delivery market.
Consolidation Trends
The acquisition of Good Eggs by GrubMarket is just one example of the increased consolidation trends in the online food and grocery delivery space. Other notable developments include the merger between Shipt and Target, the acquisition of Instacart by Coupang, and the investment in Foodpanda by Prosus.
What’s Next?
The future of online food and grocery delivery will likely be shaped by the evolving needs of consumers, technological advancements, and shifting market dynamics. As the industry continues to consolidate, we can expect to see more acquisitions, partnerships, and innovations that redefine the landscape.
In conclusion, the acquisition of Good Eggs by GrubMarket marks a significant development in the online food and grocery delivery space, underscoring the growing trend towards consolidation and innovation.
