The new frontier of food
Canadian company SPUD.ca uses AI, ebikes & the Microsoft Cloud to deliver local organic food to homes & offices with almost zero waste!
Vancouver-based SPUD is a fast-growing local online organic food delivery company servicing six urban areas in Canada. The company’s proprietary logistics platform built on Microsoft Dynamics 365 uses artificial intelligence to prepare and deliver grocery orders faster and better—and with almost zero food waste.
Big expectations
When it comes to groceries, Canadians want it all. We expect a big selection of high-quality food at a low price. We want our food to come from local sources, or at least ethical ones. Some of us will pay a premium for organic or prepared foods. And, above all, we love a deal! We expect lots of sales and loyalty benefits with our purchase.
In exchange for meeting our many needs and wants, we open our wallets. Statistica estimates the annual retail sales of food and beverage at $188 billion in Canada & five trillion dollars in the USA.
Same old, same old
Despite the size of the opportunity “on the table,” not much has changed when it comes to how we buy groceries. Many of us still drive to grocery stores, browse the aisles collecting what we want, and then transport it all home. Even as online shopping has taken off in Canada for other products and services, grocery shopping remains largely the same since the 1950s.
“Online grocery is where apparel was 10 years ago. People hesitated to buy clothes online at first because they couldn’t try them on. Then the tech caught up. Now most apparel is sold online.” – Peter van Stolk, CEO
Margin issues
Grocery stores operate a high-frequency, low-volume business. That model makes home delivery too costly for them to offer, at least by traditional means. Just consider the complex safety requirements of transporting fresh food. Then factor in Canadian weather—everything from sweltering summer days to frigid winter mornings.
“Anyone can ship a box of cereal, but try shipping a strawberry pie next to eggs, ice cream, and seafood and getting it all there in one consolidated order, at temperature—and at the same time! Now that’s difficult.”
E-groceries at last!
Everything’s changed now, thanks to the innovative work of Peter van Stolk and his team at Sustainable Produce Urban Delivery, or SPUD. With its roots as a CSA company (Community Supported Agriculture), SPUD builds on the success of the fresh produce subscription model. In that model, farmers deliver bins full of freshly-picked fruits and vegetables directly to homes on a weekly basis. SPUD expands on that service concept greatly by selling and delivering a “full basket” of groceries.
Voted best grocery delivery by the Georgia Straight for three years running, spud.ca sells a full range of products, including produce, dairy, bakery, meat, seafood, packaged goods, ready-to-eat meals—you name it.
Omnichannel strategy
SPUD.ca is just one of many channels the company uses to connect with consumers and grow its business. Their YouTube channel offers informative videos about their services. Under the Be Fresh brand, the company also operates stores, cafes, local markets, and even a food service/catering storefront. This omnichannel approach helps meet the needs and wants of shoppers—on their terms and at their convenience.
“Our goal is to offer a seamless experience for our customers to get fresh, healthy food where they want it, when they want it, and how they want it.”
Grocery retailer-friendly
All this must be bad news for grocery retailers, right? On the contrary. True to its values as a CSA, SPUD offers Food-X Urban Delivery, a platform designed to help grocery stores make urban delivery a reality. Housed in a new state-of-the-art 74,000 square foot facility in Burnaby, Food-X gives other grocery retailers access to SPUD’s industry-leading technology, warehousing, home delivery, and food preparation platform.
How does SPUD do it?
It takes more than ebikes and ethics! Ingeniously, the SPUD platform integrates directly with the retailer’s point of sale (POS) systems to provide live visibility of inventory. This seamless integration allows retailers to sidestep clumsy work-arounds, like requiring a store employee to manually collect and ring up the items from a list. Instead, their orders are fulfilled, swiftly and efficiently, through SPUD’s state-of-the-art facilities and sophisticated logistics planning and deployment.
“Reducing food waste makes both ethical and business sense. It’s the number one thing we can do as a society to impact the world.”
Close to zero waste
The company runs an online store, so they don’t have food items expire or get damaged on the shelf. SPUD only orders based on their customer needs, so they don’t over-order perishable, short-shelf life items. In fact, they don’t hold a huge inventory at all and turn it over dramatically faster than traditional stores. They even donate “imperfect” food to local charities and put them on sale at an Organic Imperfect Produce page!
Traditional grocery stores’ food waste typically represents five to six percent of their sales. SPUD’s approach cuts food waste to just 0.5 percent!
Precision packing
On top of all that, SPUD’s rapid-pack technology uses artificial intelligence and license plates to better pack, prepare, and monitor each order. Bins with plates travel the whole system and go back to the picker for packing and loading in a precise order, which maximizes the amount of room in the bins and the trucks carrying them. All of which creates unprecedented efficiencies.
Talk about agility! Conventional grocery stores take 27 days to turn over inventory. SPUD turns over 80 percent of its inventory every 48 hours and 100 percent of its inventory in 12 days.
Dynamics 365 at work
Behind the scenes, SPUD’s proprietary inventory management system built on Dynamics 365 manages their operations—from end-to-end—providing real-time visibility into all operations and sales, as well as reliable business analytics. Combined with Office 365 and Azure cloud services, SPUD takes full advantage of Microsoft integration and scale.
What an impact! In a single year in Vancouver, SPUD diverted 265,971 kg of waste from the landfill; prevented 444.3 tons of carbon from entering the atmosphere; and saved 3,564,275 litres of water.
A global vision
With dramatic business results like these and the industry validation of a global retailer like Walmart, SPUD stands poised to expand quickly into other markets, big and small. Rather than disrupt grocery stores, SPUD enables them to digitally transform, to reduce food, energy, and water waste—while they enhance their customer’s experience.
The sky’s the limit for SPUD! By leveraging Microsoft’s global network of secure datacentres, the company can compete in virtually any market in the world, securely and compliantly.
Built on local relationships
Best of all, SPUD continues to build and strengthen its relationships with organic farmers and artisan growers across the country. They source fresh food from over 700 growers today and intend to continue to build that local network, wherever they go next. That’s great news for Canada’s independent food manufacturers and grocery stores!
“Grocery stores may not be able to compete against Amazon in the future. We can bring ecommerce grocery to a smaller market and help independent grocers who’ve already been squished.”
Including Microsoft
SPUD migrated from Google to Microsoft after a comprehensive review of the company’s technology options. When the dust settled, the SPUD team recommended partnering with Microsoft after recognizing it as the best cloud for scaling their business and handling transactions securely and compliantly.
“We spent about two years deciding on an ERP system. When we looked up and saw what Microsoft was doing—where Dynamics was going and the changes we’ve seen—we made the leap.” – Peter van Stolk, CEO
A bright future
SPUD continues to innovate with practical sustainability in mind. The fast-growing company is working towards operating plastic-free facilities and has plans to market clever eco-bags and lunch containers. In the meantime, just making sustainable online grocery shopping viable for everyone, including food retailers, is awesome!
