Goodfood, Meal-Kits, and Gruppo MutuiOnline BPO

Goodfood & Canadian Online Grocery

Goodfood is a Canadian online meal kit subscription service evolving into an online version of Aldi or Trader Joe’s. In 2025, the Canadian total grocery market is expected to grow to 130bn CAD. The pre-pandemic online grocery penetration was 3-4% which quickly jumped to 7-8% in 2020. If we assume online grocery penetration is 20% in 2025, the online market will be worth around 30bn CAD. This is a great opportunity for a cash breakeven DTC meal kit service to leverage existing infrastructure to enter the huge grocery market.

Goodfood runs a vertically integrated ecommerce model. Just as Carvana sources cars from auction, reconditions the vehicles in IRC’s, and ships them to vending machines or directly to customers, Goodfood has a similar strategy for groceries. The company sources fresh produce directly from farmers, stores products in refrigerated warehouses, and picks and packs the ingredients to ship directly to consumers. However, the big difference is that Goodfood requires just-in time sourcing and just-in-time delivery. Perishable inventory needs to be sourced, stored, and packed at the optimal time and temperature to ensure the customer receives the meal kit as expected. The time between sourcing produce and packing and shipping to customers is possibly the shortest in any business we’ve ever come across which makes this a huge execution challenge.

Goodfood has 320,000 meal kit subscribers and aims to offer 4,000 private label grocery SKU’s for same-day delivery. This is a fully vertically integrated private label grocer built on a base of recurring meal-kit subscription revenue. Goodfood already has the supply chain to source products and is building new facilities and a delivery fleet to reduce the picking and delivery cost per unit. As the business scales, all of these cost savings can be passed on to the customer.  There are clear parallels between Goodfood, Carvana, and Naked Wines in that they all operate vertically integrated models online. Owning the full end-to-end customer process can build the foundation for a superior customer experience which drives volume and scale through the system. At scale, the best businesses pass the savings back to customers which creates a sustainable cost advantage in the market.

We interviewed the founder of MissFresh, an online meal kit subscriptions service that competes with Goodfood, to explore the operational challenges of selling perishable goods online directly to consumers. Given the evolution of Goodfood toward, the big questions we are exploring are:

• What synergies are there between a meal kit and online grocery online supply chain?
• How can Goodfood use the warehousing infrastructure for both meal kits and grocery and what level of picking automation is optimal for both?
• How does order frequency and AoV change when adding on grocery SKU’s to meal kit subscriptions?
• How can incumbent grocers and HelloFresh compete with Goodfood’s vertically-integrated model?

If you have any thoughts then please reach out as we are studying online grocery very carefully and have some interesting interviews lined up for June!

Gruppo MutuiOnline