Grocery e-commerce skyrocketed in 2020, and more startups are entering the space.
This month, Umamicart, an online Asian grocer, launched — aiming to provide a one-stop-shop for home cooks interested in Asian cuisines. When it comes to hard-to-find ingredients, accessibility is one of the biggest pain points for many customers, co-founder and CEO Andrea Xu told Modern Retail.
“We’re not trying to replace authentic local markets,” she said. “But bridge the gap between online consumers and offline suppliers we love.” About 90% of the company’s current offerings are by Asian American and immigrant-owned businesses, as well as mom-and-pop suppliers and producers, Xu explained. The company’s sourcing team works directly with national distributors and independent brands to source products.
Umamicart’s launch follows unprecedented online growth experienced by major grocers. According to eMarketer, grocery e-commerce sales grew by 54.0% in 2020, reaching $95.82 billion. The boom has had a ripple effect across the board; Thanks to an increase in home cooking, even local grocery shops and gourmet markets have been thriving during the pandemic. During the early days of the pandemic, a number of local grocers scrambled to get their offerings online. And now, smaller upstarts are entering the space in hope of harnessing similar growth.
The marketplace’s assortment covers Chinese, Korean and Thai flavors; it includes 500 items across produce, meats, tofu, seafood and pantry essentials such as condiments and sauces. The company currently offers shipping to zip codes in New York, New Jersey, Connecticut, Pennsylvania and Delaware, with plans to expand the delivery range to Washington D.C., Virginia and Maryland this spring.
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To attract new or inexperienced cooks — who may otherwise feel intimidated to recreate Asian dishes, Xu explained — Umamicart is rapidly adding DIY recipe kits. So far, subscribers — which grew via a pre-launch waitlist — is a mix of Asian Americans and non-Asian customers. Currently, the focus is to grow the East Asian and Southeast Asian product offerings, said Xu.
Umamicart currently offers free delivery for orders over $49, and charges a $6.99 fee on orders under $49. The service doesn’t require a membership, but orders must be at least $30 to qualify for delivery.
The launch comes at a serendipitous time, as customers having already become accustomed to grocery ordering, said co-founder and COO Will Nichols. The company has a Brooklyn-based fulfillment facility with workers packing for next-day shipping. This investment decision was made in order to realistically compete in this category as the service expands, said Nichols.
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According to a recent Reach3 report, 45% of consumers said they have done more online grocery shopping during the pandemic than before. Now, the grocers are trying to figure out ways to keep customers using their online services. Many marketplaces are incorporating content hubs to keep the customers engaged and cart sizes growing, said Dara St. Louis, senior vp at Reach3 Insights.
Over the last year, a number of niche online grocery startups experienced impressive growth. Thrive Market, which features organic pantry staples, said that by the end of 2020, the membership-only marketplace had added 300,000 new subscribers — hitting 1 million members in total. Meanwhile, CPG-focused online shop Boxed reportedly generated hundreds of millions in annual revenue, and is eyeing an Asia expansion. Asian-focused online marketplace Weee, founded back in 2015, saw a 700% year-over-year revenue growth in 2020.
Over the last year, a number of services popped up bringing online products and services that used to be only available at small in-person locations. For example, Asian food delivery service Chowbus, which offers delivery from smaller mom and pop restaurants, has seen marked growth. Similarly, New York City-based Southeast Asia Food Group started up local delivery once the coronavirus hit.
Xu said that Umamicart isn’t trying to replace local markets or necessarily compete with the big delivery services. She sees the content as its biggest differentiator. The ultimate goal is to create a robust, personalized recipe database while providing a hands-on approach to content. For example, content will fold in tutorials, prep tips and ideas on what to do with unfamiliar ingredients.
Curation is increasingly becoming a way for grocery startups to stand out, St. Louis said. “When a consumer can find these products in one place, the barrier to entry gets lower.”
As things reopen, St. Louis said that specialty retailers and marketplaces will need to stay on top of what trends will be sticky. “The key is to understand how households’ consumption patterns will shake out in the coming years,” she concluded.