Online grocer Farmstead, which offers grocery delivery at no extra charge, announced July 27 that it has signed a lease for a larger microhub space in Burlingame, Calif., that is six times larger than its existing facility on Harrison Street in San Francisco.
The new space, which Farmstead will transition operations to in July, will help the San Francisco-based company accommodate the increased delivery volume it has seen during the COVID-19 pandemic.
When San Francisco’s shelter-in-place order went into effect, Farmstead’s order volume increased by 5x, and its average basket size doubled, meaning its staff was picking, packing and delivering 10x the volume it was before, it said.
“Grocery delivery has now passed the tipping point,” Farmstead co-founder and CEO Pradeep Elankumaran said in a release. “The recent shelter-in-place accelerated adoption of grocery delivery by three to four years.”
Elankumaran said Farmstead went from 5% adoption to 30% to 40% adoption in the Bay Area in a matter of weeks and is confident that “most new customers will continue weekly service through and after the COVID-19 pandemic.”
When the pandemic hit, more consumers sought out delivery and pickup for groceries as a safer alternative than shopping in-stores. To accommodate, many grocers quickly rolled out or expanded offerings. Farmstead already had a delivery infrastructure in place, with a microhub that could serve customers in a 50-mile radius.
“Our new facility, coupled with our continued hiring spree, will help us immediately quadruple our delivery capacity, and grow it by 10x in the coming months,” Elankumaran said.
According to Elankumaran, there are approximately 50,000 grocery stores in the U.S. and each can support about 100-150 online orders per day, or about 7.5 million deliveries total per day.
Earlier this year, Farmstead expanded its Refill & Save program to all shoppers. The savings program, which provides significant discounts on staples, including milk, eggs, fresh fruit, fresh vegetables and bread, had previously only been available to weekly subscription customers.