CartFresh, a white-label grocery delivery service, launched Wednesday for customers in the Boston area, including Brookline, Cambridge, and Belmont.
CartFresh chief executive Yegor Anchishkin brought the service to Boston several months ago as a participant in the startup accelerator program Techstars. Anchishkin, who originally launched the service in Ukraine under the name Zakaz in 2010, sought out to find the best grocery store with which to form a partnership. Again and again, he said, people pointed him to Russo’s.
Tony Russo did not need any persuasion in forming a partnership with CartFresh, only wondering why CartFresh wanted to partner with his grocery store, instead of a larger, more centrally-located company.
“We want to expand the best retailers to a wider geographic area,” Anchishkin said. “We have to find the best retailer in every category. One of the most important categories is produce.”
CartFresh will compete against Instacart – Instacart has been delivering Russo’s products to Watertown for more than one year in an unofficial partnership – Google Express, and Peapod.
So how does CartFresh’s pricing match up? There is no minimum order total, at least for now, which is unique to CartFresh. Delivery starts at $6.99 to the nearest ZIP codes from Russo’s, such as Brookline and Boston.
Instacart requires a $10 minimum ordering fee. If a delivery is scheduled at least two hours in advance, Instacart express members’ fee starts at zero dollars, and nonmembers’ cost start at $3.99. Peapod’s prices start at $6.95 or $9.95 in Boston, depending on the order total.
CartFresh is advantageous for lower order totals, but an order must be placed at least four hours in advance. Instacart orders can be at a shopper’s house within an hour.
Russo foresees slow growth in revenue by having CartFresh’s part-time employees come into the store and fulfill orders, but sees this partnership as a great way for people to enjoy his family’s items. His biggest concern is if there will be something wrong with the product delivered to the customer.
“Shoppers tend to know what they want when they see it,” Russo said.
Coley Ward, marketing director of CartFresh, said customers are hesitant about grocery delivery service for this reason. The thought of trusting a stranger to pick out a tomato, for example, that is not too big, too ripe, or has the perfect flavor, is worrisome. CartFresh hopes that by having 10 to 20 part-time employees, instead of contractors, turnover rate will be lower than Uber experiences with its drivers, thereby increasing customer satisfaction.
Shoppers will pay the same price online as they would pay in the store, because CartFresh and Russo’s are official partners. Ward said Instacart shoppers pay an extra 15 percent for Russo’s items because Instacart is not an official partner. Russo said he doesn’t even know when an Instacart employee is inside his store.
Customers don’t have to be home to receive their CartFresh orders, which will stay cold for up to five hours in an insulated box. CartFresh has the technology capability to lock the boxes to a tree and a four-digit code will be sent to the customer.
Anchishkin founded GVMachines in 2010, which is the holding company for CartFresh and Zakaz. According to Angel List, Zakaz raised $2.5 million in Ukraine. Anchishkin said a round of Series A funding from US investors will probably occur in the next six months.
CartFresh is currently in talks with about six Boston area stores to offer customers a variety of products. The next store, Ward said, will likely need to sell paper towels, a household necessity that Russo’s doesn’t sell.
To place an order, customers go on the Russo’s website and select their desired items. The delivery fee is calculated based on ZIP code. CartFresh employees receive the order on their phone and the entire process is tracked using the internally-built app. Hence, the “white label” description – CartFresh built and manages the service that customers interact with on the store’s website.
“The idea of spending $7 to get your groceries delivered, if it means you don’t have to own a car and spend $9,000, it seems like less of luxury than it did 15 years ago,” Ward said.