YourGrocer bought Aussie Farmers Customer Base
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YourGrocer has purchased the brand and database of failed online grocery business Aussie Farmers Direct (AFD) for an undisclosed sum.
The small Melbourne-based business said it has been working with the administrators since AFD collapsed over two months ago.
The acquisition will see YourGrocer start to use the AFD brand throughout its website and on its fruit and veggie boxes as a “stamp of quality”.
It will also see YourGrocer expand into the Sydney market by leveraging AFD’s 100,000-strong customer database on top of the “few thousand” customers it already has in Melbourne.
“Our goal is to expand as quickly as we can without damaging the customer experience. The challenge for us is to figure out how to keep quality high as we scale,” YourGrocer co-founder Morgan Ranieri told.
One thing that will not change is YourGrocer’s business model, which unlike AFD, is not a franchise.
Growing pains
Started in 2013 by Morgan Ranieri and two co-founders, who are no longer involved in daily operations, YourGrocer gives customers access to a variety of local butchers, fishmongers, greengrocers, markets and other independent grocery retailers online, with same-day delivery available for orders placed before 11am.
The business has grown rapidly in the Melbourne market, doubling or tripling in size each year, and has experienced some growing pains as a result.
In an email sent to customers today, Ranieri said YourGrocer is working to reduce the number of out of stock items and training its team in continuous improvement to provide a better quality of service.
“It will also see YourGrocer expand into the Sydney market by leveraging AFD’s 100,000-strong customer database on top of the “few thousand” customers it already has in Melbourne.”
“We are going to be very careful with how much growth we take on over the next few months. We know that in the past we’ve sometimes grown too much, too quickly and that’s not been great for existing members,” Ranieri wrote in the email.
To combat this, YourGrocer has built a wait list and will only be taking on new members when it knows it can handle them.
Ranieri believes this growth is testament to the high level of customer demand for a convenient alternatives to Coles and Woolworths and produce and groceries from Australian farmers and local brands.
More drivers, vans needed
AFD also promised to provide a convenient, local alternative to the big supermarkets, but ultimately, it was unable to compete with the duopoly.
According to submissions to the Senate franchising inquiry, AFD’s growth was hampered by poor quality produce and insufficient investment in infrastructure, including technology issues and shortages of chillers.
However, Ranieri said he does not anticipate any bottlenecks on the supply side.
“Finding suppliers for us is relatively straightforward. There are thousands of amazing independent grocers. The biggest thing we need as we scale is more drivers and refrigerated vans,” he said.
Ranieri is looking to hire some former AFD franchisees to grow YourGrocer’s delivery team. The Melbourne-based business currently employs around 25 people total.
“We don’t have work for all of them immediately. I wish we did,” he said.
After failing to find a buyer for AFD last month, administrators wound up the business, leaving creditors $69.2 million out of pocket, 260 employees without a job and 100 franchisees with worthless investments.
Questions & Answers
Q.Will YourGrocer adopt the franchise business model that Aussie Farmers Direct used?
Will YourGrocer adopt the franchise business model that Aussie Farmers Direct used?
No, YourGrocer's business model will not change. Unlike Aussie Farmers Direct, YourGrocer is not a franchise. This non-franchise model will be maintained as the company expands into new markets.
Q.What specifically is YourGrocer acquiring from Aussie Farmers Direct?
What specifically is YourGrocer acquiring from Aussie Farmers Direct?
YourGrocer has purchased the brand and the database of Aussie Farmers Direct. This acquisition includes the use of the AFD brand on its website and fruit and veggie boxes, and access to a 100,000-strong customer database.
Q.How will YourGrocer manage the expected increase in customer numbers while maintaining service quality?
How will YourGrocer manage the expected increase in customer numbers while maintaining service quality?
YourGrocer plans to use a wait list for new members and will only take them on when it can handle the growth. They are also working to reduce out-of-stock items and training staff in continuous improvement.
Q.What are the main challenges YourGrocer anticipates in its expansion, particularly compared to Aussie Farmers Direct?
What are the main challenges YourGrocer anticipates in its expansion, particularly compared to Aussie Farmers Direct?
YourGrocer anticipates needing more drivers and refrigerated vans as it scales, as finding suppliers is straightforward. Unlike AFD, they do not foresee bottlenecks on the supply side or issues with produce quality or infrastructure.
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