Vancouver’s Sustainable Produce Urban Delivery (SPUD) has partnered with a major Canadian grocer and will deliver that grocer’s online orders in Metro Vancouver out of a new 74,000-square-foot warehouse on Trapp Avenue in Burnaby, SPUD CEO Peter van Stolk told Business in Vancouver February 13.
Van Stolk would not name the grocer that he calls his “anchor tenant” in the facility, but his plan is to attract other retailers that will also store merchandise in the warehouse and have deliveries provided by SPUD’s new wholly owned subsidiary Food-X Urban Delivery Inc.
The business model will have SPUD charge the retailers a fee for each delivery but Van Stolk said he expects that all deliveries will be free for the customer.
SPUD already provides free delivery for its customers as long as they buy $35 worth of merchandise. Van Stolk estimated that his company currently makes between 370,000 and 400,000 deliveries per year and that the new warehouse’s orders will initially double that workload. The capacity for the new warehouse, he said, will be about 30,000 orders per week when it opens this summer.
The company will continue to operate its current warehouse on East Hastings Street.
Other B.C. grocers provide delivery. Save-On-Foods, for example, offers a free first home delivery and then charges $4.95 and up per order, according to its website.
Nova Scotia-based Sobeys announced in January that it is partnering with British online-supermarket venture Ocado to launch an online grocery store by 2020.
“Sobeys intends to play to win in Canadian online grocery shopping,” Sobeys CEO Michael Medline said in a news release at the time.
Sobeys’ partnership will involve Ocado taking two years to build a warehouse outside Toronto that will be equipped with the most modern e-commerce technology.
“There’s only six large grocery retailers in Canada and I met four of them and we started to discuss [a partnership,]” Van Stolk told BIV.
“I had them come in and walk through the warehouse [in East Vancouver.] They were impressed and couldn’t believe our metrics because the challenge in the online grocery business isn’t so much getting people to want it but it’s how do companies make money at it.”
He added that SPUD’s technology for consolidating orders and devising efficient delivery routes results in the process eliminating greenhouse gases.
Other branches of SPUD’s business are its small-footprint retail stores, commissary and food-preparation services and distribution.
Van Stolk believes that about 15% of Metro Vancouver’s $8 billion-plus grocery trade will eventually move online.