Has online grocery start up, HelloFresh, cracked the code to online grocery shopping in Australia?
According to the founder of the brand’s local arm, Tom Rutledge, it has.
First launched in 2011 in Berlin, the meal kit delivery service has raised more than $70 million from investors over the past three years.
Last month it secured $50 million in its fourth round of funding from US-based venture capital firm, Insight Venture Partners.
HelloFresh operates in six markets, including Germany, the US, UK, Netherlands, and Austria. It launched in Australia in 2012 with Rutledge heading its local operations.
Rutledge says HelloFresh’s subscription-based model has established an entirely new category in grocery retail.
“If you look at grocery retail it hasn’t really changed in the last 50 years, unlike other forms of retail like books, clothes, or music. They have all been transformed by the internet, but grocery hasn’t yet,” Rutledge said.
“Part of that I think is because no one has really cracked the code for a good user experience for grocery shopping online.
“Clicking through the aisles is still almost as laborious as walking through the aisle, and there is still that element of planning needed for online grocery in Australia.
“Obviously online shopping has impacted the grocery sector and I am not disregarding the innovation that has taken place, but consumers still need to think about what they want to cook and what they need to buy.”
HelloFresh delivers weekly recipes and ingredients to customers, with an entry level kit priced at $64 for three meals for two people.
“We’re seeing more and more of that recipe side integrating with supermarket ordering. I think that’s something that will continue, but they (traditional supermarkets) still include large sized products rather than just the right amount for those recipes – they don’t tackle the wastage issue like we do.”
Rutledge says 90 per cent of its customers return week on week, and the business has seen a rapid uptake of customers since its launch.
“We think the sky’s the limit for HelloFresh. There’s a lot of money spent on groceries in Australia every week and you don’t need a big portion of that at all to have decent sized company,” he said.
“We’re coming into our third year and we’re still growing rapidly. We’re going to have triple digit percentage growth again this year and we have aspirations of achieving not less than that again next year as well.”
HelloFresh operates in Melbourne, Sydney, NSW’s Illawarra region and Newcastle, Brisbane, and Canberra, and plans to expand following its latest round of funding.
“We’re evaluating our expansion plans at the moment, we definitely know that this is something that’s too good to keep to just the eastern seaboard.”
