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In 2009, three software engineers, a financial director and a human resources director had a tasty idea: they would create a platform that would allow buyers to make purchases from several producers of artisanal food and have everything delivered in a single order, with some major brands. staples.
“To be successful, we knew we had to work with artisans in each city and create an online farmers market filled with local products,” said Lior Lavy, co-founder and COO of Dallas-based Artizone.
Today, the company works with hundreds of suppliers who sell everything from pancake mix to sea salt in three markets. We spoke to Lavy about how he is helping small food businesses expand their reach.
How did Artizone start?
Our initial conversations focused on creating an online supermarket. The more we talked about it, the more we fell in love with the idea of helping artisans who wanted an e-commerce site but who had neither the knowledge nor the budget to make it. At the same time, we knew that buyers wanted to get in touch with these artisanal producers without having to go to several stores across the city.
We went to Dallas – we chose it because of the demographics and the value of the specialty food market – to tell artisans about our idea, and their comments were positive. We launched Artizone in 2010.
How do you create a seamless shopping experience?
Customers can purchase items from multiple artisans in one virtual shopping cart. All the craftsmen who work with us have access to the back of the software to retrieve information on their orders. Manufacturers choose and package orders; our driver collects them and brings them to a central warehouse where they are organized and sent for delivery, often the same day. If the products have a sufficiently long shelf life, we will store them in our warehouse and our staff will take care of the picking and packaging.
There are a few issues: for example, there is a baker in Chicago who needs all baguette orders to be received before 5 a.m. for same day delivery; if a customer orders baguettes at noon, we cannot deliver until the next day. We give customers the option of having their order delivered when the products are available ($ 3 per delivery) or when the entire order is ready ($ 5.95), which can mean waiting until the next day.
Each city requires a different logistics model. When we launch in Los Angeles, we will need more than one warehouse because the city is too big for a central location; In Manhattan, due to traffic, we will have to have several trucks on the delivery routes.
How do you control costs?
In traditional online grocery stores, 50% of the costs go to picking up and packing in the store. For us, the artisans do this work, so we do not have to bear the cost.
Artisans pay a percentage of each transaction; fees start at 25% and go up to 35% for products stored in our warehouses. We bill customers for delivery charges (canceled on orders over $ 120). We are also experimenting with a model like Amazon Prime: customers can pay $ 99 for free shipping and a 5% discount on all orders for six months.
What is the next step for Artizone?
We focus on growth. We work with 200 artisans in Dallas and Chicago. We launched in Denver in May and are continuing to develop these markets. We are seeking $ 20 million in funding – our first outside investment – to expand into seven new markets, including Manhattan, Boston and Houston.