Dive Brief:

• San Francisco-based online grocer Good Eggs has raised $100 million, according to a press announcement Wednesday.
• The company will use the funding to fuel its expansion into Southern California by this fall — a move that will triple the size of its current market. Good Eggs also announced the appointment of Vineet Mehra, previously the global chief marketing officer and chief customer officer with Walgreens Boots Alliance, as its chief growth and customer experience officer.
• After failing at an attempt to expand nationally several years ago, Good Eggs is now focusing on growth within its home state, whose metro markets will account for up to 15% of U.S. online grocery sales within the next few years, according to the company.

Dive Insight:

Good Eggs is the latest online grocer to receive a windfall of investment capital following record demand over the past year. But rather than pour that funding into a broad geographic expansion, as some of its competitors have, it plans to jump into a highly competitive market closer to home.

Over the past year, Good Eggs, which serves the San Francisco Bay Area, has nearly doubled its customer count, hired more than 400 new workers and increased revenue to north of $100 million. It also opened a new 115,000-square-foot fulfillment warehouse in Oakland last February — just in time to meet sky-high demand fueled by the pandemic.

Now the company aims to press its advantage in Southern California — a move that’s been in the works for some time, CEO Bentley Hall said. Good Eggs is currently in the late stages of negotiations for a warehouse that’s close to the size of its Oakland facility, Hall said, and will serve an area more than twice the size of the Bay Area market. The company also plans to add additional facilities in the coming years and is building out its local product sourcing network, Hall said. 

In a market chock full of online and brick-and-mortar grocery options, including a growing Amazon Fresh presence, Hall said Good Eggs stands out with its focus on local products and a strong customer experience. Currently, 70% of the company’s assortment comes from local suppliers.

"Whether it's against an Amazon or a local brick-and-mortar grocer, we feel like we need to have peak quality, really high integrity food, and that a lot of the way we source enables that, and that's a starting position," he said. "In other words, you shouldn't be able to get better produce or proteins from those retailers than you can based on how we buy and what we do."

Good Eggs scored a major win in recruiting Mehra, who brings experience operating at the top of a Fortune 500 company to the online grocer. During his two years at Walgreens Boots Alliance, he led the revamp of the company’s loyalty program. Mehra has also served in top management roles at Ancestry, Johnson & Johnson and Novartis Consumer Health.

"I think for modern for modern growth organizations, they need to have a balance of creativity and consumer innovation and they also need to know how to run a business and be intelligent about numbers, and Vineet is one of the few leaders I've found to be able to be balanced across both of those sides," Hall said.

Scoring a major c-suite hire of that magnitude points to ambitions beyond just California, and Hall acknowledged as much, saying the company aims to grow into additional regions along the West Coast.

"We will continue to see more regions, but be focused on the West Coast for the next five years," he said.

In its drive to become the primary grocer for its customers, Good Eggs has added meal kits and prepared foods. It’s moved beyond groceries into personal care and home products, including supplements, face masks and organic firewood kindling.

Looking ahead, Hall said Good Eggs will continue to push deeper into fresh meals, which now account for more than a third of its revenue. He said the lines between grocery and restaurants will continue to blur, and that Good Eggs is trying to market itself as an outlet for ready-meals and kits from restaurants dissatisfied with the current crop of delivery options.

"We are often asking ourselves how is that line blurring and how do we help those restaurants get to customers in a way that is better than the last-mile solutions they have right now," Hall said.

Hall said Good Eggs also plans to roll out a new online shopping experience later this year that will distinguish between meal buying and grocery shopping, but declined to provide further details. Like other grocers, Good Eggs has invested in lowering prices and improving fulfillment times. Whereas five years ago lead times were two or three days out, now the company can fulfill orders same-day with plans to offer rush delivery and pickup options, he said.

Although pure-play online grocers have run in their own lane for years, they're coming into closer competition and also presenting tie-up opportunities for traditional grocers. Farmstead, which is in the midst of a 14-city expansion, is selling its fulfillment technology to other grocers, while December saw Ahold Delhaize's acquisition of FreshDirect — an online grocer that Good Eggs is in many ways modeling as it scales on the opposite coast.