Dive Brief:

• GrubMarket, an online company that sources organic food directly from farmers to businesses and consumers, recently closed a $32 million funding round to further grow its business. The company plans to make acquisitions and expand before its IPO, which the company has scheduled for the end of 2019.

• GrubMarket plans to expand from its home state of California to the east coast in New York and New Jersey by October. Recently, the company acquired So Cal Farm Network, another company that sources organic and healthy foods from farms to business.

• Between 60% and 70% of the West Coast company's business is in B2B sourcing, with a client list that includes WeWork and Whole Foods Market. The company provides apps that lets business customers manage their sourcing logistics with farmers. It also developed a game that let's shoppers earn points towards future orders.

Dive Insight:

Competition is heating up among e-commerce startups such as Thrive Market, Good Eggs and others seeking to challenge Amazon, but GrubMarket's business model is what sets it apart. It's diversified, sourcing to both businesses as well as consumers. It also has unique selling points, including its direct-from-the-farm sourcing, logistical support tools and acquisition-focused growth model.  

As it continues to expand, founder and CEO Mike Xu told TechCrunch it will focus more on consumer grocery delivery to supplement its wholesale business. This is an expected move, especially as e-grocery is expected to become a $100 billion business in as little as four years. Currently, the company has a grocery education app called Farmbox, which when played, wins coins to spend on GrubMarket. 

​A major concern among e-commerce startups is competition and brand awareness. These companies are going up against retailers — and in this case, wholesalers too — that are established names. Kroger, Walmart and other large players are ramping up their e-commerce innovations, making it harder for smaller companies to compete on pricing and convenience. But shoppers have continuously shown in recent years that they're willing to try new brands, both in where they shop and what they buy. 

Amazon is a key competitor, but Xu told TechCrunch he isn’t worried about standing out from the e-commerce giant. GrubMarket's farm-focused business offers something Amazon doesn't, he pointed out. Also, the global food and agriculture industry is valued at $9 trillion with a mere 1% of the grocery buying done online — leaving plenty of room for other companies to grow.

Many e-commerce startups have failed over the years, and GrubMarket is no doubt aware of this. What may ultimately ensure its success is its business-to-business distribution arm, which sources to some of the same retailers its consumer business competes with. Indeed, sales growth at retailers like Whole Foods and non-traditional companies like Blue Apron and HelloFresh seems like more of a sure bet than a startup grocery operation.