Organic food delivery startup Good Eggs, which collected a $21 million funding round last September, has laid off 15 percent of its roughly 215 employees, TechCrunch reported.
The layoffs last week came shortly after the San Francisco company hired former Netflix and Clinkle executive Andy Rendich to run operations at Good Eggs. It’s the restructuring of those operations that resulted in the layoffs, the company confirmed.
The layoffs will be spread across teams in the four locations where Good Eggs operates — the San Francisco Bay Area, Los Angeles, Brooklyn and New Orleans — and the company will continue to hire and grow, a company statement said, adding that “sales continue their strong weekly growth.”
Good Eggs works something like delivery startup Instacart, but instead of delivering standard supermarket groceries, Good Eggs offers only locally sourced organic and sustainable produce, meats and other items. Customers online can shop nearby farms and vendors, then Good Eggs handles packaging those orders and delivering them to customers. The company, which was founded in July 2011, offers either free or low-cost delivery depending on day and time.
But grocery delivery services have turned out to be highly challenging, both for startups and more established companies. Even Amazon’s AmazonFresh has taken years to ramp up to a relatively small number of cities, and still charges customers a $299 annual fee for the convenience of using its service. It turns out that deep pockets and patience alone aren’t enough to assure profitability in grocery delivery.
And while startup competitor Instacart has been growing aggressively and collecting more investment (it just raised $210 million and reached a $2 billion valuation), that has required some adjustments to its business model. Past analysis of Instacart’s pricing indicated it was marking up some items as much as 20 percent in order to make ends meet. But the company has shifted its model over the past year to let its partner grocers set prices, with Instacart now charging a fee for delivery services.