eGrocery Startups Push Niche Innovations to Swipe Share From Walmart, Amazon

As consumers increasingly look to digital channels to meet their grocery needs, small, specialized players are getting creative in their efforts to gain share from category giants by promising very specific benefits and advantages.

But it’s not just customers that are taking note of the trend, as sustainability-focused eGrocer The Rounds, which promises reusable and refillable containers to minimize waste, announced in a blog post Wednesday (Oct. 5) that it had booked a $38 million Series A fundraise to further drive its expansion plans.

The grocer drops off items and picks up containers to be reused on a set day of the week and currently has operations in Philadelphia, Miami, Atlanta and Washington, D.C.

“[W]hat we’re building at The Rounds [is] a psychic home manager to keep your home stocked, by refilling and delivering all the essentials and neighborhood favorites — from toilet paper to local coffee — without the packaging waste from cardboard boxes and single-use plastic,” Co-Founder and CEO Alex Torrey wrote in the post. “It’s all powered by our hyper-efficient, two-way (read: closed-loop) last-mile logistics network.”

Certainly, The Rounds is not the only online grocer looking to appeal to consumers’ environmental concerns. Take, for instance, Misfits Market, which promises sustainable brands and perfectly good foods that may otherwise have gone to waste, and which last month announced the acquisition of fellow sustainability-focused eGrocer Imperfect Foods.

Read more: Misfits Market Buys Imperfect Foods to Boost Online Grocery Work

With this angle, these grocers have the opportunity to stand out from online grocery giants that are able to promise convenience and the most competitive prices, players such as Walmart and Amazon, and to capture consumers whose needs are not being met by these category leaders.

One might expect that the younger a consumer is, the more likely they are to purchase groceries online, such that a focus on sustainability could help attract a large Generation Z audience, but this is not necessarily the case. Rather, millennials are the most likely to purchase online groceries, followed closely by bridge millennials and Generation Xers, according to data from PYMNTS’ new study “Super Apps for the Super Connected,” created in collaboration with PayPal.

See more: Super Apps Promise Relief for Always-on Millennials

The report, which drew from a survey of more than 9,900 consumers across the United States, the United Kingdom, Australia and Germany, found that Gen Zers were actually the least likely — even less likely than baby boomers and seniors — to shop for groceries online.

Sustainability is not the only promise that smaller eGrocery players are making to capture share from category giants. Some are focusing on consumers’ dietary needs, offering options to filter by constraints such as “ketogenic” or “Low FODMAP” diets, which stands for fermentable oligosaccharides, disaccharides, monosaccharides and polyols — whatever that means.

Others, such as Weee, Yami and Quicklly, are offering foods specific to certain cultures and regions, providing a greater selection of these items than is offered by any of the leading eGrocers.

“The ethnic grocery and food market is currently $360+ billion, and within this market, Asian and Hispanic populations in the U.S. are the fastest-growing,” Weee Founder and CEO Larry Liu told PYMNTS in an interview earlier this year. “So that is where we have focused and will continue to explore additional opportunities.”

Read more: Weee Leverages Automation to Drive Affinity Amid Grocery Inflation

The share of consumers overall purchasing groceries online is significant. The July edition of PYMNTS’ ConnectedEconomy series, “The ConnectedEconomy Monthly Report: The Rise of the Smart Home,” which drew from a May survey of more than 2,600 U.S. consumers, found that 40% of consumers had purchased groceries online for delivery in the prior month, and 16% of consumers purchased groceries for delivery every week.