Dive Brief:

• Grocery delivery service Farmstead has opened its waitlist to customers in Charlotte, North Carolina, the company announced in a press release on Friday. 
• Waitlist signups will be restricted initially to 1,000 shoppers in the Charlotte market, and Farmstead expects to begin offering delivery slots to customers next month. 
• The online grocer, which was started in San Francisco, expects to open several dark stores to facilitate delivery service in the Carolinas, which will be its first expansion market and first time serving East Coast consumers.

Dive Insight:

Amid a slew of grocery delivery services in operation in the Bay Area, mid-market provider Farmstead stands out in that dark stores are central to its operations. By relying on dark stores, the company is able to minimize real estate costs and provide delivery to areas that have few grocery providers while cutting out high third-party delivery costs.

The company also says that its in-house grocery delivery software, Grocery OS, which it made available to other U.S. grocers last month, offers predictive analytics and management tools to maximize order processing efficiency. 

Farmstead’s no-fee, warehouse-centric model has likely been a critical differentiator in a crowded field, enabling its recent Bay Area expansion of same-day delivery to 32 additional ZIP codes out of a microhub dark store in Burlingame, California. Between July and September, the facility has doubled the grocer’s delivery capacity, though in its announcement of the move Farmstead estimated it would quadruple existing capacity, signaling more growth to come. 

Farmstead previously employed a waitlist system in the early weeks of the coronavirus outbreak to cope with an influx in demand, after receiving complaints of delayed grocery deliveries. According to the brand, since the start of 2020, Farmstead’s customer base has increased by double digits, month over month. The online grocer now seems to have caught up with demand, announcing earlier this month that it can now offer two-hour delivery to doorsteps across a 50-mile radius from its California hub. 

The Carolinas expansion will be Farmstead’s only presence on the East Coast, in a market which has been experiencing significant attention from grocers this year. Charlotte’s established grocery outlets, Food Lion and Harris Teeter, face new competition this year from Wegmans, Aldi, Lidl, Walmart, Publix, Amazon Fresh, and organic specialty chain Earth Fare. Whether Farmstead thrive amid the competition remains to be seen. 

Mark Thompson, founder of real estate tracking site GroceryAnchored.com, predicted in an interview with Grocery Dive in January that “there’s not enough migration to the Carolinas to support the growth of grocery stores going on.”