In 2009, three software engineers, a CFO and an HR exec came up with a savory idea: They would create a platform that lets shoppers make purchases from multiple artisan food producers and have everything delivered in a single order, along with certain big-brand staples.
“To be successful, we knew we had to work with artisans in each city and build an online farmers market filled with local products,” explains Lior Lavy, co-founder and COO of Dallas-based Artizone.
Today the company works with hundreds of purveyors who sell everything from pancake mix to sea salt in three markets. We talked to Lavy about how he’s helping small food businesses expand their reach.
How did Artizone get started?
Our initial conversations were focused on creating an online supermarket. The more we talked about it, the more we fell in love with the idea of helping artisans who wanted an e-commerce site but didn’t have the knowledge or the budget to make it happen. At the same time, we knew that shoppers wanted to connect with these artisan producers without having to go to several stores all over town.
We traveled to Dallas—we picked it because of the demographics and the value of the specialty-food market—to talk to artisans about our idea, and their feedback was positive. We launched Artizone in 2010.
How do you create a seamless shopping experience?
Customers can purchase items from multiple artisans in one virtual shopping basket. All the artisans who work with us have access to the back end of the software to retrieve information about their orders. The makers pick and pack the orders; our driver picks them up and brings them to a centralized warehouse where they are organized and sent out for delivery—often in the same day. If products have a long enough shelf life, we’ll store them in our warehouse, and our staff will do the picking and packing.
There are some glitches: For example, there’s a baker in Chicago who needs all baguette orders to be in by 5 a.m. for same-day delivery; if a customer orders baguettes at noon, we can’t deliver until the next day. We give customers the option of having their order delivered when products are available ($3 per delivery) or when the entire order is ready ($5.95), which can mean waiting until the next day.
Each city requires a different logistics model. When we launch in Los Angeles, we’ll need more than one warehouse because the city is too big for one central location; in Manhattan, because of traffic, we’ll need to have multiple trucks on delivery routes.
How do you keep costs in check?
In traditional online grocery shopping, 50 percent of fees go to picking and packing in the store. For us, the artisans do that work, so we don’t have to carry the cost.
Artisans pay a percentage of each transaction; the fees start at 25 percent and go up to 35 percent for products stored at our warehouses. We charge customers a delivery fee (waived on orders of more than $120). We’re also experimenting with a model like Amazon Prime: Customers can pay $99 for free delivery and a 5 percent discount on all orders for six months.
What’s next for Artizone?
We’re focused on growth. We’re working with 200 artisans in Dallas and Chicago. We launched in Denver in May, and we’re continuing to grow those markets. We’re looking for $20 million in funding—our first outside investment—to expand into seven new markets, including Manhattan, Boston and Houston.