Online supermarket co BringBring challenges the big chains

Supermarket Photo: Tamar Matsafi

The Israeli startup promises deliveries to shoppers from local supermarkets within only four hours.

An Israeli online food retail startup called BringBringis trying to prove that a venture providing online shopping can be profitable. The startup, in which food and beverage giant Coca-Cola Israel (Central Bottling Company) has invested, promises to facilitate supermarket deliveries to the consumer within only four hours, by sending them from nearby supermarkets.

The site was developed in order to provide a new and innovative service for purchasing products online while creating an easy shopping experience and providing high quality service. This is another venture that is trying to leverage the relative growth in the private retail market and compete with online supermarket websites for orders over NIS 200. In other words - the service is not available for purchases of a lower amount, in order to justify fast and free delivery.

Millions of shekels have been invested in the venture that is led by entrepreneurs Moshe Maximov, a retail entrepreneur and the founder of "Makolet Beshchuna,” Ofir Steinberg, a businessman who has served in several positions in logistics and retail fields, including as a CEO in the Diplomat Group, and Alon Zamir, former Coca-Cola Israel VP marketing.

BringBring CEO Ofir Steinberg said, "Instead of operating warehouses and storing stock, we created a decentralized network of dozens of supermarkets, while we handle the ordering and payment process. We connect the order to the nearest supermarket and process the order. We are not a delivery or logistics company. From the consumers perspective, the experience is that of an online supermarket."

When asked how deliveries are expected to be carried out logistically Steinberg said, "The mini-markets assemble the order using the store clerks and delivery personnel. The business owner receives the proceeds of the larger cart purchased, minus a percentage of commission.” Steinberg stresses that in addition to supermarket deliveries, the venture has a support network with field personnel and shell companies, and that consumers will receive uniform deliveries with the BringBring logo and packaging."

What are the benefits for neighborhood mini-markets? According to Steinberg, instead of ordering a shopping cart that consumers would usually buy at neighborhood supermarkets, with an average value of NIS 75 which is considered a supplementary purchase, "We are creating a new revenue stream for them with a shopping cart purchase just like those of the large discount stores of about NIS 500."

The venture promises competitive prices that will tempt consumers to prefer buying through BringBring, rather than through existing platforms such as Shufersal Ltd. (TASE:SAE), Rami Levy Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI) or Victory Supermarket Chain Ltd/ (TASE: VCTR). When asked how they will be able to compete with prices of the large discount chains, Steinberg replies: "We do not act as a purchasing body, but if we increase profitability and turnover, [the local supermarket’s] purchasing power increases by working with us. We intend to offer competitive prices that will match large purchase prices. We accomplish this by providing the retailer with a larger cart purchase than they would have seen without us. On the other hand, we manage to lower costs because the larger shopping carts enable them to work at lower profitability than usual."

Steinberg estimates that the online market for food products and consumption reaches an annual volume of more than NIS 2 billion. Today there are about 7,000 private supermarkets that do not belong to the large chains. However, not every private supermarket can participate in the venture: "We have standards to be met, a monthly turnover of more than half a million shekels, enough employees to accommodate a significant number of orders per day, and we can grow at rates that every significant player in the market can meet. There are over 1,000 businesses that are suitable to meet our standards. We can cover all of Israel with less than 100 supermarkets. We currently cover the Dan region." The venture’s entrepreneurs are aiming high: "Our goal is to be a significant player in a market, where Shufersal currently controls a sales rate of about NIS 1.5 billion a year, and we intend to be a strong number two."

How is this venture different from the venture recently launched by the food and toiletry retailer Unilever? “Shopo? Shopo has provided a digital platform and each supermarket is responsible for their visibility and variety. With us there is a commitment to a comprehensive and uniform assortment [of products]," says Steinberg.

BringBring was founded in 2017, and its headquarters is in the Azrieli Rishonim office tower in Rishon Lezion. Today, BringBring employs 25 people, half of them in technology and the rest in customer service and operations. The project is headed by seven entrepreneurs, who have been joined by private investors and the Wertheim family's Central Bottling Company.

Published by Globes [online], Israel business news - www.globes-online.com - on May 7, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Supermarket Photo: Tamar Matsafi
Supermarket Photo: Tamar Matsafi
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