Organic grocery delivery e-retailer Door to Door Organics, No. 415 in the Internet Retailer 2017 Top 500, closed its doors on Friday, Nov. 17.
Amazon.com Inc.’s acquisition of Whole Foods Market, finalized in August, was not mentioned by Door to Door Organics in its statement, but the e-retailer did appear to allude to it. On its website, Door to Door Organics explained its closure this way: “In the end it’s hard to point to one thing that led us to this conclusion. Ultimately timing of recent events in our industry and the impact that had on our funding prospects were not in our favor with the ultimate result being no path forward.”
The company also apologized for the timing of its closure—just six days prior to Thanksgiving. “We know many of you had counted on next week’s deliveries for your Thanksgiving meal,” the statement says. “We sincerely apologize that we are unable to meet your family’s needs on this occasion.”
On Facebook, Door to Door Organics says customers who pre-ordered a Thanksgiving turkey will receive refunds.
“Unfortunately, no one from Door to Door Organics is available to discuss this further,” a spokeswoman said.
Founded in 1997 as a produce box delivery company operating in Bucks County, Pa., Door to Door Organics says it made nearly 3 million deliveries of organic produce and natural groceries during its existence. According to Top500Guide.com, Door to Door Organics’ online sales in 2016 totaled $53 million, up 23.3% from $43 million in 2015. Between 2012 and 2015, the web-only retailer raised $31.8 million in three funding rounds, according to Crunchbase.
Sucharita Mulpuru-Kodali, vice president and principal analyst, Forrester Research says she was shocked to hear about the demise of Door to Door Organics. “I thought they’d be one of the companies that would make it,” she says.
Mulpuru-Kodali says it is likely that Amazon’s acquisition of Whole Foods put a damper on Door to Door Organics’ ability to raise more capital.
“Investors tend to think ‘winners take all’ and I’m sure everyone thought they couldn’t survive given they would compete with Amazon/Whole Foods grocery now,” Mulpuru-Kodali says. “I think what this exposes is just how darn hard online grocery is in the U.S. Even Amazon with all its scale and data has struggled which means smaller, lesser players don’t stand a chance.”
Mulpuru-Kodali says Door to Door Organics should serve as a warning to all grocers that want to sell online. “Don’t foolishly invest in the digital channel. Be very careful, deliberate and conservative. It’s too easy to throw money to the wind in online grocery,” she says.
Bill Bishop, chief architect at Brick Meets Click, a consultancy for grocery retailers and the consumer packaged goods industry, says Door to Door Organics deserves credit for lasting 20 years and becoming a pioneer in the online grocery business. “A lot of players come and go a lot faster then that,” he says.
“I think it’s just that they ran out of runway,” Bishop says. He says the company had a capable team but was likely a victim of the Amazon and Whole Foods merger, which, in Bishop’s view, has caused some investors to overreact—and that probably made it impossible for Door to Door Organics to raise additional money.
In June, Door to Door hired Mike Demko as its CEO, replacing interim CEO Stefan Pepe, who had replaced Chad Arnold. Arnold left the position at the end of 2016 because “he wanted to take his entrepreneurial career in a new direction,” according to a company spokeswoman. Pepe continued with Door to Door Organics as chairman of the board.
Shortly after being hired, Demko said the Amazon-Whole Foods deal, as well as Amazon’s same-day and next-day grocery delivery service AmazonFresh, was accelerating changes in online grocery shopping.
“When you merge those two brands together, it really accelerates awareness from a consumer and investor perspective—how online grocery is a thing and is growing,” Demko says. “There’s this humble confidence that we know what we’re doing. It’s still anybody’s game because Amazon has yet to figure [online grocery] out.”
At the end of October, Door to Door Organics agreed to remove all references to “humanely raised meat” from its website and marketing materials after complaints from the animal rights group People for the Ethical Treatment of Animals.
In mid-2016, Door to Door Organics acquired Relay Foods for an undisclosed amount.Favorite