Online Ontario marketplace expands into local food home delivery

Bioenterprise support accelerates FreshSpoke expansion

By Lilian Schaer for Bioenterprise

An online Ontario wholesale marketplace for local food has expanded into home delivery and curbside pickup in response to an unprecedented shift in consumer shopping behaviour driven by the COVID-19 pandemic.

FreshSpoke opened its first regional distribution centre in Barrie last fall to bring fresh, local food to Ontario doorsteps along the Hwy 401-corridor, as well as making consumer orders available for curbside pickup.

To help make its home delivery and curbside pickup expansion a reality, the company closed a successful expansion round of private investment and grant funding last year. That included a grant from the SmartGrowth fund administered by Bioenterprise, Canada’s Food & Agri-Tech Engine, which helped FreshSpoke accelerate the pace and scope of its expansion project.

“The Bioenterprise funding let us hire more warehouse staff so we could expand our operating hours. It also let us put in bigger freezers and fridges and more racking in our warehouse, and it supported a radio campaign in our area to promote local food throughout the holiday season,” says founder and CEO Marcia Woods.  “We opened a warehouse, retooled software and launched home delivery in only six months partially because of this funding that let us offset costs and do things faster.”

As Canada’s Food & Agri-Tech Engine, Bioenterprise brings more than 15 years of industry experience and a national and international network of research institutions, academia, mentors and experts, funders and investors, government, and industry partners to help small and medium-sized businesses in the agri-food sector nationwide connect, innovate, and grow.

FreshSpoke originally got its start in 2016 when Woods realized there was a need to make local food more easily available to retailers, who preferred to order through a single source rather than many smaller suppliers.

The company handles ordering, payment, and delivery as a single transaction to address that need, and leverages excess backhaul capacity in the existing transportation system to coordinate its logistics. Its first order consolidation hub in the Greater Toronto Area was established in 2018 to service retail and food service customers.

“We can pull local food supplier products together into one order on a single truck. Suppliers love it and customers love it because we are one source to deal with for hundreds of SKUs of local food products,” says Woods, adding that the real key to future growth lies with regional distribution or consolidation centres, like its new facility in Barrie. “Our goal and model are for these centers to be located across Ontario and even further afield to service specific market clusters.”

FreshSpoke currently has over 100 suppliers on its home delivery roster and more than 40 brands on the wholesale side of its business, with the vision of expanding that to 200 for both distribution channels. According to Woods, finding new suppliers isn’t hard with Ontario’s abundance of locally produced primary and processed food products, and many suppliers approach the company through a referral from one of FreshSpoke’s retail buyers.

At the same time, Woods and her team watch consumer trends and will also approach suppliers to fill certain product demands, like plant-based and gluten-free products for example. Smaller suppliers who don’t yet have the scale to fill larger retail orders can start out in the home delivery stream and gradually scale up into FreshSpoke’s larger accounts, which wasn’t possible before.

“Now that we are both home and wholesale, we can work with a supplier to help them scale their business strategically and we’ll have critical sales data that shows we have traction in the market when we approach a larger retailer. It helps derisk products for both sides, “she says. “We can help local food producers expand their market share while also responding to consumer trends.”

Particularly active trends are vegan, vegetarian, keto, gluten-free and organic products, as well as ready-to-serve and take-home meals like curries and pastas, she notes. And since the pandemic, they’ve also added locally produced health and wellness products like hand sanitizer in response to consumer demands.

“If we want to bounce back (from COVID), the best way every person can impact that is by keeping their money closer to home, and we give local businesses the opportunity to do that,” she says. “Of every dollar spent on local food, 45 cents stay local compared to just under two cents for imported.”

Looking forward, FreshSpoke will be using its experiences with its new Barrie facility to scale its distribution model to other market clusters in Ontario in 2021, and hopefully further across Canada and potentially also into the United States in 2022 and beyond.

FreshSpoke’s next channel will be the broader public sector, as well as adding product aggregation to its services, which will let smaller suppliers come together to access public sector contracts that are currently only going to bigger companies.

“We want to be the Amazon of local food with local good,” she says. “We’re at the beginning of a massive revolution of the food supply and our mission is to build a business that is predicated on a far more resilient food system.”

Bioenterprise, Canada’s Food & Agri-Tech Engine, is currently accepting applications for the second round of its SmartGrowth Program from southern Ontario companies in the agriculture, agri-food, or agri-technology sectors to access funding and mentorship support services. For more information, visit https://bioenterprise.ca/programming/bioenterprise-smartgrowth-program/ or contact Alexandra Coccari at alexandra.coccari@bioenterprise.ca.