Failed online grocery business Aussie Farmers Direct (AFD) lives on, but not as a franchise.
The brand and database has been bought by YourGrocer for an undisclosed sum.
The small Melbourne-based business said it has been working with the administrators since AFD collapsed more than two months ago.
The acquisition will see YourGrocer start to use the AFD brand throughout its website and on its fruit and veggie boxes as a “stamp of quality”.
It will also see YourGrocer expand into the Sydney market by leveraging AFD’s 100,000-strong customer database on top of the “few thousand” customers it already has in Melbourne.
“Our goal is to expand as quickly as we can without damaging the customer experience. The challenge for us is to figure out how to keep quality high as we scale,” YourGrocer co-founder Morgan Ranieri told Inside Retail.
Online grocer will not franchise
One thing that will not change is YourGrocer’s business model, which unlike AFD, is not a franchise.
Started in 2013 YourGrocer gives customers access to a variety of local butchers, fishmongers, greengrocers, markets and other independent grocery retailers online, with same-day delivery available for orders placed before 11am.
The business has grown rapidly in the Melbourne market, doubling or tripling in size each year, and has experienced some growing pains as a result.
In an email sent to customers today, Ranieri said “We are going to be very careful with how much growth we take on over the next few months. We know that in the past we’ve sometimes grown too much, too quickly and that’s not been great for existing members.”
To combat this, YourGrocer has built a wait list and will only be taking on new members when it knows it can handle them.
Ranieri believes this growth is testament to the high level of customer demand for a convenient alternatives to Coles and Woolworths and produce and groceries from Australian farmers and local brands.
AFD also promised to provide a convenient, local alternative to the big supermarkets, but ultimately, it was unable to compete with the duopoly.
According to submissions to the Senate franchising inquiry, AFD’s growth was hampered by poor quality produce and insufficient investment in infrastructure, including technology issues and shortages of chillers.
However, Ranieri said he does not anticipate any bottlenecks on the supply side.
“Finding suppliers for us is relatively straightforward. There are thousands of amazing independent grocers. The biggest thing we need as we scale is more drivers and refrigerated vans,” he said.
Ranieri is looking to hire some former AFD franchisees to grow YourGrocer’s delivery team. The Melbourne-based business currently employs around 25 people total.
“We don’t have work for all of them immediately. I wish we did,” he said.
After failing to find a buyer for AFD last month, administrators wound up the business, leaving creditors $69.2 million out of pocket, 260 employees without a job and 100 franchisees with worthless investments.
Heather McIlvaine is editor of Internet Retailing, a sibling publication to Inside Retail and Inside Franchise Business.