Ukrainian serial entrepreneur Yegor Anchishkin, who sold his startup Viewdle to Google-owned Motorola in 2012, is gearing up to enter the American produce delivery market. Last year he raised $2.5 million to fund Zakaz.ua, an online service that delivers produce from five grocery stores in Ukraine.
To boost
his new venture CartFresh in the U.S., Anchishkin and his
team entered the TechStars startup accelerator in Boston for
its summer program.
Participants
of the program receive $118,000 in seed funding in exchange for 7 to 10 percent
of the company. During the three-month long program, startup companies receive
all the support they may need, including mentoring, business connections and
work space, in order to advance as fast as possible.
“An accelerator
is like a sparring partner,” Anchishkin told the Kyiv Post. “The team is
extremely important but you stay inside your own world, it’s hard for you to
identify your bottlenecks, the problems you need to solve. In the accelerator,
you meet very clever people who help you with that on a daily basis.”
Upon
completion, startups are meant to be well positioned to attract more funding
from top American investors, who usually set a high value on TechStars alumni.
“We will
start fundraising in September but that’s not the main result. For us, the main
result is the acceleration itself, which makes us better positioned to do
business,” Anchishkin said.
Business
plan
Similar to
Zakaz.ua, Anchishkin’s new project, CartFresh, offers local supermarket chains
a turn key delivery solution, which includes everything from an ordering system
to logistics.
It uses the
same platform that Zakaz.ua has. All intellectual property in software, hardware
and processes is owned by GV Machines, also belonging to
Anchishkin. It includes front-end and back-end interfaces for the customer, the
store and for employees who fulfill orders. It uses complicated software that enables
enormous searchable databases to be created of goods with photos in a very
short time.
GV Machines
can also licence its platform to retailers so that they can organize delivery
by themselves. Currently the company is engaged in negotiations with a “major
Indian retailer” that is interested in adopting the system, according to
Anchishkin.
Tough
competition
On the
American market, CartFresh has a number of competitors, with Google Express, AmazonFresh, Instacart and Peapod
being the most formidable ones.
“You may
call us high-tech refugees,” Anchishkin said. “Google is fighting Amazon and
Walmart, and we jump in this with less than $1 million on our bank account and
a valuation of between $10 million and $20 million.”
Despite the
competition, Anchishkin said he is expecting nothing else but “a smashing
victory.”
“The moment
U.S. retailers understand our offer and our approach, they will start jumping
into our bed,” he said.
The
advantage with CartFresh is that it “won’t dilute the store’s brand,”
Anchishkin said.
“It’s a
white label solution. Unlike Instacart, we won’t make you pay for the data on
your clients and their purchases. They are your clients in the first place.
What we’re doing is brand extension,” he said. “We only have our brand on
couriers and delivery vehicles. But customers always know from which store
they’re buying goods.”
Money
and market
The business
model is identical to that of Zakaz.ua: first, stores pay a small fee from each
transaction; second, the company takes home all the profit from the delivery
service.
”In
Ukraine, the stores’ fee turns out to be higher than the profits from delivery
but not by far,” Anchishkin said. “If any of these two income sources breaks,
the business won’t survive.”
Although Anchishkin
is currently the CEO of CartFresh, in the future he expects someone from his team
to take his place. The same happened earlier this year at Zakaz.ua, where
Anchishkin was succeeded by Anna Matsyuk, who worked at the company since 2010.
“Now we
need to grow our team in the U.S., build up some muscles,” Anchishkin said.
“Instacart always has about 20 job openings in each city they’re operating, and
we have to compete with it.”
Currently
CartFresh is talking to a few medium-sized supermarkets in Boston, while its
future expansion plans include New York City, Philadelphia, Chicago, and
Washington, D.C.
The size of
America’s grocery market is $600 billion, but only less than 1 percent of
produce gets sold online. In Anchishkin’s opinion, this is about to change very
soon.
“Some
people don’t understand that online sales don’t need to account for 51 percent
of all sales to win the market,” he said. “They only need to represent 5 to 6
percent of the total turnover.”
When that 5
percent threshold is crossed, retailers will have to close the least profitable
brick-and-mortar stores, Anchishkin continues. This will be an obvious signal
for both grocers and customers that the shopping paradigm is inevitably
shifting towards online sales. And by that time, Anchishkin wants CartFresh to
be in good shape to take advantage of the new market.
Freelance writer
Andrii Degeler can be reached at [email protected].The Kyiv Post’s IT coverage is sponsored by AVentures Capital, Ciklum, FISON and SoftServe.
