CHARLOTTESVILLE, Va. — Relay Foods here, an online grocery delivery service specializing in local, artisanal and organic foods, said it is expanding into the Washington, Baltimore and Philadelphia markets through the acquisition of another online grocery purveyor.
Relay, which was launched in 2009, said it has acquired Arganica Farm Club in Virginia and raised $1.2 million to expedite the integration of the companies. Terms of the acquisition were not disclosed. Arganica was focused on home delivery in those Mid-Atlantic markets of local and organic produce, grass-fed meats, and other product from local farmers and producers.
“I think Relay’s biggest attribute is that it’s part of the whole local-foods wave,” said Andrew Wolf, a Richmond, Va.-based analyst with BB&T Capital Markets.
In the Relay model, which is currently available in Charlottesville and Richmond, customers can shop online until midnight for free next-day pickup at one of several locations around the areas it serves, or get home delivery for a fee. It charges $10 per order for home delivery, or $25 per month for unlimited delivery service.
On its website, Relay said it makes money by charging a fee to vendors for providing online ordering and delivery to customers.
Relay Foods earlier this year said it raised $3 million from private-equity firm Battery Ventures and other investors. The new investment came from existing investors, Relay said.
Relay’s key challenges in the acquisition are around increased operational complexity, Brian O’Malley, general partner at Battery Ventures, told SN.
“Relay and Arganica today have different delivery and fulfillment models, so they will need to come together in a way that can scale. The good thing is that Relay excels in this and has great software/systems to help manage the process.”
Synergies include “overlap in the two company’s value proposition to customers that can leverage one common infrastructure to drive better customer service, product breadth and ultimately margin for the business,” he said.
“Our intention is to leverage our superior technology, precise operations model, and the concept of Relay offering virtually infinite shelf space, to pursue rapid growth in major metropolitan areas,” said Zach Buckner, founder and CEO, Relay Foods.
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