With the pandemic shutting down restaurants and bars, cooking at home has become more frequent. And for the grocery industry, business has been booming. Not only did grocery stores see a massive increase in sales but the way that people shopped also changed. A lot of shoppers migrated to online retailers leaving brick and mortar retailers scrambling. At the same time, consumers also became conscious of what they eat. But as demand for local produce increased, so did prices. Up to 80% of the food we buy comes from another country. Now, with the borders closing, the food industry has been forced to reconsider.
The spread of Covid-19, caused those highly globalized supply chains to slow. And that in turn drove up the cost. Food prices have continued to increase and experts predict that trend is unlikely to slow in 2021. With demand for local products now at an all time high we need affordable local alternatives, fast. Marcia Woods thinks she has the solution. Formerly a professor in marketing at the Georgian College, Marcia Woods,is the founder of FreshSpoke. FreshSpoke connects local producers to the distribution channels previously only accessible to huge food companies. Despite the demand for local produce, it’s been challenging trying to change a system that has become deeply ingrained. But Marcia is optimistic.
“We now have big initiatives and movements starting to source more locally, not just because it addresses serious fractures in the supply chain but it’s also an incredible stimulus to economic recovery, and to creating resilience and food security for our future as well.”
FreshSpoke is Marcia’s third tech startup. She says that there’s a difference between liking an idea and being an entrepreneur. It takes thick skin to stick it out. But you also need to listen to the market.
Never being much of a big city person, Marcia moved to Barrie for a couple of reasons. She wanted to be at the heart of the agricultural belt to really understand food production. Relocating also gave her access to the Simcoe business community and be part of DMZ Innisfil which provided her the resources she needed to run her tech startup. She’s got the best of both worlds where she can still make a quick trip to the city but still enjoy the work-life balance of living in a slower paced town with a beautiful community.
A Broken System
In the developed world it is usually cheaper to import than to use local. The reason being that the existing local supply chains are too long. Retailers, food service providers and local food suppliers, all wanted to do business with each other but the distribution system made the process expensive. This issue didn’t grow overnight. It started with the rise of the “supermarket” in the 1950’s. Consumers wanted foods that were out of season throughout the year and they wanted variety. And the rise of super-processed foods like frozen dinners wowed customers tired of cooking every night. Local producers could no longer compete.
“For a farmer to transport their produce they would have a truck that would go either half empty which was a loss and not worth it against the bigger supply chains.”
Rethinking the chain
It was cheaper to import than use local because existing supply chains were too long. The products changed hands multiple times before they got to the grocery stores which increased the cost of local produce. The local market is also governed by policies set in place to conserve and protect the environment and workers which raises the price of locally produced food. Imports from countries that don’t have those policies sell the same foods at cheaper rates, making business hard for local farmers. Not only were farmers competing with cheaper products but whatever they couldn’t deliver off season was in supply throughout the year from foreign markets.
The Power of Numbers
FreshSpoke provides a shared distribution system. It’s like Uber Pool for food produce. Instead of farmers individually incurring high costs by each sending out a truck that’s not full, they share transport. Goods from various farmers are grouped together to fill a truck or trucks and one invoice is issued per truck. This has cut down costs substantially and shortened the supply chain drastically.
Using Technology to Level the Playing Field for Local Producers
A system like FreshSpoke’s requires a lot of logistics. And the biggest cost lies in delivery. There are grocery accounts looking for products and there are suppliers with those products. At the same time, there are drivers with trucks that are partially empty or completely empty. FreshSpoke is the conduit between the buyer, supplier and the delivery resources. They publish routes of where products need to be picked from suppliers and bring all those products to one consolidation point. As soon as the buyers purchase a product, it goes on to a load board for a driver to choose from.
“And so the driver says, ‘Hey, wait a minute. Sobeys in London is ordering carrots. I’m going to London next week, and maybe I’m even going to Sobeys with another product. I could pick that product up along the way and I could take it there. And I could earn some extra cash for doing that.’”
Once drivers register with FreshSpoke, they have access to the system and it shows on their phone and web browser and from there they can pick orders. The system does almost everything except carry the produce and drive the truck. Once an order is received by a driver’s phone, the tech tracks the order from the consolidation point to the end buyer and grabs the proof of delivery, does the signature capture and completes the transaction. Unlike the preexisting supply chain, this one only has 3 people involved – the driver, supplier and retailer.
Why We Need to go Local Faster
One of the ways you can have a direct positive impact on the economic development and recovery is by buying local. Buying local means:
- There’s more variety available to the consumer. Big chains tend to provide what can grow fastest or is easier to cultivate in bulk.
- For every dollar spent on local foods and goods, 45 cents remains in the community unlike foreign products where only 1.8 cents goes towards the community.
- Workers are paid better wages
Recruiting High Caliber Talent in a Small Town
There was a time when it was difficult to build a team in Simcoe County. But that just isn’t the case anymore. Marcia isn’t the only one who migrated out of the city. The talent pool is now diverse with a lot of talented and skilled people who went North looking to improve their quality of life and avoid the hustle and bustle of the city like being stuck in traffic for five hours. The pandemic also changed the way people work, with more people opting to operate remotely.
“We’ve been really lucky. We are so fortunate we have an incredible team of A players and I can lay my head on the pillow every night and know that they’ve worked as hard as I have that day.”
A Support System for Entrepreneurs
Being an entrepreneur can be extremely lonely. Having the opportunity to get on a call and interact with other CEOs has made a huge difference. Marcia likes that the people she’s engaging with at DMZ Innisfil are entrepreneurs with experience; people who have sold their own companies and are not just discussing theories.
“So they can support you at every stage in the business and you need that, because it just helps to expedite things incredibly fast and that’s why they call them accelerators, right, is it gives you that ability to get things done faster.”
She cites the Georgian Angel Network as being top notch and values them for their sophistication, organization and experience. She partnered with them to lead FreshSpoke’s round in 2019 and within 30 days, they were oversubscribed.
Connect with the FreshSpoke Team