It also could reduce CPG manufacturers’ influence over shoppers because it is not focused on specific brands, but rather on containing costs, reducing food waste and providing convenient, whole-food based meal solutions.
Handpick’s Smart Groceries, which launched July 30, partners with local grocery stores to select and deliver 10-15 whole, unopened ingredients that are selected to match and be fully used by three step-by-step, illustrated recipes that are included with the delivery and fall into five categories from which consumers can choose, including: gluten-free, seafood, vegetarian, Asian and meat lovers.
The service marries the convenience and time-savings of online grocery shopping with the meal solutions offered by meal kit delivery services, but leaves out the elements of each that can drive up costs and create waste, said Handpick’s co-founder and CEO Payman Nejati.
How Smart Groceries reduces costs
Smart Groceries, which starts at $30 for ingredients to make at least two servings of each of the three recipes, saves consumers 30-60% compared to most meal delivery services, which typically cost $60-$96 for the same number of meals, says Nejati.
He explains that Smart Groceries is able to deliver larger portions of food for less money than meal kits not because it keeps its margins tighter, but rather because it reduces overhead costs. For example, because it provides whole foods, such as an entire crown of broccoli that consumers prep and divide among the three recipes, the company does not need to hire employees and rent space for them to pre-measure and re-package ingredients. Nor does it need to buy small containers and sachets for the perfectly portioned ingredients that ultimately end up in the trash or recycle.
By lowering the price of the service, Nejati said more people can afford to use Smart Groceries than meal kit delivery services, which typically target young, urban, affluent professionals or couples who want a novel experience and can afford to pay $10-$15 for a meal they prepare themselves.
Smart Groceries, on the other hand, is aimed at families cooking on a budget but who also are strapped for time. To help keep costs down, he said, the service does not shop for brand-specific products.
This is a notable difference for CPG manufacturers from online grocery shopping, which allows consumers to select specific brands of foods to be delivered. Likewise, some meal kit delivery services, such as Blue Apron, will promote in videos and blog posts products in their boxes from specific manufacturers. With this in mind, while Smart Groceries’ approach may appeal to cost-conscious consumers, if the new service takes off, it could significantly hamper how manufacturers market to and ultimately reach shoppers.
Reducing food waste
Smart Groceries also wants to reduce food waste in part by “reverse-engineering” the meal-planning and shopping process so that the recipes are selected based on the ingredients, rather than the other way around, Nejati said.
He explains that many shoppers create grocery lists by first selecting recipes, which can lead to long lists and leftover ingredients that are not used before they expire. Instead, by selecting meals based on the same ingredients, Smart Groceries strives to help consumers use up all the perishable food within the three recipes.
Smart Groceries also lowers costs and reduces food waste compared to regular online grocery shopping by eliminating impulse shopping, which 90% of Americans do and which can increase the typical grocery bill 20-50%, Handpick says, citing an ongoing study by The Checkout. The company adds that impulse shopping also creates food waste because it leads to consumers buying more than they can consume before the ingredients spoil or expire.
Reducing food waste translates to significant savings for Americans, Handpick stresses. It estimates that the average American can save between $28-$43, or about 20 pounds of food, each month if it eliminated food waste.
Even if Americans cut food waste by just 15%, it would be enough to feed 25 million Americans, and significantly reduce methane gas production in landfills where most food waste ends up, Handpick adds.
Currently, Smart Groceries is only available in California, but Handpick has ambitious plans to scale it up nationwide, and already is in discussions with major retailers across the country about partnerships.
In addition, the startup is exploring making Smart Groceries available for pickup in stores, which would lower the service’s price even more for consumers, Nejati said.
Find out more how services like Handpick’s Smart Groceries and online grocery shopping are changing the way consumers buy food and interact with brands at FoodVision-USA Oct. 27-29 in Chicago. Register for event here.