GrocerKey, a startup that has developed white-label software to help grocery stores create an online presence, said it has raised $2.5 million in a funding round led by Woodman’s Market, an early GrocerKey customer.
Other participants in the investment include Dunnhumby Ventures, the venture capital arm of Dunnhumby, a subsidiary of U.K. retail giant Tesco that provides data analytics and services to retailers and brands; and individual investors from the Midwest, GrocerKey said. Woodman’s had previously invested in the Madison, WI-based startup.
“GrocerKey has built an impressive track record of growing profitable operations on behalf of its retail clients by providing the tools and technology needed to succeed in grocery e-commerce,” Kyle Fugere, head of Dunnhumby Ventures, said in a news release.
Woodman’s is a chain of large, low-cost stores based in Janesville, WI. Since 2015, the chain has worked with GrocerKey to install its software in all 16 of Woodman’s stores. According to its website, 13 of those stores are in Wisconsin and the others are in northern Illinois. Woodman’s has fulfilled more than 100,000 grocery orders that shoppers placed online using GrocerKey’s tools, the startup said.
GrocerKey, which Jeremy Neren founded in 2014 and continues to lead as CEO, said it’s raised about $4.2 million in total from investors.
The startup’s software helps people get the items on their shopping lists without having to walk through the aisles of a store themselves. GrocerKey works with Woodman’s and other customers, including Piggly Wiggly Midwest and Kowalski’s Markets, to set up “staging areas” in stores, where orders are compiled and stored after employees pick the goods from shelves, Neren told Xconomy in an interview last year.
“After orders are picked, that’s where they’re warehoused until they’re either sent out for delivery or a customer comes to pick them up,” Neren said. Staging areas are outfitted with refrigerators and freezers to keep perishable foods chilled, he said.
GrocerKey typically charges supermarkets a setup fee after they agree to license and install the startup’s digital tools, a monthly fee for each store offering pickup or delivery, and a small percentage of each transaction conducted through the online store. Grocers can in theory pass on some of these costs by requiring shoppers to pay an extra fee for pickup and delivery orders.
Earlier this year, GrocerKey introduced a new software product that allows shoppers to pay for groceries at select stores using their smartphones, rather than having to go through the checkout line.