Imagine not being able to finance an online food company in the current climate

Christmas deliveries for thousands of customers are at risk after Farmdrop, the upmarket grocery website, stopped trading.

The company has told its reported 10,000 customers on Thursday that it is closing permanently.

Deliveries have now stopped. Farmdrop’s closure risks disrupting festivities as many customers are likely to have ordered their Christmas dinners through the website.

The business has logged a notice of intention to appoint administrators at the High Court, typically a precursor to an insolvency process, after it failed to raise emergency cash.

Given current investing fancies you’ve really, really, got to have a dog on your hands to not gain finance:

Founded in 2012 by Ben Pugh, a former stockbroker at Morgan Stanley, Farmdrop had been backed by high-profile investors including Atomico, the London VC fund founded by Skype co-founder Niklas Zennström, and Zoopla founder Alex Chesterman.

Seriously, should be able to gain cash if you’ve got that roster.

It posted sales of £11.8m in its most recent set of accounts, up from £5.4 in 2019, and narrowed its lossed from £11m to £9m.

Ah, it was a right dog. The problem with having investors who know what they’re doing is that your investors know what they’re doing….

12 thoughts on “Imagine not being able to finance an online food company in the current climate”

  1. The photo accompanying the article in The Grocer amuses.

    Doesn’t appear to be anything beyond ordinary staples in the crate being delivered – so just how much can you charge for broccoli? – and there’s a quote/testimonial from an (possibly interchangeable) Emma. In SE1.

    Flogging stuff to peeps who regard Waitrose as disgustingly working class.

  2. It used to be Xmas hamper companies that were notorious for going out of business and leaving customers high and dry. You could spread the cost of Christmas by paying so much a week then get a big box of festive themed groceries at the end of the year. This seemed to me to be a fairly sound business plan but it seems not.

  3. Ducky McDuckface said:
    “… peeps who regard Waitrose as disgustingly working class”

    That’s good; I will probably steal it.

  4. These grocery delivery services really do seem to be a re-invention of the Victorian upper class’s grocery suppliers. One go /to/ the shop? The shop shall come to me, servant’s entrance, the cook shall take the delivery. Re-inventing the servant class.

  5. The problem with having investors who know what they’re doing is that your investors know what they’re you’re doing….

    See Theranos et. al. for further details…

  6. It’s just execution, isn’t it? Ocado does the same job far more efficiently.

    The name doesn’t help either – most people assumed they only did veg boxes, when in fact they did everything a supermarket does.

  7. We bought from them, most recently on their 30% off offer (which we interpreted as a sign of trouble). Some of their stuff was excellent – butter, cheeses, and salami spring to mind. And croissants. (Ask yourself, when did you last think “My God that butter is delicious”?)

    I can’t compare them with Ocado since we’ve never used them. Should we? We tend to shop at whatever we find ourselves close to: Morrisons, Sainsburys, Aldi, the Coop, Tesco, Waitrose. Even Lidl recently.

    They all have their strengths and weaknesses. During lockdown we found Waitrose’s click-and-collect good, especially since they sought us out to offer the service. So we now get some deliveries from them. (But we avoid their bakery – largely hopeless.)

    For lockdown deliveries our local butcher and greengrocer were excellent. Sainburys were No Bloody Good so we don’t use them for deliveries any more: in fact we generally use them much less than we used to. Punish the bastards, that’s what I say.

    Also during the lockdown a local Christian charity collected medicines from the chemist for us. I think I feel a Christmas donation to their cause coming on.

  8. Losses of 11m on sales of 5m hints at a problem. Losses of 9m on sales of 11.8m suggests there is a long way to go. Diseconomies of scale?

  9. This is interesting.

    I wish people would grasp that supermarkets are a very efficient delivery mechanism. Shops were a different matter. People in record shops or electrical shops spent most of the day just stood around waiting for customers. Supermarkets have very low staff to customer ratios. They’re mostly running a local warehouse where you turn up. If a £1 squash ends up as £3 on the shelf, that’s probably as cheap as it can go. It’s also why Argos and B&Q are still doing fine. Warehouses with tills.

    It’s like I’ve tasted Virgin wines and they’re not as good value as Sainsburys or Tesco wines, let alone Aldi.

    Where mail order works for food is the niche stuff. High end cheese, condiments, 25 year old Armagnac. Stuff that Tesco and Aldi don’t sell. And you sell to people who don’t mind that it’s £70 a bottle. But you have saved them crossing the country to buy it.

  10. Bloke in North Dorset

    I don’t know about the supply of squash farming and distribution, but I learned a bit about milk production and distribution when we first moved here 11 years ago. We had a lot of snow and the milk tankers couldn’t collect. A herdsman explained the the market, at least as it was then.

    His boss had refused to take a supermarket contract and stuck with local farmers’ cooperation. When their tanker couldn’t get through they threw the milk away and that was that.

    When their neighbour, who was contracted to one of the supermarkets, didn’t have his milk collected he still got paid the agreed price.

    Of course the supermarkets are hard task masters, especially on hygiene. Unannounced inspections and fairly harsh penalties if problems found. He reckoned they’d been given 24 hours to replace a cracked tile.

  11. Saw an article today complaining that the restrictions have led to so many cancellations that venues have a massive amount of food waste and isn’t this terrible, I’m sure suggest he problem is government interference in the first place would never occur to the author, you really can’t win with these people

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