Software eats food: FarmersWeb raises $1 million brings wholesale food sales online

By Erin Griffith , written on May 31, 2013

From The News Desk

A year ago I lamented the shortcomings of B2B ecommerce. What ever happened to the $7.3 trillion in business-to-business spending that we expected to come online? Why is so much business still done via paper invoices, fax machines, and obnoxious email chains?

Since then I've encountered a handful of companies aiming to solve this problem. Joor, Lookboard, Handshake, Insite Software, MerchantFuse and NuORDER all attempt to solve this problem in various ways. This week I met another one that's bringing software to an industry that previously did business via cash, handshakes and faxes: wholesale food.

FarmersWeb is a New York-based company with an online platform to connect buyers and sellers of wholesale food. So farmers list their inventory, which can be updated in realtime. Buyers such as restaurants, office cafeterias and schools use the platform to purchase their ingredients.

The company has raised close to $1 million from private angel investors to bring wholesale food sales online. Co-founder David Ross was previously a venture capitalist at Bay Grove Capital. His co-founders worked at a distribution company focused on local food; they were shocked when they realized such a platform didn't exist.

There is no special sauce to FarmersWeb's platform; it is simply an online marketplace similar to many other digital marketplaces. The difference is that no other company has really offered this service before and put in the work to build up both sides of the marketplace, Ross says. Most platforms for farmers are consumer-facing and so the sales happen on a much smaller scale, or they're focused around helping people form CSA's or only provide a database of local farms in a certain area. "The local food movement is still relatively new," Ross says.

"We're solving some of the general inefficiencies you get from traditional B2B commerce," he says. It's not only convenient from a timing perspective -- chefs can place an order at any time rather than calling during business hours. Likewise, buyers have an online record of what they've purchased, as opposed to just sending someone to a farmer's market with cash. Same goes for the sell side -- farms can pull detailed transaction records to help them plan for what will be popular next season; they can also ensure their inventory lists are always up-to-date with an easy to manage back end system. FarmersWeb handles the payments and leaves the logistics to the farms, who use their own delivery trucks, rent them, or sometimes ship via Fedex where it makes sense.

Currently FarmersWeb is only available in New York, with around 100 active buyers on the site including Hearst, The Met, Proskauer Rose, NoMad Hotel, Eataly and The Four Seasons using the platform. A variety of private high schools are also on board. By taking a transaction fee, the company's revenues are growing at 20 percent each month, tripling sales over the past six months.

Soon the site will roll out a national platform that allows any farmer to list their goods, for which they will pay a subscription fee.