Scott DeGraeve (Scotty’s Home
Market, Peapod, Door to Door
Organics) is the COO of Locai.
Read the full conversation at WinsightGroceryBusiness.com.
Jon Springer: Welcome to the Break
Room, Scott. Your career in grocery
e-commerce goes back nearly 25 years
to the Scotty’s Home Market business
acquired by Peapod in 2000. Looking
back, has the industry evolved in the
way you imagined it would?
Scott DeGraeve: When you start out, you
have some visions in your mind of where
the industry can go, and you are continually
working to convince yourself you are in front
of it and are headed in the right direction.
There was no real road map to follow, so
through trial and error it was continually
looking at how to lead the consumer, how to
influence the supply chain and figuring out
how the model needs to work financially.
Overall, I think the growth in online
grocery has gone much slower than I thought
that it would. Groceries are very personal
to consumers, and it has taken a long time
to build a level of trust to buy this category
online. The exponential improvements in
technology, in the past few years especially,
have been a huge enabler of this. Also, if you
don’t have a good service in all aspects, social
media takes care of ensuring everyone knows
that. It has driven e-grocers to really do
whatever it takes to satisfy the customer.
You’re commissioned to carve a
Mount Rushmore for influential figures
in grocery e-commerce. Whose faces
go on the rock?
1. Andrew Parkinson, for co-founding
Peapod with his brother Thomas and
paving the way.
2. Tim Steiner of Ocado, an early leader in
utilizing robotics in each-pick grocery.
3. Marc Lore, for his pure plays and the
leadership now at Walmart.
4. Apoorva Mehta, for Instacart’s
What should our readers know
about your new business, Locai?
Locai is a team of experienced e-grocery
veterans, bringing our expertise
alongside retail partners. In addition to
providing consulting support, we also
have what I consider a next-level end-
to-end e-commerce platform to enable
personalization of e-grocery. The platform
came from Door to Door Organics, which
has ceased operations, but the software was
one of the real strengths of the business.
It is built on a modern microservices
architecture, which allows us to offer this
as a white label to retailers in either full or
through a number of plug-in features that
can integrate through application program
interfaces to existing front ends.
Can grocery e-commerce be profitable?
What will it take?
The short answer is yes. From a broader
view, we need to be looking more
holistically at customer profitability. Your
customers should feel as though you are
agnostic if they want to come in-store,
pick it up or have it delivered. When you
as a retailer are able to do that, you will
maximize the dollars that come into your
banner. You will be profitable in total.
When we do look specifically at the
e-commerce channel, there are a number of
levers to work to achieve profitability. The
variable costs are very key, starting with
fulfillment, and this multiformat approach
is going to drive improvement. The
delivery costs are what most retailers fear,
understandably. However, my experience is
that when you do delivery and compare that
to just click-and-collect, the basket size is
significantly higher. This higher basket, and
associated margin, allows you to fund the
shortfall in your delivery fees against your
delivery cost. Most retailers who haven’t
done significant deliveries don’t realize this,
and you can also use a tiered delivery fee
structure to drive a higher basket. Basket
size is an essential metric, among others,
to achieving channel profitability.
Who does the food shopping for your
family, and where does it get done?
We do 80% online, and both my wife and
I have a look at the list before we send it
off. We still use Peapod, having worked
there for 15 years, but also try other
grocers through Instacart.
Cubs, White Sox or other?
Lifetime Cubs fan.
Best piece of business advice you’ve
gotten? “Don’t be afraid of the analysis.”