While more companies are diving into the online grocery shopping and delivery industry, Fetch Rewards is betting on a mobile app that aims to improve the in-store buying experience by helping shoppers find discounts, make lists, and more easily pay at the checkout lane.
Now, more investors are betting on the idea, too.
Madison, WI-based Fetch has raised $4 million in a Series A round from a Midwest investor that the company declines to disclose. That’s on top of the $4.5 million Fetch previously raised from Great Oaks Venture Capital, angel investors, and company officials, founder and CEO Wes Schroll tells Xconomy.
The money will fuel business growth. Fetch intends to add at least 10 people to its current staff of about 30 employees, Schroll says. Its app is available in 10 stores in four Midwestern states, and he wants to have more than 100 stores coast-to-coast signed up by the end of the year. “We’re changing over from development mode to expansion mode,” he says.
Here’s how Fetch’s app works: Shoppers open up the app on a smartphone or tablet when they’re in a store and use the device to scan barcodes of items as they put them in the shopping cart. The app keeps a running tally of how much they’re going to pay at checkout, while also searching for any available coupons for those items and automatically applying the discounts, Schroll says.
Grocery stores can offer coupons exclusively to Fetch users, and Fetch will push certain coupons to users that might find them relevant, based on previous purchases, Schroll says.
Fetch users rack up points in the app for every product they buy—“virtual dollars” that can be redeemed to buy goods, Schroll says.
Once the customer is ready to check out, he or she heads to the front of the store and goes through a special lane for Fetch users. The app will produce a single barcode on the device’s screen that has tallied up all of the items in the cart, then the cashier scans the barcode, and the customer pays for the items like normal. This process means a faster checkout, in part because it eliminates the need for the shopper to load the items on the conveyor belt—skipping directly to bagging, Schroll says.
The Boston native came up with the idea for Fetch in 2012, when he was a sophomore at the University of Wisconsin-Madison studying business. He decided to drop out of school after his sophomore year to focus on Fetch. “I wanted to devote all my time to this. I couldn’t do both at the level I wanted. I put school aside,” he says.
Fetch still has a lot to prove, but it has picked up some early traction—more than 30,000 people have downloaded the app, and users spent more than $5 million on groceries via the app in the past year, Schroll says.
Fetch is arriving at a time when the trend in grocery tech has been services that facilitate online ordering and delivery of groceries. Instacart, Peapod, and AmazonFresh are among the major players in that industry, and more recent entrants include a startup in Fetch’s backyard, GrocerKey.
So, assuming online grocery shopping becomes more popular, does that mean Fetch’s business has an expiration date?
Schroll isn’t worried. For one thing, the vast majority of U.S. consumers—around 95 percent, by Schroll’s research—still prefer grocery shopping in traditional brick-and-mortar stores. “It’s one of the things that’s fundamentally ingrained in people’s heads to do in person,” Schroll says. “There’s a lot of trust that needs to be built into the system for them to be comfortable trusting someone else to do their grocery shopping and then deliver their items to their house.”
Still, that 95 percent will probably shrink as online options grow in popularity. “We’re not naïve to that,” Schroll says, adding that Fetch could get into the online shopping industry one day.
But a potential future of all-online grocery shopping is still years away—if it comes at all. Right now, Schroll’s company is “razor-sharp focused” on the “opportunity to enhance that brick-and-mortar experience,” he says.
Fetch makes money by charging retailers a “small” monthly subscription fee based on how many shoppers use the app. It also charges product manufacturers money to run coupons via the Fetch app and to conduct consumer surveys. Schroll declined to share prices or revenue figures.
To encourage shoppers to use the app, retailers put up signs in their stores advertising Fetch, and Fetch has a referral program that rewards store employees who successfully convince customers to use the app, Schroll says.
Grocers also buy equipment from Fetch to run the app, including a device at the checkout lane that helps transfer the transaction information from the app into the retailer’s point of sale system. Each store also makes a few tablets available for customers to use if they don’t have their own device that could run the app, Schroll says. “That was a recommendation that came from one of our stores,” he says. Some stores have more than five tablets available, and they are “heavily used,” he adds.
