Tobias Schubert, Co-CEO of Farmy

Farmy delivers food and necessities from different manufacturers directly to consumers. In 2020, Farmy achieved strong growth of 170 percent compared to the previous year. We interviewed Tobias Schubert, co-CEO of Farmy, to learn more and take a look at the future together.

Tobias, looking back on the past year, what were the most exciting things you learned?

We felt we were well-prepared for all different situations, but some developments overwhelmed us. In addition to the many new customers that we gained, purchasing behaviour has also changed. People were placing far larger orders that consisted of very different things. For example, there was a period of huge growth in orders for dry products, which was challenging for us. Our staff had to take on different tasks than they were used to, and the warehouses were not suitable for all products. This required a lot of flexibility.

Sometimes, it was difficult to plan the right availability for all products. We mainly work with fresh products from a range of suppliers, and we wanted to keep our fresh food inventories small to avoid waste. This meant that we occasionally couldn't deliver all products.

For an online business, this is particularly bad. If a product is sold out in a brick and mortar store, then the customer might be frustrated, but they can choose something else or do without it. But if a customer orders something online and it just doesn't arrive, it's irritating.

This means that we couldn't always live up to our quality standards with regards to service, but we always tried to find a balance between processing as many orders as possible whilst maintaining the highest quality service possible.

Have you had many complaints from customers?

We have had complaints, but most of our customers have been able to understand our situation. We actually got a lot of good reactions.

So you were more limited by product availability than by your capacity to process orders?

Both played a role, but we were lucky enough to be able to gain new employees quickly, especially from industries that were completely closed down during the lockdown. However, they did need some training, and our storage capacities were also brought to the limit, so that we just couldn't process any more orders for longer periods of time. The waiting times for an available delivery window were long, too.

The huge average increase in the size of people's shopping carts was also a real challenge. There was a lot of mineral water and toilet paper being ordered, for example, which meant heavy and voluminous orders, and we weren't used to orders with these dimensions. We had to completely rethink our planning.

Do you think this changed purchasing behaviour is here to stay?

We have determined that many of these changes are not permanent, but we've also noticed that customers are getting used to ordering groceries online and we're sure that this will stay.

If you're in a supermarket, you can orient yourself straight away, but it's not like that for customers who are shopping online for the first time – they have to work it out. A lot of customers have just done this now because of COVID, and they're getting better at shopping online. This means that a weekly shop of more or less the same items can be done online quite efficiently. Customers can, for example, take last week's shopping cart, adjust a few items, and in just a few minutes, their shop is done.

At the same time, food shopping is also an experience, so we're sure that our suppliers are not competing with themselves when they sell their products on Farmy. Online shopping is no alternative to visiting farmers' markets... Even brick and mortar supermarkets are focusing more on experience. This can already be seen with retailers' new store concepts where the number of products is no longer the focus, but rather the experience.

Your company grew a substantial 170 percent last year. Other e-food providers also experienced strong growth during this time. For example, the supermarket Coop grew around 40 percent. How did you manage to grow so much more than the competition?

A few different ways... An important one is definitely our flexibility as a startup and our internal IT capacities. All of our processes are managed internally on IT systems that we developed in-house, which allowed us to react straight away and to make changes to processes within a few days. Growth and agility are in our DNA.

The small quantity of products in our warehouse also made a difference. Most of them come directly from the producers via our hubs in Altstetten in Zurich or Ecublens in Lausanne, arriving at the end consumer on the same day. This meant that we could process a far larger volume far more simply. For most major distributors, this is different. If their online business grows, they have to expand their infrastructure right away. And a lot of our producers had free capacities that came about, for example, from the closures of hospitality businesses. This meant we could purchase larger amounts.

Before Corona, e-food in Switzerland made up a small share of the market, around two percent. What share do you predict that it will have in the coming years?

Of course, it's difficult to say, but I think that we will gain a share of 10 percent in the next few years, and a share of 20 percent by 2030. Shopping for everyday products online is becoming far more efficient, and I'm sure that will prevail.

One of the biggest challenges in the e-food branch is logistics. Products require different temperatures, and many of them are fragile. This makes logistics expensive and a lot of work. What concepts do you think will prevail here?

Yes, logistics is certainly a challenge. Almost all our products are different.

It's important for us to be able to close the packaging cycle, which means using packaging that can be easily reused and washed. One-way packaging needs too many resources– this applies to paper bags, too– so logistics chains don't only need to go to customers, they also need to come back from customers.

We need to use the space in our vehicles efficiently, both on the way to our customers' houses and on the way back. Our customers don't have room to stack large crates somewhere, which means the packaging has to fold up, too. The first pilot projects were done in Lausanne together with Swiss Post. We had to cancel the pilot because of COVID, but we will definitely start again when it is safe to do so.

I read recently that you've started offering the software that you've developed to other companies. That's a whole new business area. Does that mean that Farmy will turn into more of a software and service company in the future, instead of an e-food one?

Well, we started developing our own software because we couldn't find a suitable solution for foodstuff on the market. Existing ones with the scope that we needed were too expensive and inflexible for a startup. We're sure that other businesses feel the same way, so meanwhile, we've developed an extensive, flexible system landscape. It was particularly evident during the lockdown– we saw the gap in the market for the e-food segment with a decentralised fulfilment structure. There is almost nothing available for players delivering from existing offline retail spaces, decentralised hub networks or production warehouses, so we're offering an IT solution that provides everything that a supermarket needs to digitise its offer.

At its core, Farmy will remain what it is today, and end consumers will recognise Farmy as an online supermarket. The new business will be called "Farmy eFood Solutions" and will be a B2B level business for the food industry.

We understand our software customers' needs so well because we're in the same boat. We know exactly what the effects of changing our software will be, which is an advantage that not many software manufacturers have.

Aren't you afraid of losing flexibility if you have to start taking the needs of third parties into account with your software?

No. We already have different conditions that we need to consider in the German-speaking region of Switzerland compared to the French-speaking region, so it's nothing new for us. On the contrary, we're sure that we will profit from this cooperation and develop further, together.

Thank you for the interesting information on Farmy and wishing you all the best!