You look at some of these new eCommerce players that have been making some big waves in the Food Distribution Industry lately and you must wonder, what’s their game plan?

The entire addressable market for US food distributors is relatively small, very top-heavy and ever consolidating. Margins are extremely tight and customers tend to be price sensitive. Most in their right mind would pick any other industry for a software startup. Why would an investor put $10 Million, $20 Million+ into a startup eCommerce application that specifically targets food distributors, especially when there many established solutions out there already?

When founders of these new entrants come from places like Facebook, Google, AirBnB and ByteDance (parent company of Tik Tok), you have to wonder what the business plan is. Is it about providing an eCommerce tool to small-midsized distributors or something perhaps larger, much larger?

An eCommerce application knows who (Ship-To) buys what and at what price. That’s information lots of folks might be interested in from data aggregators/syndicators and manufacturers to perhaps even foreign governments or competitors. While the retail food channel has solid data from companies like IRI, Neilsen and SPINS the foodservice channel is a bit unknowing at the ship-to level.

WHAT IF, distributor eCommerce applications aggregated data and provided information back to those willing to pay? The buyers of this data would now have access to very detailed market-driven analysis. That’s something companies like Google might invest in. Afterall, they did just throw almost $10 Million at one of these such companies. How our food supply works is also very valuable to foreign entities, but perhaps that’s just a conspiracy theory.
NECS has been providing software solutions to the industry for over 30 years. We don’t sell your data or “share it with our partners.” Can the same be true for some of these new entrants? Might be worth taking a very close look at the privacy policy with regards to your data. You would be surprised.


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