Peppere-commerce platform for food distributors, continues to push into Sysco and US Foods territory by giving smaller independent distributors a technological advantage.
The company developed an ordering system specifically for independent food distributors that supports catalogs of more than 100,000 items and allows these companies to launch mobile applications and websites so they can accept online orders and payments.
Co-founder and CEO Bowie Cheung, who previously worked at Uber Eats, said the company now has 200 customers in a market of 25,000 food distributors. However, Cheung said Pepper wants to grow by facilitating the relationship between independent distribution and technology.
“These companies, generally speaking, have never been well served by large broad-line distributors like Sysco or US Foods,” Cheung told TechCrunch. “If you enjoy the diversity and vibrancy that non-chain restaurants bring to your community, then you already understand the importance of that independent distributor, and that is very much the customer we have always served and continue to serve today” .
Pepper is accomplishing this by developing dozens of new product features each year that leverage advanced technology, such as generative ai, to improve experience, efficiency and results. The company's proof points include customers seeing a 23% increase in sales, 93% buyer retention and the ability to save more than 10 hours of work per week per sales representative, Cheung said.
There are a few players in the e-commerce food distribution space with Pepper, including Choco, which developed a sustainable food system for restaurants and suppliers; Cut+Dry and Anchovi, which is Dot Foods' white label foodservice e-commerce platform.
What Cheung believes Pepper is different is that all of those competitors adopted a market-first strategy where you download an app. There is no “Pepper app,” but rather a dealer-oriented strategy is needed, he said. This means the distributor's brand identity is front and center instead of Pepper's.
Customers seem to like it. The 140+ clients represent double the number of clients it had when Pepper raised $16 million Series A in 2021.
The company has since grown into a full-fledged payment processor. This makes it easier for operators to pay distributors. He also “reimagined” what modern customer relationship management and co-pilot software should look like for a sales rep working in food distribution so they can be more productive. Additionally, the company created an advertising platform that allows distributors to run marketing campaigns with their suppliers to promote existing products.
Cheung was not specific about Pepper's revenue, but shared that it has grown more than 20 times. He also did not disclose the company's valuation, but said it was “a step up from our last round.”
Investors also like Pepper. On Monday, the company announced a $30 million Series B funding round led by new investor ICONIQ Growth and with participation from another new investor, Harmon Partners, and existing investors in Index Ventures, Greylock and Imaginary. This gives the company around $60 million in total funding.
“ICONIQ Growth is the perfect partner for us,” said Cheung. “His track record of supporting large, successful vertical software companies and industries that the consumer world wouldn't necessarily consider really resonated with us. Food distribution is one of those industries.”
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