December 6, 2022

The food distribution industry is not as consolidated as many others.

There are 25,000 food distributors that operate warehouses and deliver food every day to restaurants, grocery stores and convenience stores, and more than half of the industry is powered by local wholesalers, Pepper Co-Founder and CEO Bowie Cheung told PYMNTS.

It’s also an industry that has not seen the same massive influx of technology as many others, he said. For the most part, food distributors don’t have a high-quality digital catalog or paper catalog. In fact, in the food distribution industry, 80% of payments are done by mailing paper checks, and 80% of orders are made by leaving voicemails.

“If you’re a buyer, like a chef working in a restaurant, you don’t necessarily have a ton of transparency into whether everything from that order is going to be fulfilled the next day,” Cheung said. “Maybe you place the order from a cellphone in a kitchen and the reception might have been choppy — you’re not totally sure if your message that was left was super clear or not.”

Giving Time Back in an Otherwise Hectic Job

Pepper serves this market with an eCommerce platform for food distributors that brings that process online so wholesale buyers can order the way consumers order on B2C eCommerce sites do — by putting items in a cart, submitting the cart and checking on what’s been included in the order.

“Bringing that process online is a win-win for all parties involved and something that the Pepper platform is helping with,” Cheung said. “I think we can help folks do it with a lot less effort and a lot more precision with some simple tools, and that’s taking stress and giving time back in what’s otherwise a really busy, hectic job.”

Investors think so too. On Nov. 30, Pepper announced that it had raised $16 million in Series A funding, bringing the total capital raised to $20 million.

Read more: eCommerce Platform Pepper Raises $16M in Series A Funding

With the new funding, the company is eager to invest in two areas. First, the funding will help it make the platform available to distributors across North America. Second, it will help Pepper’s product development, enabling it to add more features to the eCommerce platform.

“I think there’s a lot more that we’ll do even early next year around product recommendations and tools that really turn eCommerce for these companies into a real growth engine,” Cheung said. “So, not just a way to save time and make life a little bit more easy, but also a really serious revenue-driving tool for these businesses.”

Freeing up Sales Reps From Administrative Work

Pepper is a Software-as-a-Service (SaaS) business. It charges distributors a monthly fee based on the number of active buyers doing business with the company online. It does not charge upfront fees or consulting fees.

“The more you use it and the more value you’re getting out of the platform, then our fees kind of scale to match that, so we think it’s a win-win model for everybody,” Cheung said.

By freeing up food distributors’ sales reps from administrative work, he added, Pepper enables them to spend more time with customers.

“We’re driving real business value,” Cheung said. “On average, when our clients migrate their customers from leaving voicemails to doing business online, they tend to see at least a 15% lift in revenue from those same customers while at the same time reducing the order entry workload by over 75%.”



About: This report represents the inaugural edition of the TechREG™ Chronicle. The regulation of digital businesses is emerging as one of the signature issues of our times. Through this new publication, we seek to contribute to the debate and discussion over when, how, and when not to regulate digital businesses and the key technologies they use.