Peapod and Artizone

You can soon 'buy local' with Peapod, courtesy of Artizone deal

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By Brigid Sweeney   June 05, 2014

Skokie-based Peapod LLC, that elder statesman of the grocery delivery game, has partnered with Artizone, a website that delivers local meats, fish, pastries, cheeses and other artisanal products to Chicagoans.

Beginning later this month, some 100 Artizone products will be available on Peapod.com, with more items to follow later in the year. It's the latest move by Peapod to ramp up selection and improve technology in order to defend against emerging competition from the likes of Amazon.com Inc. and Wal-Mart Stores Inc. "Peapod was looking to expand its offerings to customers, and, in doing so, they needed access to small-batch producers and artisans," Artizone COO Lior Lavy said. "They approached us to discuss our technology, and in those conversations we saw a mutual fit."

Originally launched in 2010 by five Israeli owners, Artizone first partnered with Texas businesses to serve the Dallas market. The company expanded to Chicago two years later and now maintains a network of 75 local small businesses, including Gepperth's Meat Market, Bang Bang Pie Shop, CJK Foods and Dirk's Fish and Gourmet Market.

Peapod executives say Artizone's product line fills a major consumer demand for locally sourced produce, meats and baked goods. "Local is such a big trend with customers right now," said Tony Stallone, Peapod's vice president of merchandising. "We concentrate on the front-end, bringing the delivery logistics and the customer base, and (Artizone) has a great back-end that interacts well with the artisans."

Messrs. Lavy and Stallone say there's no discussion of a potential acquisition. Artizone's technology allows each vendor to control the number of orders they accept, so a small artisanal shop won't be overwhelmed by a deluge of Peapod customers. The company has grown by 500 percent over the last six months, according to Mr. Lavy, who moved from Israel to north suburban Highland Park last year as Artizone picked up steam. He said he and his four partners have poured in $15 million into developing the technology and relationships with vendors. Artizone delivers "hundreds" of deliveries per week, he said, and top-selling vendors earn six-figure annual revenue sums through Artizone sales.

Peapod was founded in 1989 and acquired by Dutch retail conglomerate Royal Ahold NV in 2001. The company, which doesn't disclose financial details, posted revenue of about $550 million last year, according to industry estimates.