Afresh's AI Produce Ordering System Increases Sales and Reduces Shrink

In 2017, three Stanford grad students, Matt Schwartz, Nathan Fenner, and Volodymyr Kuleshov, founded Afresh Technologies, an AI-based ordering platform specifically designed for the retail produce industry.

The company was born out of two observations. First, fresh produce and other perimeter categories show strong consumer demand and give brick-and-mortar stores a competitive edge over online outlets. And second, most, if not all, of the ordering and inventory technology used in the retail food industry is designed for nonperishable items.

Afresh Technologies co-founders Volodymyr Kuleshov, Nathan Fenner, and Matt Schwartz

“What you had was a lot of technology companies that built software for things that come in boxes [with] barcodes in a lot of different industries, ranging from electronics to apparel to general merchandise, and it would even work decently well for packaged foods,” says Afresh’s CEO Matt Schwartz. “But when it came to all of the rich complexity of perishable foods, these pieces of software and technology would really break down.”

Because of the many variables involved in produce—seasonality, weather, quality grades, etc.—Schwartz realized that applying an ordering platform designed for nonperishables to fresh produce didn’t make much sense.

“I was surprised to see that people were trying to employ the same technology that is used for cheerios to … heads of broccoli,” he says. “What you end up seeing is that those technologies really don’t work that well. … And the result … is that these massive problems exist in the trillion dollar US grocery industry, and that drives a ton of the waste, on the order of billions and billions of dollars each year.”

“What you had was a lot of technology companies that built software for things that come in boxes. But when it came to all of the rich complexity of perishable foods, these pieces of software and technology would really break down.” -Matt Schwartz

“So … [my co-founders and I said to] ourselves, well, the future of food is fresh, but the technology is not built for it and causes all these inefficiencies. If we could build a fresh-food-first technology company, we might be able to massively reduce food waste, increase the profitability of fresh food, and, in doing so, make fresh nutritious food far more accessible to as many people as possible.”

So that’s exactly what the three then grad students did. They created Afresh, a produce-specific platform that leverages machine learning and artificial intelligence for accurate ordering and inventory management. 

Afresh Technologies platform demo

“A critical differentiator for us is that we don’t try to fully automate that decision of how much broccoli to order, which is what a lot of systems do for nonperishable goods,” says Schwartz. “The human users in the store … can use judgment when needed if any edge cases happen like broccoli becomes suddenly unavailable due to supply issues upstream or a snowstorm or something like that.” 

"If we could build a fresh-food-first technology company, we might be able to massively reduce food waste, increase the profitability of fresh food, and, in doing so, make fresh nutritious food far more accessible to as many people as possible.” -Matt Schwartz

Fresh Thyme Market was an early customer of Afresh and has experienced significant improvements from the platform—200 BPS of incremental sales growth, a 25-percent reduction in shrink, and an 80-percent reduction in stockout.

In addition to these improved overall metrics, Fresh Thyme’s Vice President of Produce Scott Schuette says he’s also observed that the Afresh platform has had specific benefits for his company’s organic produce program.

Scott Schuette, Vice President of Produce, Fresh Thyme Market

“The artificial intelligence of Afresh allows produce managers to order just the right amount of organic items,” says Schuette. “There is no doubt that the loss of organic items due to food waste or shrink is quite a bit more painful to the retailer’s bottom line [than the loss of conventional items]. … Taking the fear out of accurate organic ordering while rapidly growing organic sales is a win-win combination for any retailer. Having an ordering system built around artificial intelligence that drastically reduces food waste is priceless.”

In terms of specific organic items where he’s seen a large impact, Schuette says, “The Afresh system has allowed us to perfect ordering of critical categories like organic berries, organic grapes, organic packaged salads, and organic packaged mushrooms. (All four of [these] categories [have] the highest shrink potential and shortest shelf-life.)”

"Taking the fear out of accurate organic ordering while rapidly growing organic sales is a win-win combination for any retailer. Having an ordering system built around artificial intelligence that drastically reduces food waste is priceless.” -Scott Schuette

Fresh Thyme has also seen significant benefits from Afresh during the coronavirus crisis. In a stroke of good fortune, the company had just recently finished implementing the platform when COVID hit in March. 

Fresh Thyme Market organic produce section

“We were at the right place at the right time!” says Schuette. “We had spent all of December, all of January, and all of February rolling out [the] new [platform]. … It helped not only the store-level people order correctly for some of these major double-digit sales growth days that they had, but it also kept our supply chain sane. … It was a game changer for us. … That is probably one of the only things that has helped us really successfully navigate the COVID virus.”

Overall, Schuette says he’s very excited about the new technology. “This is the first time in my 36-year career that I’ve [encountered] a program that is built for the needs of organic and conventional produce. It’s not built for a can of green beans on the grocery shelf or a loaf of bread over in the bakery like many other programs are built for. This one is specifically built for the needs of produce.”