Local Ties Lead to Partnership Between Fetch Rewards and Kraft Heinz
By Jeff Buchanan, May 25th 2016
Wes Schroll, the founder and CEO of Fetch Rewards, says that in early 2015, his startup received a call from a man who worked at Oscar Mayer, the meat producer known for its hot dogs, bologna, and Wienermobile.
Schroll says the caller lived just outside of Madison, WI—where Fetch Rewards is based and also where Oscar Mayer operates a plant—and said he was interested in hearing more about Fetch, whose app for smartphones and tablets is aimed at saving shoppers money on groceries, and helping stores and food manufacturers build customer loyalty. His wife used the app to shop at a Piggly Wiggly supermarket in Waunakee, WI, and he thought there might be an opportunity for his employer and Fetch to work together, Schroll says.
“He said, ‘I’d be really interested in learning more about the program,’” Schroll says. “Do you guys want to come to our office?”
Schroll says that Fetch’s initial meeting with Oscar Mayer led to another with its parent company, Chicago-based Kraft Foods, now part of Kraft Heinz (NASDAQ:KHC). Following a series of “testing pilots,” he says, the two sides struck a deal.
On Tuesday, Fetch announced it had entered into a seven-year partnership with Kraft Heinz.
The agreement is “aimed at providing Fetch with capital and other resources,” Birk Cooper, Fetch’s head of marketing, says in an e-mail.
“There is no equity or debt component” to the deal, says Schroll, who was reached by phone. He characterizes the transaction as a “payment for services” and “learning partnership.”
Asked whether food items made by Kraft Heinz and its family of brands would receive preference over competing products in Fetch’s app, Schroll says only that under the terms of the deal, Kraft Heinz “[hasn’t] precluded us form working with any other manufacturers.”
Fetch’s app, which Cooper says has more than 60,000 users and is available at dozens of grocery stores, lets you check out as you shop, rather than all at once. You scan barcodes of items before placing them in your cart or basket. The app displays the total cost of your groceries, while also searching for any available coupons for those items and automatically applying the discounts.
Fetch provided a sample use case in a press release announcing its partnership with Kraft Heinz: “In one test, when shoppers scanned Heinz ketchup in the Fetch app, a deal for Heinz mustard was presented to the shopper.” Twenty percent of test subjects also bought the mustard, Fetch said.
Stores pay Fetch a small monthly subscription fee based on how many shoppers use the app. The startup also charges food producers to deliver coupons through its app, and some of these companies also pay Fetch to conduct surveys on their behalf. Schroll says his startup is now bringing in revenue, but declined to share sales figures from 2015 or projections for the current year.
Cooper says Fetch plans to scale up its retailer base with the new financing from Kraft Heinz.
Schroll, who came up with the idea for Fetch in 2012 and later dropped out of the University of Wisconsin-Madison to devote his full energies to the startup, says Fetch hopes to announce one or more partnerships similar to the one with Kraft Heinz in the coming months.
“There’s a number of other manufacturers that we are working with, more in pilot phases right now, but with the intention of moving into long-term partnerships and strategic learning arrangements,” he says.
Fetch now has 45 employees and the majority are based in Madison, Schroll says. The company has raised $8.5 million in outside financing, he says, including $4 million in a Series A funding round a year ago.