While it sometimes feels like we do all of our shopping on the internet, government data shows that actually less than 10% of all retail transactions happen online. In a world where we get our groceries delivered in just two hours through Instacart or Amazon Fresh, the humble corner store–or bodega, as they are known in New York and Los Angeles–still performs a valuable function. No matter how organized you are, you’re bound to run out of milk or diapers in the middle of the night and need to make a quick visit to your neighborhood retailer.
Paul McDonald, who spent 13 years as a product manager at Google, wants to make this corner store a thing of the past. Today, he is launching a new concept called Bodega with his cofounder Ashwath Rajan, another Google veteran. Bodega sets up five-foot-wide pantry boxes filled with non-perishable items you might pick up at a convenience store. An app will allow you to unlock the box and cameras powered with computer vision will register what you’ve picked up, automatically charging your credit card. The entire process happens without a person actually manning the “store.”
Bodega’s logo is a cat, a nod to the popular bodega cat meme on social media–although if the duo gets their way, real felines won’t have brick-and-mortar shops to saunter around and take naps in much longer. “The vision here is much bigger than the box itself,” McDonald says. “Eventually, centralized shopping locations won’t be necessary, because there will be 100,000 Bodegas spread out, with one always 100 feet away from you.”
About a year ago, McDonald and Rajan secured funding from notable investors to launch the concept, including Josh Kopelman at First Round Capital, Kirsten Green at Forerunner Ventures, and Hunter Walk at Homebrew. They also secured angel investment from senior executives at Facebook, Twitter, Dropbox, and Google.
For the past 10 months, the pair has been testing out the concept at 30 locations in the Bay Area ranging from apartment lobbies to dorms to offices to gyms. The idea is to preempt what people might need, then use machine learning to constantly reassess the 100 most-needed items in that community. In a sorority house, for instance, young women might regularly purchase pretzels, makeup remover, and tampons. Meanwhile, in an apartment block, residents might regularly buy toilet paper, pasta, and sugar. When an item is bought, Bodega gets a note to replace it, and regularly sends people out to restock the boxes.
“Each community tends to have relatively homogenous tastes, given that they live or work in the same place,” McDonald explains. “By studying their buying behavior, we’re hoping to eventually figure out how the needs of people in one apartment building differ from those in another. We could customize the items in one dorm versus the next.”
Today, McDonald unveils 50 new Bodega locations on the West Coast, and plans to quickly go national. By the end of 2018, he hopes to have more than a thousand.
In most cases, Bodega doesn’t pay for the retail space, but pitches itself as an amenity or a convenience to property managers. At gyms for instance, McDonald makes the case that having a Bodega stocked with power bars and protein powder might make the facility more attractive to members. In dorms, a Bodega might be a more comprehensive alternative to a vending machine or a college-owned “honesty box” store. In apartments, a Bodega saves residents a trip to their local bodega. Within the current business model, Bodega does not have many fixed costs–besides installing the simple box itself–and makes money from the sale of each item.
The major downside to this concept–should it take off–is that it would put a lot of mom-and-pop stores out of business. In fact, replacing that beloved institution seems explicit in the very name of McDonald’s venture, a Spanish term synonymous with the tiny stores that dot urban landscapes and are commonly run by people originally from Latin America or Asia. Some might bristle at the idea of a Silicon Valley executive appropriating the term “bodega” for a project that could well put lots of immigrants out of work. (One of my coworkers even referred to it as “Bro-dega” to illustrate the disconnect.)
I asked McDonald point-blank about whether he’s worried that the name Bodega might come off as culturally insensitive. Not really. “I’m not particularly concerned about it,” he says. “We did surveys in the Latin American community to understand if they felt the name was a misappropriation of that term or had negative connotations, and 97% said ‘no’. It’s a simple name and I think it works.”
But some members of the Hispanic community don’t feel the same way. Take Frank Garcia, the chairman of the New York State Coalition of Hispanic Chamber of Commerce, who represents thousands of bodega owners. Garcia’s grandfather was the head of the Latin Grocery Association in the 1960s and was part of the original community of immigrants who helped settle on the term “bodega” for the corner store. “To me, it is offensive for people who are not Hispanic to use the name ‘bodega,’ to make a quick buck,'”Garcia says. “It’s disrespecting all the mom-and-pop bodega owners that started these businesses in the ’60s and ’70s.”
In fact, Garcia would consider making it harder for McDonald to set up the pantry boxes within his community. “I would ask my members not to allow these machines in any of their properties in New York State,” Garcia says. “And we would ask our Hispanic community not to use the service because they are not really bodegas. Real bodegas are all about human relationships within a community, having someone you know greet you and make the sandwich you like.”
According to Garcia, many bodega owners are suffering because of escalating rents and competition from delivery services like Fresh Direct. A service like this could further adversely affect them. “Bodegas can’t compete with this technology, because it is so much more expensive to have a brick-and-mortar store than a small machine,” Garcia says. “To compete with bodegas and also use the ‘bodega’ name is unbelievably disrespectful.”
McDonald believes that Bodegas could eventually serve as marketing opportunities for the companies making consumer packaged goods. Bodega has very accurate demographic details about the people who live in a particular community and would use the service, giving brands a chance to put particular products in front of their target consumer. If a deodorant brand is going after young women, they might value making their product available at a dorm.
In his initial observations of consumer behavior, he’s noticed that people seem to enjoy learning about new products. “One woman in a dorm stopped by the Bodega every day for a packet of microwave popcorn,” he says. “On day three, she picked up nail polish remover, and on day four, she picked up a cookie. This happened because she was coming into contact with these products every day.”
Over time, McDonald hopes to be able to create partnerships with other retailers to bring mini-versions of their stores to where they are needed. Home Depot might set up little Bodegas at construction sites with the 100 most-requested items there, Staples might set one up inside an office, or GNC might have mini-stores in gyms. “Brick-and-mortar retailers have been scrambling to try and keep up with Amazon, but we believe they have an opportunity to take a different approach,” McDonald says. “They could bring the products to where people already are so that they can access them immediately, when they need them. This beats out any two-hour delivery–or even half-hour delivery–alternative.”