Pepper Raises $50M to Modernize Food Distribution

Pepper Raises $50M to Modernize Food Distribution

Zainab Hussain is a seasoned e-commerce strategist who has spent years at the intersection of customer engagement and complex supply chain operations. Her expertise is particularly relevant today as the food distribution sector, a massive but traditionally low-tech industry, undergoes a rapid digital transformation. With a focus on how independent players can leverage technology to compete with national giants, she provides a unique perspective on the operational shifts required to modernize the way food moves from warehouse to table.

In this discussion, we explore the strategic deployment of new capital to eliminate manual friction in the supply chain and the challenges of moving a $1.4 trillion industry away from legacy communication methods like fax and phone. The conversation covers the technical nuances of integrating with dozens of disparate ERP systems, the importance of sales representative buy-in during software transitions, and the specific metrics that independent distributors must track to ensure their digital investments deliver a clear return.

With $50 million in new capital, how will you prioritize the development of AI-driven automation for ordering and financial workflows? Could you share specific metrics for measuring efficiency gains and a step-by-step breakdown of how these tools will reduce manual friction for distributors?

The primary focus for this $50 million investment is to deeply embed AI across the entire order-to-cash lifecycle, moving beyond simple digital forms to true cognitive automation. We are currently supporting over 500 distributors who manage a staggering $30 billion in annual gross merchandise volume, and at that scale, even small errors in manual data entry lead to massive financial leaks. To measure success, we look closely at the reduction in “order touches”—essentially how many times a human needs to intervene before a shipment is finalized—alongside improvements in order accuracy and payment velocity within our Finance Hub. Our roadmap begins with the “Order Agent” tool, which uses AI to transcribe unstructured data from emails or voice notes directly into the system, followed by automated reconciliation where the software matches payments to invoices without manual oversight. By removing these friction points, we allow distributors to handle higher volumes with their existing staff, shifting the workforce from data entry to high-value customer service.

Many independent distributors still rely on phone and fax systems despite managing over $1.4 trillion in annual sales. What are the primary hurdles to implementing self-service portals in this environment, and what specific anecdotes illustrate the impact of shifting toward real-time visibility for foodservice operators?

The biggest hurdle isn’t just the technology itself, but the deeply ingrained habits within an industry that accounts for two-thirds of the North American food distribution market. Many operators have spent decades building relationships over the phone, and there is a lingering fear that moving to a self-service portal might dehumanize the partnership or lead to mistakes. However, when we provide 100,000 active foodservice operators with real-time visibility into inventory and pricing, the “aha” moment usually happens late at night when a chef realizes they can swap a missing ingredient instantly rather than waiting for a call back the next morning. I’ve seen cases where a distributor previously spent hours every morning manually correcting faxed orders that contained discontinued items; by switching to our Storefront, those errors dropped to zero because the customer saw live stock levels. That shift from reactive firefighting to proactive ordering changes the entire energy of a warehouse, moving it from a place of constant chaos to a streamlined fulfillment engine.

Your technology acts as an overlay to over 70 legacy ERP systems rather than a total replacement. What technical trade-offs are involved in this strategy, and how do you ensure seamless data synchronization across the entire order-to-cash lifecycle without disrupting daily operations?

Choosing to be an overlay rather than a full replacement is a strategic decision to prioritize speed and stability for the distributor. Replacing a core ERP is often a multi-year, multi-million dollar “heart transplant” that many independent businesses simply cannot survive, so we chose to build deep integrations with over 70 existing platforms instead. The main trade-off is the complexity of maintaining these bridges; we have to ensure that our Sales Hub and Finance Hub are constantly talking to aging databases that weren’t originally designed for the cloud. We handle this through a robust synchronization layer that polls for updates in real-time, ensuring that when a sales rep makes a change in the field, it reflects in the back office within seconds. This approach allows a business to modernize its customer-facing commerce and internal sales execution without the risk of a total system migration shutting down their operations for a single day.

Following the acquisition of Kimelo and the growth of your Storefront and Sales Hub products, how do you manage the integration of vertical distribution software? What practical steps should distributors take to ensure their sales representatives successfully adopt these automated order processing tools?

The acquisition of Kimelo was a pivotal move to bring more specialized, vertical-specific functionality into our ecosystem, particularly for the unique demands of the foodservice industry. Integrating this software requires a delicate balance of merging backend data while keeping the user interface intuitive enough for a sales rep who is constantly on the move. For successful adoption, distributors must involve their sales teams early in the process, demonstrating how the Sales Hub actually gives them more time to sell rather than just acting as a digital leash. We recommend a “pilot and champion” approach where a small group of reps uses the automated tools first to prove they can close orders faster; once the rest of the team sees their colleagues leaving the office earlier and hitting higher targets, the resistance to the new technology usually evaporates. It’s about showing the physical relief of not having to manually key in dozens of orders at the end of a long day.

Independent distributors represent two-thirds of the North American market but often lag behind national competitors regarding digital infrastructure. How do you bridge this technological gap, and what metrics should an independent distributor track to prove the return on investment for modernized e-commerce tools?

Bridging the gap between independent distributors and national giants is about democratizing the kind of high-end tech that was previously only available to companies with massive R&D budgets. We provide these independents with a shared digital infrastructure that allows them to offer the same polished, data-driven experience as a national player while maintaining their local, relationship-based advantage. To prove the ROI, a distributor should track the “Digital Capture Rate”—the percentage of orders moving through automated channels—and the “Average Order Value,” which typically rises when AI-driven suggestions are present in the Storefront. Additionally, monitoring the reduction in customer churn is vital; in a $1.4 trillion market, keeping a customer is often more cost-effective than finding a new one, and modern tools provide the transparency that builds long-term loyalty. When a distributor sees their gross merchandise volume growing without a corresponding increase in administrative overhead, the value of the investment becomes undeniable.

What is your forecast for the digital transformation of the food distribution industry over the next five years?

I expect that within the next five years, the “manual” distributor will become an endangered species as the industry moves toward a “headless” commerce model where AI manages the bulk of routine transactions. We will see a shift where voice-to-order and predictive inventory management become standard features, not luxuries, allowing the 500+ distributors we work with to function more like agile tech companies than traditional wholesalers. As more of the $1.4 trillion in annual sales moves through integrated platforms, the data generated will allow for hyper-efficient routing and waste reduction, fundamentally changing the sustainability of the entire food supply chain. Ultimately, the distributors who thrive will be those who view technology not as an added expense, but as the essential backbone that enables them to provide a superior, frictionless experience to the next generation of digital-native chefs and operators.

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