When the final tally is in, there are going to be a few retail winners, but many more losers from the Covid-19 pandemic. One in the winner’s column will be Thrive Market, the online grocery company that sells healthy, good-for-you-and-the-planet food and home products through a subscription model.
Thrive Market promises the same natural and organic vibe as Whole Foods
And a new guided shopping experience added since the pandemic began allows shoppers to create a personal grocery store customized to their special dietary needs and value preferences.
Thrive Market is benefiting from four converging trends that shifted into overdrive by the pandemic: healthy eating, online grocery, subscriptions and personalized shopping.
It’s propelled an already rapidly-growing company, tracking at 40% year-over-year growth before the pandemic, to nearly double its business since, with sales up 90% year-over-year.
“We are about six-years old now, and we have always been a fast-growing business,” says Sasha Siddhartha, the company’s cofounder and chief technology officer. “Since we launched, keeping up the growth and scale has been a consistent focus for us. But then starting in late February/early March, that growth accelerated dramatically, and we continue to hold that accelerated pace. It turns out Thrive Market is a sticky concept.”
Here is what makes Thrive Market stick:
Beauty trends Curated healthy selections
With its membership rapidly approaching one million, Thrive Market solves many of the problems inherent in traditional grocery shopping and online as well. Because the typical grocery store carries between 30,000 to 50,000 products, grocery shoppers suffer from a confusing abundance of choice.
Thrive Market makes selection simple, offering about 5,000 carefully curated items that represent the best brands that are better for people and better for the planet.
Initially focused on non-perishable products in the center aisles of a grocery store, it now offers wine, meat, seafood and ready-made meals, along with a growing list of pet, beauty and home products. The only thing missing are dairy and fresh fruits and vegetables, which present logistical challenges the company is working to overcome.
“Our approach has always been curated, so you don’t have to worry about which brand is better for you or spend time studying the labels. Our merchandising team has already done the work for you to pre-select and curate based on the highest standards in the industry,” Siddahartha says. “Instead of finding 40 products to choose from, we offer the best two or three, taking the guess work out.”
Since Covid hit, people have prioritized health and wellness in grocery shopping. Thrive Market sits in that sweet spot. Even before the pandemic, natural and organic had been the fastest-growing sector in the grocery industry, he shares. It is a trend that is sure to continue as the immediate health threat abates.
Beauty trends Online grocery saves time
Online grocery shopping is a great convenience, saving time, which is the ultimate luxury. But consumer habits are hard to break and going to the grocery store has long been a staple of American’s lifestyle. That changed overnight due to the pandemic.
In 2019 Coresight Research reported that 37% of consumers had purchased groceries online in the past year and some 40% expected to do so in the next year. But after the pandemic hit, 52% had purchased online and 63% said they planned to purchase groceries online over the next 12 months.
“There has been a forced sampling effect over the past six months where people have tried to buy groceries online and realized that the experience is actually pretty good,” Siddhartha says. “For a brand like ours, that means we’ve been able to drive a lot of consideration.”
Even before the pandemic, online grocery overall was on the fast track, up 22% in 2019, but it is expected to nearly double this year to 40%, according to Coresight projections. Yet it still represented less than 3% of all food and beverage sales in 2019, but is projected to reach 3.5% by year end or nearly $38 billion.
“If we provide a high-quality experience and it works out well for customers, this paradigm shift will continue,” Siddhartha believes. “A huge number of these new online grocery shoppers will make permanent habit shifts toward buying some or all of their groceries online in the future.”
Beauty trends Subscription saves money and builds community
Just like Costco, Thrive Market is able to offer its premium natural and organic products, which typically are priced 40% to 5o% above comparable traditional brands, at traditional brand prices, thanks to its subscription model. And like Costco, it has a thriving private label business, which today makes up only 10% of its SKUs, but 30% of sales.
An annual membership is $60 per year, or $5 per month, but for those initially reluctant to commit a full year, monthly memberships are available for $10. Overall, 85% of members opt for the annual subscription and 70% of members renew.
It’s been easy to convert monthly members to annual memberships because saving money is guaranteed. If the customer hasn’t realized that $60 in savings, Thrive Market will credit the difference.
And built into its subscription model is a community dynamic. “Thrive Market members become part of a community of shared values,” Siddhartha says. “It means you believe in health and wellness, sustainability, conscious consumption. You become a Thrive Market member not just to save dollars but to benefit from being part of that community.”
In retail today, people pay a premium price for healthy and sustainable consumption. Thrive Market wants to make it accessible to all.
“We want to make this class of products affordable to every single household in the U.S.” Siddhartha declares. The company backs up that commitment by giving a free year’s membership to a disadvantaged family for every membership bought.
Beauty trends Guided shopping creates a virtual personalized grocery store
And with a new service introduced during the pandemic, Thrive Market members have the ability to create their own virtual grocery store arranged to their specific dietary needs and preferences.
“A core premise of grocery shopping is the customer is left to their own devices. You have to find the right aisle, read the labels to select the right product. And if you have special dietary needs, like vegan or gluten-free, it becomes even more problematic,” Siddhartha shares.
To facilitate that process, Thrive Market has introduced a guided shopping experience where shoppers answer a series of questions around their individual and family shopping needs. They can specify their dietary and ingredient preferences, along with social and environmental priorities, like BIPOC-owned businesses, ethically-sourced, fair-trade and recycled packaging.
With this data in-hand, Thrive Market will put products that meet those preferences first during the shopping process. “It takes the guesswork out of shopping,” Siddhartha continues. “We go alongside you through your journey in our ‘store’ as a helpful personal shopper. The goal is an experience personalized for everyone.”
I walked through this new on-boarding process and found the questions very straightforward and easy to complete. However, customers can bypass the questions if they want to get right to it. Importantly, the shopper is not restricted to shopping only within their stated preferences; it only puts items that meet those preferences ahead of other selections.
New visitors to Thrive Market have appreciated this personalized service, with conversions from sign up to order up 16% and speed to checkout improved by 25%, dropping from an average of 48 minutes spent shopping to 36 minutes.
“These are metrics we are really proud of,” Siddhartha declines. “They’re hard numbers to move and represent a real savings of time and energy. It’s entirely recommendation driven, by dietary needs and values, versus a customer going to a basic e-commerce website and having to figure it all out on their own.”
Beauty trends In the pipeline
With Thrivers (what the company calls its 600+ employees) firmly committed to take the “hassle” out of grocery shopping, the company continues to lean into personalizing the shopping experience.
Product and value preferences are encoded based upon the guided shopping questionnaire, as well as product purchase data, so that all emails, text messages and push notifications are tailored for the recipient’s specific needs and interests.
It is building up an adaptive reorder system so customers can get scheduled refills of their more frequently purchased products. Also in the pipeline is a shopping list feature so that customers, when reading a recipe on Thrive Market, can add all the needed ingredients into their shopping cart in one click.
“We are continually thinking about how we can save the customers clicks, how we can save them cognitive overload and just get them what they need at the right time,” Siddhartha concludes. “Our goal is to be the customer’s trusted partner, to save them time, save them money and take the guesswork out of their shopping journey.”
Note: The original posting stated Thrive Market carried 7,000 items; the correct number is about 5,000. Also the original stated 70% of monthly members convert to annual membership. However, that 70% referred to its annual membership renewal rate.
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