“We’re big believers in the direct-to-consumer model [DTC],” cofounder and CEO Gautam Gupta told FoodNavigator-USA.” We think it’s really powered by consumers becoming more conscious about their purchase decisions and trying to understand better what’s in the food they’re buying and what their family is consuming. We see consumers going online and in stores trying to understand products and nutritional information and new brands. The power of DTC is it enables a one-to-one interaction and connection with the consumer. We can really educate and help the customer find the right products for their diet without having to sift through 50 choices on the shelf.”
Gupta and longtime friend Ken Chen came up with the concept in late 2011 and launched the company in January 2012, before any other DTC snack food services were available in the US, he said. Having struggled with obesity as a child, Gupta wanted to make it as easy as possible for consumers to make healthy snacking choices.
“In our own personal lives, what we’ve noticed is we eat what’s around us or what’s convenient,” he said. “We want people to get more out of opportunity to snack. We think we play an important role in consumer education and helping them make better choices.”
Giving access to better options
It’s a good time to be in the snack business, as a recent report from the Hartman Group found that half of all US eating occasions are snacks or mini meals. And perhaps owing to the Millennial penchant for online ordering, DTC snacks are on the rise in the US. 2014 has already seen the debut of Nibblr, a subscription snack service from General Mills, along with the stateside rollout of five-year-old UK-based Graze.com, which eclipsed 150,000 US users in just three months.
Gupta wouldn’t disclose the number of NatureBox subscribers or sales figures, though he said the firm saw 20 times growth year over year in 2013. “We shipped 50,000 boxes in 2012, 1 million last year and are on track to ship 3 million this year,” he added.
NatureBox ships to all 50 states, though nearly half of its customers are based in the Midwest. Gupta attributes this in part to the fact that many of them are two or more hours away from the closest natural health food store.
“Part of the model we see as driving our future success is our ability to serve customers in areas that are not currently being served by health food stores. We can give them access to better options where theirs might be limited.”
Blurring the line between choice and discovery
Consumers sign up to receive monthly deliveries of five full-size, resealable snacks from a catalogue of 120 items all sold under the NatureBox brand. The company chose not to carry branded products, Gupta said, because “we are investing time and effort to show the consumer that we believe in what we’re sending.”
Once they register, users can either select the snacks they want or opt for the “discovery” experience, where NatureBox chooses for them. The service is priced at about 75 cents a serving.
“The pantry [build your own box] experience is really differentiated,” Gupta said. “It allows customers to choose exactly what they want. In that way, we’ve kind of blurred the line between choice and discovery. It’s also great for customers with dietary restrictions or allergies. [Search filters include gluten-conscious, nut-free, lactose free, no sugar added, soy-free, non-GMO and vegan]. The power of choice is important and valuable to them.”
The firm is constantly examining emerging food trends, as it rolls out four to five new products each month. Still, the selection process is often based on the types of products or flavors Gupta and Chen would want to snack on, from Sriracha-roasted cashews to whole wheat raspberry fig bars to the “right” kind of dried pineapple.
“We were inspired by what we like. When we were starting out, we wanted to do dried pineapple because (Chen) loves it. It was hard to find a dried pineapple product that doesn’t have sugar or sulfur dioxide. So we partnered with a plantation to produce the product we really wanted for ourselves. We approach every product this way,” he said.
Data invaluable to improving customer service
Equally as important to getting the products right, though, is the data gleaned from customers once they’ve started using the service.
“As soon as we’re getting the product into the hands of the customer, we are looking at the data, trying to understand what’s working or whether we need to go back to the drawing board,” Gupta said. “The data tells us so much about our own products—what customers like and don’t like, what they want more of. It’s invaluable to improving our customer service.”
Plus, given the inherently fast turnaround of DTC, NatureBox is more nimble than most product manufacturers when it comes to testing new products. Because consumers are invited to rate products, NatureBox is able to amass data quickly to determine how well the product is doing.
“The DTC model allows us to test a great number of products very quickly,” Gupta said. “From idea to getting the product into consumers’ hands, tests only take two or three months, which is really a fraction of the CPG industry.”
The company just secured $18 million in series B fundraising, which is helping fund the building of its East Coast facility, set to open later this year. (The California-based company currently operates out of a single facility in San Carlos.) It’s also growing its staff, having just added executives from Netflix and Dean & Deluca to the team.
“We’re just getting started,” Gupta said. “We really think there’s an opportunity to serve customer needs in a much better and more personal way. Everyone is snacking, and most of them want to find ways to snack better. From those just starting to think about better quality foods and natural options, all the way to customers that might be health nuts looking for new better-for-you options, we have something for them.”