While this may sound counter-intuitive, CEO Gautam Gupta explains that only 2% of consumers currently buy food online, which means to reach the remaining 98% and drive initial trial of the NatureBox’s snacks, and eventual trial of online food shopping, the firm needs to be in brick and mortar stores.
“Most consumers become aware of [new] brands at the shelf” where they can more easily see and compare multiple products, Gupta said. “Being a part of that shelf experience lowers the barrier to trial” and builds consumer awareness, which are the two major challenges for online food sales.
The company is not abandoning its online roots with this expansion, though, Gupta said. Rather, he hopes that consumers who try NatureBox products on the shelf will love the product enough to find the company online and try home delivery.
“We think there are a lot of opportunities to drive consumers between the online and offline, and not just in one direction,” he said.
Striking a mutually beneficial deal
In exchange for a place on the shelf, NatureBox will use its extensive consumer data to help brick and mortar retailers create a better, more personalized shopping experience for consumers, which is one of the major strengths of online retailing, Gupta said.
“Being a direct to consumer based business, we collect a lot of data on what consumers are ordering and how they rate those products,” which allows NatureBox to know “down to the zip code level what products are selling better than others,” Gupta said.
In addition, the product level feedback is in real time, which distinguishes it from the aggregate sales data individual stores collect, but which often is delayed by a month or quarter, he said.
The granularity of the data and speed to access it will help stores more nimbly stock products that are selling well and quickly remove or minimize the shelf space of those that are not, he said. He noted this is one way that NatureBox uses the data when developing and launching new products, which it does three to five times a month.
“We have a million individual product ratings and have developed more than 200 products using this real time feedback, to discontinue products that did not hit the mark in consumers’ eyes and to reformulate products in a ways that make them better,” he said.
Sharing this data not only would help retailers, but it would also help NatureBox.
“If we can help retailer-partners maximize their sales in the snack category, and we are a part of that category, we think we will see growth in our business, too,” Gupta said, acknowledging that competing snack products also likely would benefit.
He emphasized, however, that NatureBox’s presence is a key component of the arrangement, saying, “We are thinking of [the information exchange] as a way to be partners as opposed to getting into the data business and competing with existing services there.”
A leader for change
To help NatureBox transition into physical retailers, the San Carlos, Calif., firm appointed Andy Malloy as VP of retail sales in April.
With more than two decades of CPG sales experience, including at Frito-Lay, Malloy will leverage NatureBox’s online experience to build a physical presence while also making the subscription service stronger, Gupta said.
“Andy is someone we really believe can be successful in threading the needle and taking this brand from online only to much more,” he added.
Companies interested in learning more about whether retailing online, in brick and mortar stores or a hybrid of both is the best way to maximize sales can find out at Food Vision USA in Chicago Oct. 27-29 when we talk with HUMAN Health Markets, NatureBox, 7-11 and Door-to-Door Organics to find out what food shopping will look like in 2020. Find out more HERE.