Indeed, Thrive Market, which has only been ‘live’ for around 14 months, has just raised $30m in a Series A funding round led by Greycroft Partners, and is now growing at a pretty meteoric pace, co-CEOs Gunnar Lovelace and Nick Green tell FoodNavigator-USA.
Says Lovelace: "A lot of people thought we were crazy to get into this business, and a lot of the top VCs rejected us initially because there was a lot of skepticism about our ability to pull this off.
“But we’ve attracted the absolute best talent in every area of the business and we have been able to redefine the paradigm about what is possible in this space.”
First round of investors doubled as marketing partners
He adds: “The first $10m we raised was not from institutional capital, but from what we call ‘strategic influencers’, bloggers, celebrities and thought leaders that could double as investors and marketing partners, that gave us access to a network of 100m people via social media and other channels. That has been a huge differentiator for us."
Thrive Market currently has 175,000 paid members, says Lovelace, but the total number of users is “much higher as this does not include the sponsored memberships through Thrive Gives [every time a new member joins, the company donates a free membership to a low-income family]. Our annual revenue run rate is approaching $100m and we will be well well beyond that in 2016.”
How it works
The proposition is fairly simple, says Lovelace, Thrive Market isn’t Amazon (“We’re not trying to be everything to everyone; so we’ll stock four nut butters, not 40”) or Costco (no bulk sizing): “We want to offer a curated experience, people want to outsource their trust to people that know more about these lifestyles [eg. vegan, paleo etc].”
What Thrive is, is a membership-only online store offering the best-selling non-perishable 4,000+ health and wellness products from the top 400 non-GMO, certified organic and natural brands on the market at 25-50% below traditional retail prices. It also sells Thrive Market branded products including coconut oil and pasta sauce.
Not surprisingly therefore, a lot of the repeat business Thrive is seeing comes from customers simply making the same order again, with a few tweaks, he says. “We sprinkle in new things to keep things interesting; about 5% of the catalog is new and innovative products such as bone broth.”
“A lot of people thought we were crazy to get into this business, and a lot of the top VCs rejected us initially because there was a lot of skepticism about our ability to pull this off.” Gunnar Lovelace, co-founder and co-CEO, Thrive Market
Each member pays an annual fee of $59.95 “which allows us to cover our costs”, adds Lovelace. “We then go directly to brands and buy premium products at wholesale prices so we can pass those savings directly onto our members.”
Shipping is free on orders over $49 and packaging is 100% recyclable and compostable. Everything is shipped within 24 hours from fulfilment centers in Los Angeles and Indiana serving 90% of the US population within two to four days.
The data shows we are capturing a new consumer
So who is using Thrive Market and why?
Not who you might expect, says Lovelace: “The data shows we are capturing a new consumer. Not the Whole Foods shopper.
“It’s middle-class, middle America. We're talking about household incomes significantly lower than that of the typical health consumer and largely female – about 85% - and the majority are head of household, a lot of families, a lot of Moms that have historically shopped at Kroger, Target and Old Navy and even Walmart.”
He adds: “We’ve pulled some of the psychographic data using facebook insights to really understand our customers – what brands does she like, what blogs does she read? She’s a savvy budget-conscious Mom looking for better foods and products for her family. The average member makes back her membership fee in savings within two purchases, and the engagement is really strong, which is very encouraging.
“We want to make healthy living affordable to anyone. Why is it that most Americans are not eating natural and organic products? The answer is price. We wanted to offer these products at or below the price of conventional equivalents. By charging a membership fee we can offer a KIND bar for the price of a Snickers bar.”
Thrive Market users can apply search filters including diet (eg. paleo), health & ingredients (eg. grass-fed, low glycemic), lifestyle (vegan, gluten-free), environmental and social factors (eg. BPA-free, made in the USA, family-owned business) and certifications (eg. organic).
We let brands tell their stories
But what’s in it for the vendors?
Strong volumes, access to customers they would not otherwise reach, data about who is buying their products that they can’t get from bricks and mortar retailers, and the opportunity to tell their stories and showcase their brands in a unique way to a motivated audience, says Lovelace.
“We are a top 10 sales channel for almost every one of our brands and a top five sales channel for the majority of our brands, and we keep things simple and buy directly from the brands and fulfill directly from our warehouses.
"We also have more than 3 million people on our email lists right now, so that gives our brands so many ooportunities to reach consumers in targeted promotions or other things. We're just scratching the surface when it comes to working out what we can do with all the data we have."