
This Week in CPG 02/10/25
News from W, Lotus Foods, Glonuts, My Better Batch, Tiny Sprouts Foods, Spritzal Cookie, Koia, Rotten, Daddy’s Homemade, Curious Elixirs and Daily Crunch Snacks.
By Christina Appleton
Welcome to the wild world of e-commerce, where the players are constantly shifting and VC dollars abound. While COVID-19 has certainly increased the prominence of the “big guys” — Amazon, Instacart, even supermarket’s own click ‘n’ ship –there are a wide variety of other great third-party e-commerce partners that better-for-you food and beverage brands can work with to reach new customers. These range from a typical retail model of buying inventory outright to drop-shipping and everywhere in between. Below you’ll see a breakdown on all of your options and what it takes to be successful in each.
These retailers are usually a big win for brands when they get in, for a few different reasons. First, there is a strong brand synergy between the retailer and the BFY brand. You get a bit of a halo effect from simply being on the virtual shelf at Thrive that you don’t get from being in many brick & mortar stores. Second – these guys place a PO, hold your inventory, and pay you for it. There are rarely any chargebacks and sales are sales. Lastly, when you spend your marketing dollars in these channels it is very easy to read the data and see if they were effective or not (and they usually are!) They’re basically a marketers dream. The downside to these channels is that they are usually pretty tough to break into, especially for new brands.
Thrive is not necessarily the biggest or the oldest in this category, but it is certainly the one that makes the most noise. Full disclosure – I also worked there so will have the most to say about this retailer. There are strict quality standards (both for ingredients and suppliers) that Thrive holds all its vendors to, and the catalog is very tight. Not Costco-levels small, but much smaller than what you will see in your average Whole Foods or Sprouts. And like Costco, Thrive charges its members an annual membership fee to give access to cheaper pricing than MSRP as well as all of the freebies (gift with purchase, exclusive products, sales, etc)
To be successful here, you need to have a few things going for you. Thrive has a very strong private label program, so make sure that your product is going to compete with one of theirs. Check out your category – are they already pretty saturated? If you see 5 brands already it’s going to be tough to get in. Make sure that your operations are on point – nothing is worse than going out of stock and in this limited assortment the buying team will get tired of you fast. Once you’re in, it’s very important that you participate in the marketing programs. The “Gift with Purchase” program is one of the most powerful, but there are a whole host of other placements like onsite banners and social giveaways that could really help your brand stand out.
No, this is not Apple’s foray into the cannabis space (although it totally sounds that way, right?) iHerb is an independent third-party e-commerce player that has a slightly different focus than the others. Rather than bet on the treasure hunt of finding the new best thing, iHerb only works with brands who are already well established in the US and takes their distribution network to grow the brand here and overseas. So small brands need not apply – you should probably have at least 3000 doors before you think about joining up with these guys.
Like Thrive Market, Lucky Vitamin has made a bet on its own private label and pushes it’s products quite frequently. As the name implies, they skew more heavily into the supplement space than some of the other players in this category but still have a wide variety of items that you would find in your local Whole Foods. Brands that have a unique product in the wellness space (one that doesn’t compete with their PL) would be successful on this platform.
The grandfather of them all, Vitacost started off as a supplement catalog and has grown into the e-commerce player that we see today. Purchased by Kroger back in 2014, they are one of the few that have a multi-billion dollar backer. The catalogue is most similar to Thrive’s, with a much lower percentage of products dedicated to private label. Their catalog, searchable by diet type, is also one of the biggest. So if you already have an in with Kroger, have a unique product that pops on a white background – this is the place for you.
Calling these guys small is hopefully just a factor of timing – most have launched in the last year and are rising to the occasion that COVID-19 has created in the e-comm food & beverage space. It’s always a good idea to test the waters with the new guys – you never know who will become the next Thrive Market and it always pays off to have been there since the beginning.
It even rhymes with Thrive! These guys are positioned as the “Thrive Market for brands” – and their philosophy is very brand-forward. They say that they will never have their own private label, and will be the best retail partner than they can be. Frankly, it’s extremely refreshing as a brand to have that mentality (as it seems no one does!) but as a businessperson not quite sure how they are going to grow. But they have a great team in place so have confidence they will figure it out! Brands that have flexibility, a unique value proposition, and a bit of patience are great partners for Hive.
Now this one is going to get very specific – Tiny Bodega bills itself as the online marketplace for healthy BIPOC-founded brands. They are very curated (could just be due to their newly launched status) but have a beautiful brand and an admirable mission. This is a great place for a newer, smaller, BIPOC-founded brand to test out the waters and learn best practices for working with a third-party e-comm partner.
This is a bit misleading, because Foxtrot uses a hybrid model. Those of you who live in the Chicagoland area (or read about retail news) are probably familiar with seeing their beautiful, bougie convenience stores popping up all over. So you can sell into Foxtrot using a traditional model (like going through a regional distributor like Pod Foods) and/or get into their click ‘n’ ship programs. This is a great opportunity for a unique, fast growing, young brand to reach the audiences that they want to and go beyond the traditional coastal better for you bias.
In case you aren’t familiar, drop-ship partners are stores that hold no inventory, but handle the front-end of selling. Some have plug-ins that tie directly into your backend (Shopify, etc) while others have EDIs or unique infrastructure that you have to navigate. You (the brand) are responsible for shipping out the products and managing inventory so it’s a much bigger lift than some of the previously mentioned retailers. The upside is that there is little risk on the retailer so your barriers to entry are much lower. Check out a couple making noise below:
Bitewell has two main value propositions – one is that they are dietitian-curated, and the second is that they are SMS-based. So for those consumers who are all about buying over text and tiny snippets of info, this is a great choice. For people like me who grew up with arduous T9 (do you remember how many times you had to hit each button?!) it’s a little tougher to wrap my head around. They do great flash sales, so if you need to move through some inventory and want to get it out to Gen Z/Millennials, this is a great platform for you.
Showfields is another hybrid model, but it’s more of a Pop Up Grocer meets Kitson meets Foxtrot. They charge a fee per month to be in their stores and on their platforms, but it’s a very curated group so could be a good fit for businesses that are looking to add a bit more caché to their brand. Products sell in their stores on a consignment basis, and showfields.com runs as a drop-ship that plugs into your Shopify store. When life is a bit more “normal” they also have great programming, sampling, and in-person opportunities to really connect your brand with their shoppers.
I lumped all of these together because with the exception of some strategy differences (Purple Carrot is vegan-only, HungryRoot focuses more on groceries first, recipes second), the opportunities for CPG brands are about the same. There are two ways to get involved – either as a recipe element (less likely) or as an item in their “stores”. The types of brands that are successful here are less specific and more staples — but not too much of a staple as these guys have their own “private label” versions of a lot of standard items. Think Partake cookies or RightRice, twists on your standard pantry items. Note that getting into one of these businesses doesn’t ensure that you will always be on their virtual shelves – they frequently cycle through their offerings to keep their selection fresh for their customers – but they do buy your inventory outright, so you have that going for you.
While this list is by no means exhaustive, it should give you a general idea of what is out there and some different avenues to pursue for your CPG business. My last piece of advice – once you’re in, make sure you’re not competing with your retailer for your keywords on Google Shopping 🙂
by Christina Appleton
While other people go to the grocery store, Christina literally grew up in one as a fourth-generation grocer. She’s worked at General Mills in brand management, merchandising at healthy e-tailer Thrive Market (squeezing in an MBA between the two), and used this experience to launch Appleton’s Market – a delicious and convenient frozen mini-meal company.
News from W, Lotus Foods, Glonuts, My Better Batch, Tiny Sprouts Foods, Spritzal Cookie, Koia, Rotten, Daddy’s Homemade, Curious Elixirs and Daily Crunch Snacks.
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