Healthy snacks subscription e-retailer NatureBox hopes that putting its products in 900 of Target Corp.’s bricks-and-mortar stores will help drive more shoppers to buy its products online.
The Target venture is the first foray into physical retail for Naturebox, No. 358 in the Internet Retailer 2016 Top 500 Guide. Up until now shoppers could subscribe online to receive a set number of snacks either weekly, biweekly, or monthly. Target Corp. (No. 22), has 1,793 retail locations nationwide. NatureBox CEO Gautam Gupta says NatureBox selected the products for Target stores based on customer preferences. Among the eight snack items that NatureBox’s data shows should sell well in Target stores are Mini Belgian Waffles, Cinnamon Yogurt Mini Grahams and Asiago & Cheddar Cheese Crisps.
NatureBox plans to dive further into its online sales data to customize products for Target shoppers, Gupta says.
Feedback from its shoppers has always been integral in helping NatureBox determine which products to continue selling and which ones it discontinues, Gupta says. He says NatureBox has discontinued more than 120 products due to product ratings and reviews. The retailer also modified one product specifically because of customer feedback.
“We were able to launch Sriracha Cashew Crunch based on member feedback about their texture and spice level feedback for our existing Sriracha Cashew SKU,” he says.
When NatureBox closed a $30 million Series C funding round in May, Gupta said offline expansion was coming and the financing “will help grow our leadership in the rapidly growing online snack space and allow us to bring our brand to even more consumers through new retail channels.”
Store sales always were a goal, he says. “Today only 2% of consumers buy food online. The remaining 98% buy food in traditional grocery stores. In order to build a really big brand, we need to be wherever people are buying food,” Gupta says.
Selling in Target doesn’t mean NatureBox is going away from the subscription model.
“Direct-to-consumer continues to remain our core business. However, the move into Target stores marks an exciting expansion for us and the beginning of what we view as a long-term growth strategy,” he says.
Product packaging won’t specifically encourage shoppers to buy online, though Gupta says that’s something that never came up during talks with Target.
“We’ve done a redesign of our packaging to make it shelf-ready so that it tells the story we tell on our website,” Gupta says.
While there won’t be explicit instructions for shoppers to visit NatureBox’s website and buy its products online, Gupta says the key is to get the brand in front of Target shoppers first before trying to reach them online. He says he doesn’t view the offline expansion as potentially cannibalizing its online sales.
“Long-term, the more consumers see us at Target and other retail locations and are able to try us in-store, that benefits the online business in a great way,” Gupta says. “We see our presence in physical retail as a tremendous value add for our current (customers) in terms of access and convenience while being a huge opportunity to drive trial among consumers who have never tried our brand. We’re hopeful that growing our offline business will help grow the overall business.”
Gupta adds the company is not planning to make any changes to the way it makes its products. It will make future product decisions based on what is selling well at Target.
Top500Guide.com data shows NatureBox had Internet Retailer-estimated web sales of $57.5 million in 2015, up 29.8% from $44.3 million in 2014. The retailer has grown at a compound annual rate of 79.18% since launching in 2012.