In its first foray into perishable fresh food, Thrive Market is now selling meat and seafood.
“This is a big bet for us,” says Nick Green, CEO and co-founder of the membership-based organic online grocer. But Green says early indications are that the wager will pay off. While he declined to discuss sales figures, Green says meat and seafood sales during a pre-launch beta period were “multiples” of what Thrive Market expected. He predicts annual revenue from the new category could reach eight digits—$10 million or more—within a year.
Green says meat and seafood represent about 14% of the overall grocery market, and Thrive Market’s sales in that category could match that, or do better. Thrive Market is No. 244 in the Internet Retailer 2017 Top 1000 and its sales for 2017 were “in the hundreds of millions,” Green says.
As of April 3, Thrive offers beef, poultry, pork and seafood, sold in packs of 6.25 pounds to just over eight pounds per order. The packs are shipped frozen via FedEx or UPS on dry ice using insulation made from recycled denim. Green says selling in large packs helps Thrive Market ship the orders as sustainably as possible and keep the per-serving prices to about $5 to $6 each. Green says it took more than a year to work out the details in a way that made sense both economically and environmentally.
“Thrive Market set out to create the most ethical and highest-quality meat and seafood program in the country offered at our affordable member pricing,” Green says. “We have created a path for consumers to move away from toxic, conventional, factory-farmed meats and back toward the small- and mid-size family farmers that can more realistically maintain the highest standards of raising practices.”
In order to sell meat and seafood economically and in a way consistent with its sustainable/organic ethos, Thrive Market buys directly with small- and medium-sized farmers and fishing operations around the world.
For example, Thrive’s beef comes from a co-op in southern Chile, because that is one of the few places where cattle can roam on the same grass all year. Thrive also pledges that its seafood is either wild-caught or sustainably farmed. Pork comes from a multi-species rotational grazing program, and chicken is purchased from a farmers’ collective.
For now, Green says, Thrive Market is shipping the meat and seafood via third-party fulfillment centers with cold-storage capability. Thrive Market’s five existing distribution centers don’t have cold storage, but the plan is to eventually bring fulfillment of meat and seafood orders in-house. Thrive Market has distribution centers in Ferndale, Wash., Richmond, Va., Reno, Nev., Batesville, Ind., and Hastings, Neb.
Green says Thrive Market’s target market for all of its products is “everyday Americans.” The average household income of Thrive Market members is $75,000 and about 45% of its customers live in the Midwest or the Southeast, he says. To help it reach that market, he says, Thrive Market launched more than 340 private-label Thrive Market Collection products in the past 18 months.
Since 2015, Thrive Market has received almost $162 million in funding from investors, according to Crunchbase data. Most recently, it received $111 million in a Series B round in July 2016 and another $10 million via a convertible note offering in October 2016. Each $60-per-year paid membership sponsors a free membership for a low-income family, the company says.
According to the Organic Trade Association (OTA), an association for organic agriculture and products in North America, sales of organic products in the United States totaled about $47 billion in 2016, including $3.9 billion of organic non-food organic items. OTA says organic food represented just 5.3% of all food sales in 2016 but were growing much faster than grocery sales as a whole.
OTA says sales of organic food grew 8.4%, or $3.3 billion, in 2016, compared with 0.6% growth in the overall food market. Sales of non-food organic products in 2016 increased by almost 9%, OTA says, compared with non-food sales growth of 0.8% that year.Favorite