Amazon, But Healthier: How Thrive Market is Disrupting the Health Food Ecosystem
If Amazon’s the everything store, Thrive Market wants to be the “everything healthy store.”
Founded in 2014, the company describes itself as “Costco meets Whole Foods.” By charging an annual membership ($5/month or $60/year), the online marketplace is able to offer natural and organic food and products at a 25–50% discount per item.
“If we can drive a quality experience to our members, while at the same time selling organic groceries at the same price as conventional equivalents, we’ve got a winning proposition that will allow us to compete at scale with institutional players.”
– Gunnar Lovelace, Thrive Market co-CEO
Although the concept of a health-focused online grocer seems obvious in 2019, the founders were met with skepticism at the company’s inception. Because investors thought that Whole Foods already dominated the natural food space, Thrive Market initially struggled to secure funding. In the years since, they’ve managed to raise more than $160M by succeeding, in part, where Whole Foods falls short. While Whole Foods has struggled to shake its “Whole Paycheck” perception, Thrive Market has managed to build a brand and member base by making a healthy lifestyle more affordable and accessible.
As Thrive Market’s co-CEO Gunnar Lovelace explained, “More than 85% of American families want to buy organic but they can’t do it because they can’t afford it. We feel like we’re bringing the mainstream in.” While a sizable percentage of Whole Foods customers live in California and earn more than $200,000, Thrive Market is winning over middle class moms in middle America. More than half of Thrive Market’s customers live in the Southeast and Midwest, have an average household income of $75,000, and 85% are women.
“Amazon buying Whole Foods has created a big opportunity for us. Whole Foods has been the standard bearer for natural foods and organic products, but the challenge it has had is that many people don’t live near one, and many people can’t afford it.”
– Nick Green, Thrive Market co-CEO
While Thrive Market doesn’t release revenue numbers, a New York Times report from 2016 claimed the company had 5M registered users and 300,000 paid members. Additionally, at the time, the company was said to be shipping more than $200,000 worth of goods per day. As of 2018, Thrive’s membership was estimated to be around 500,000.
Besides growing its member base, the company has also been focused on expanding its product assortment. Initially, the plan was to provide food and supplements, but over time—and in response to member feedback—Thrive now offers personal care and beauty items, non-toxic cleaning products, fresh meat and seafood, wine, and more. At the same time, the company has also been growing its private label Thrive Market brand that, according to Lovelace, is expected to account for 50% of sales by 2020.
Despite their success, Thrive Market knows they still have their work cut out for them. First up, the company will need to crack the code on fresh produce and other perishable foods. Next, they’ll have to stave off upstarts like Brandless and Public Goods, both of whom appear to be pivoting to wellness. While Brandless has struggled to acquire and retain customers, they’re hoping that a new line of supplements, skincare items, and superfood powders can help. Meanwhile, Public Goods is using a membership program like Thrive Market’s to sell personal care products, ethically-sourced household goods, and organic food items.
All that said, Thrive Market will still have to compete with Amazon, Whole Foods, and the growing number of grocery delivery services. But, as Thrive co-CEO Nick Green sees it, while others focus on value and convenience alone, Thrive Market can succeed by focusing on conscious consumption. As Green told Digiday, “We want to be the platform that people trust for innovative, all-natural brands and that’s where we’re planting our flag.”