Groceryshop 2022: Thrive Market CEO Talks Private Label, Perks of Membership Model
Nick Green, co-founder and CEO of Thrive Market, talked about the online membership-based retailer’s private label growth, its pricing model, sustainability and more during a keynote interview at Groceryshop 2022.
Interviewed by CNBC business reporter Melissa Repko, Green said that Thrive Market’s mission as a company to sell accessible, unique, healthy products translated to a private label strategy when the company became large enough to venture into selling its own brand products.
“We launched about a half dozen products initially, every one of them was 'upleveling,' innovating, doing something different,” he said. “Fast forward to today and we have over 500 Thrive Market branded products on the site. They’re the best selling, most re-ordered products on the site, and last year we did over $100 million in sales just from the Thrive Market brand."
Green added that offering a curated assortment of private label products is important for keeping Thrive's portfolio to a high standard, as well as offering quality prices for members of the retailer. Founded in 2015, Thrive Market’s private label assortment now spans wine, supplements, frozen food, prepared meals, home products and more.
“We start by hyper-curating the catalog. We offer an order of magnitude fewer SKUs than you’d find at a retailer,” he said. “We have a very high bar for letting new products onto the site, but we also work really collaboratively with new brands. About half of the products on Thrive Market, even under the Thrive Market brand, are launching for the first time [on Thrive Market]. We can use our data to look at not only what people are buying right now, but what they want or can’t find, and we’ll launch products or brands that take some risk that other retailers might not be able to take because they don’t have that data."
Similar to club retailers, Thrive Market’s membership model allows for better pricing on branded and private label products. Green said that while inflation has raised costs on shipping, the retailer’s model and creative packaging solutions have helped customers save.
“It might seem counterintuitive because you pay for the membership $60 a year, but what it enables us to do is give much better pricing on the products themselves,” he said. “We’ve made changes to our box, to our packaging to try and cut out costs, and we’ve also introduced new ways for our members to save. We’ve started to give more case packs, buy-more save-more, auto-ship and save… almost a third of our sales are on recurring orders. In general, we’re finding that people value their membership more when they are saving at a higher rate.”
Like many retailers, Thrive Market has put a key emphasis on sustainability. Its efforts include selling regeneratively-grown and clean-label organic private label products, as well as reducing plastic materials like Styrofoam and offering carbon-neutral shipping on all orders.
“The consumer is really going to be the driving force [on sustainability],” Green said. “We did carbon-neutral shipping from day one. We did it from day one when it wasn’t in the lexicon, and now it’s something we market as part of our membership. We went zero-waste at all of our fulfillment centers. It’s so much easier for us to now do these things because there’s more innovation happening, because there’s more demand for that innovation."