Consumers continue to feel the effects of inflation, especially when it comes to their grocery shopping. Thrive Market CEO Nick Green joins Wealth! to discuss the state of consumer spending and how Thrive Market seeks to ease the burden of inflation.

"People are looking for ways to save, and in our case for Thrive Market, we're providing healthy, natural, organic products which are even more expensive typically," Green explains. He says that consumers are currently more sensitive to promotions, so Thrive's membership model works because it has items discounted anywhere between 20% and 40%. The company also runs seasonal sales and cash-back offers, which have helped contribute to the rising number of memberships.

Thrive Market was one of the first and only online retailers to accept SNAP benefits. Green says the platform has a lot of low-income users who not only seek discounts but are able to use their EBT to purchase groceries.

Thrive Market continues innovating, using a machine-learning algorithm to help load customer carts with recommendations. Green says that this initiative has led customers to purchase about half of the recommended products in their first orders."We absolutely see AI as a core pillar of the future of grocery shopping," he says.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video Transcript

One real tangible way that consumers continue to feel the effects of inflation is at the grocery store while prices are down from last month, they are still up 1.1% year over year.

So what are some ways for you to save for more?

We bring in Nick Green, who's the thrive market, co founder and CEO and our own Brooke Depalo joining us for the conversation as well here on wealth.

OK, great to have you here in studio, first and foremost, making your way over from the west coast to join us on wealth.

Let's dive into this.

I mean, because we take a look at the CP I report and, and retail sales and really trying to get a sense of where this consumer stands right now, especially as it remains on grocery prices.

What, what's the kind of broad stroke that you would annex to describe the consumer right now?

I mean, look, I'd say one, it, it's been 1% recently, but since the pandemic, it's been 25% plus.

So people have gotten hit, they're feeling it.

Uh it's even more acute on certain kind of staples.

And I think people are looking for ways to save, you know, and in, in our case for thrive market, we're providing healthy, natural organic products, which are even more expensive typically.

And so if you're committed to that lifestyle and you're feeling it in your pocketbook, you know, you really need a way to get better prices.

Yeah.

And what sort of ways has the average customer basket changed in the last years?

They really think twice about where they're spending their money.

Yeah, I mean, we're seeing people go to those staples, right?

Like there's a little less experimentation on new diets, new trends.

They want to go back to the things that they know and are confident about.

Uh we're seeing them be more sensitive to promotions.

So one of the cool things on thrive, you know, with our membership model, everything is always discounted from retail by anywhere from 20 to 40%.

But then we also do these seasonal sales, thematic sales.

And so at any given time, people can get those, those additional discounts and we're definitely seeing our members go in bigger and heavier when the discounts happen.

So A O BS go up the staples, you know, they buy even more of them.

Um And then we're finding that they're also thinking about other types of incentives.

So we've done stuff with our thrive cash offers where they get cash back and members really love that.

So, you know, all the things you would expect when people are trying to save money, what are the top selling items right now for thrive market?

Oh man, it's always been the core.

So for us, you know, to give just a couple of examples are uh you know, natural organic, single source, extra virgin olive oil uh comes in a beautiful tin.

It's like super, super clean product.

Beautifully.

I did not expect you to say tin olive oil as one of the top.

It's a good deal.

Yeah.

Well, so if I mean, if you send it in a bottle, right, it can break and if you have olive oil in your order, that's no bueno.

So we make sure that that can go and arrive it to people's doorsteps well and save a lot of money on it.

That's a very, that's a staple.

Um You know, we see on the supplement side like collagen peptides uh still part of people's regimen.

Uh We use a, you know, grass fed grass finished beef source of collagen, which is uh you know, sustainably sourced and very healthy.

Uh so that, that sells really well.

Um But yeah, yeah, Nick, I do want to quickly want to hit on.

You are one of the first and I believe only online retailers to give food stamps and, and that was a pretty big deal.

I wanna know with that enrollment in February.

How has your customer changed in the last few months?

Yeah.

So look, we've always given you know, very discounted prices to our whole member base.

That's how it works.

And every paid membership sponsors, one for a low income family.

So they do have uh there's a lot of low income folks that are on the platform using our discounts.

What snap enables is for those people to actually use their E BT.

There's 40 million Americans on E BT.

So we're seeing an influx of those folks onto the site.

Uh They're more sensitive to savings and now they can really get those.

Yeah, I would do quickly want to hit on who are your competitors here?

Because we have seen Walmart, we have seen Target not only step up their online game, but we've seen them gain income, cohorts across the board here.

You know, Walmart just launched that better goods Target.

It has uh good and gather.

So how are you stepping up to compete with these big box retailers?

Yeah, I mean, look, we've always been out on the frontier of healthier products more sustainably sourced better for you, bringing products on earlier in their life cycle.

Uh We're getting better discounts with our membership model.

Uh Over a quarter of our sales are from our own brand which you can't find anywhere else.

Uh So we really don't see those guys as a competitor.

Uh And we also don't see the premium uh health food retailers as a competitor because those prices are way too high for most consumers.

What about your own cost inputs right now.

I mean, Crunch Bay says you guys in a range of 500 million to a billion dollars in your own valuation.

I mean, you could tell us where that leans towards.

I if you'd like, but when you think about how you are monitoring this environment for your own expense profile, as you're trying to make sure that I, I don't know if a public debut is in, is in the cards one day.

But even if you do have to make that pitch to investors that you are a healthy business that can withstand the test of time.

Yeah, I mean, look, we're really fortunate.

We're doing over over half a billion in sales.

We're profitable.

We haven't had to raise outside money for more than four years.

So, you know, we're in a really strong position to control our destiny, uh less focused on the valuation game and much more focused on just continuing to grow, to drive that profitability up, to continue to do things that are differentiated.

And when we serve our members better, you know, whether that's through new products, new categories, better discounts, all those things drive the fly wheel and you know, renewal rates for us with the name of the game and we continue to see those increasing.

Uh We're really proud of the retention we have in our members, the word of mouth, which is still the number one way that people learn about us.

Um, and if we can keep doing that, you know, we got a long way to go.

We have 1.5 million members today.

There's tens of millions of people out there that want to get healthier.

So, we're, uh, we're just getting started really quickly in this environment where people are managing their average basket size.

What are some ways that you're helping to boost that basket size?

And is it A I that's helping to get more customers to add more at the end of the day?

Yeah, I mean, we've always seen larger basket sizes.

So our average A OV has, our average order value has always been close to that $100 mark.

Uh And that's because we encourage our members to consolidate for sustainability reasons so that we're not sending onesie twosies that have a big carbon footprint and a ton of packaging.

Um So we've always had great A OV, but we have seen that go up, we've been able to push even further using to your point, you know, better technology and using a machine learning algorithm.

You can take the data inputs from what people have purchased in the past, even what the whole member base is purchased in the past, as well as an on boarding quiz that we do where people share their preferences and then we help them to not only give recommendations but actually load the cart and what we're finding today is on that first order, about half of what people are purchasing are the things that we loaded the cart for them.

So it's been really cool to see that algorithm, that machine learning it better and better.

And you know, we absolutely see A I as a core pillar of the future of grocery shopping, Nick Green thrive market, co founder and CEO and Yahoo finances Brooke Dipalma joining us here as well.

Thank you so much for joining us in studio.

Thanks again.

Absolutely.