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How Whole Foods competitor Thrive Market plans to beat Amazon | Digiday

“Amazon buying Whole Foods has created a big opportunity for us,” said Nick Green, the co-founder and CEO of Thrive Market. “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. When you think about the Amazonification of Whole Foods, Amazon bought it for the real estate, and it’s tried to make it more accessible for everyone. That means you’re going to see different products on the shelves.”

Thrive’s model works like this: Customers pay a monthly membership fee of $5 to buy all-natural packaged foods, beverages, wines, supplements and medicines at a 25 to 50 percent discount per item. All items sold through Thrive have to meet the company’s standards around sourcing and supply chain practices (all products, the company claims, are ethically sourced) and ingredients (all products are non-GMO, for example). Thrive also has a growing private label business, with revenue from its owned brand accounting for 20 percent of total sales. The company would not disclose its revenues, but said in 2018 revenue grew by 50 percent.

So, while Green said Thrive wants to match Amazon’s “obsession” with members and service, its focus first is on expanding its network of suppliers to build out an unmatched assortment of all-natural products, to be made available at the discounted price. At the end of the year, Thrive signed on to two partnerships meant to help it broaden its suppliers and get more items into its store. The first, with RangeMe, connects Thrive Market with specialty distributors and makes it easier to compare pricing and ingredients. The second inked a five-year partnership with Kehe Distributors, one of the largest distribution channels for natural and organic products.

In comparison, Whole Foods’ partnership with Amazon implemented a centralization of Whole Foods’ distributor system. Where Whole Foods locations once sought out locally owned businesses to bring in a unique assortment of brands in each store, there’s now one entry point to the entire Whole Foods network. Plus, Amazon is known to use customer data as its main factor in merchandising decisions.

“Amazon doesn’t want Whole Foods to be a top-five regional or specialty grocer,” said Cooper Smith, principal analyst at Gartner L2. “It wants it to be a top-five national grocery chain. That’s going to impact the products you see being carried. National brands are hitting the shelves and are in talks whereas they might not have gotten a foot in before.”

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How Whole Foods competitor Thrive Market plans to beat Amazon – Digiday.

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