How Hungryroot Online Grocery Seller Profits from Not Launching an Advertising Platform

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The country’s largest grocery stores are adapting to new shopping habits with a hybrid model that combines their physical footprint with online advertising platforms.

Although Amazon led the way with its advertising platform and the acquisition of Whole Foods in 2017, grocery giants including Kroger and Walmart are also investing heavily in sponsored research and programming. And now, the Instacart delivery aggregator is also in the game.

But there is another kind of hybrid model that combines a retail distribution network and DTC deliveries with an upstream consumer subscription service.

At least that’s the plan of the online shopping and revenue company Hungryroot.

Hungryroot does not have an advertising platform and does not facilitate sponsored searches. And it doesn’t carry big food and drink brands, such as Pepsi, Coca-Cola, Nestle, and Kraft-Heinz.

Even so, for regional or start-up brands that also overlap with in-store sales and e-commerce, Hungryroot can be a valuable channel.

The soup is on

Take Nona Lim, for example, a brand that makes Asian soups and noodles.

Nona Lim was founded in 2014 and for years focused on grocery chains for distribution, as its fresh and perishable products could not be supplied by Amazon. Although Nona Lim could ship the items herself, the charges exceeded the price of many products, according to the company’s eponymous CEO, Nona Lim.

Since the start of the pandemic, Nona Lin has added Instacart and Amazon Fresh to the mix. But he’s been working with Hungryroot since 2019, Lim said. The brand was looking for ecommerce partners that it could sell the way it works with grocery chains, which support execution at a profitable level.

Another important differentiator is that Hungryroot doesn’t behave like most platforms, where brands pay for discovery.

A six dollar cup of broth and noodles doesn’t have much headroom for performance marketers, Lim said, “and the cost of acquiring customers on social media channels is really high.”

A small brand can easily be overtaken on free advertising platforms, such as Instacart and Amazon. And while Hungryroot doesn’t have paid brand promotions, it does feature social media brands and recipes. Many Hungryroot customers order homemade meal kit style recipes, rather than just choosing groceries from the menu.

Lim says Hungryroot also helped the brand reach micro-influencers and featured Nona Lim products in recipes. Because Nona Lim is no longer able to set up store facilities due to the pandemic, influencer offerings and recipe integrations are a priority right now as a way to get their products and ideas to. kitchen to customers and prospects, she said.

What’s for supper?

Hungryroot himself is looking to get smarter about how he is able to help brand partners.

For example, Hungryroot wants to take inspiration from how Netflix or Amazon learns from previous choices in order to suggest new options, CTO Dave Kong said.

At first, subscribers often select each item for delivery boxes. But as they get more comfortable with the service and find new products that they like, he said they tend to rely more on Hungryroot to fill an order with items. suggested.

Kong said the company was surprised at how forcefully outside brands responded to the element of random discovery. It is now so popular with third-party partners that it would affect the company’s calculation if Hungryroot decided to create its own white-label product lines, he said.

A sales recipe

Major grocers (see: Walmart, Target, Kroger, and Amazon’s Whole Foods) all have online search and ad technology platforms. But these platforms do not integrate the products directly into the recipes.

Spicewalla, a spice distributor, relies on content, like recipes, to drive sales, said founder and CEO Maherwan Irani.

People don’t usually buy spices on impulse, but rather have a vision of a meal that incorporates the spice.

“We want to find opportunities to tell that the spices are there to add flavor to anything you cook,” Irani said. “This is the customer we will connect with and who will keep coming back. “

Major grocery platforms work with global brands on recipe-based content marketing.

Hidden Valley, for example, which is owned by The Clorox Company (seriously) and Meredith’s Allrecipes piloted an online grocery delivery product with Amazon Alexa. And Kraft-Heinz said in its recent results that a popular meal kit company will be incorporating its products into recipes.

But Hungryroot, which creates its own recipe content and showcases other brands on its social media, provides significant help as it doesn’t charge for promotion, Irani said.

This free medium has been particularly useful over the past year and a half as many consumers have chosen home cooking. Online direct-to-consumer sales through channels such as Hungryroot are now twice as large as Spicewalla’s wholesale business, which includes nearly 1,000 restaurants.

And the brand business is also more valuable. Grocers such as Trader Joe’s and Wegmans have popular white label products that are purchased wholesale from a brand. Selling spices or other perishable goods at Trader Joe’s can be lucrative, but it doesn’t create customers who will remember the brand and become loyal to it.

Plant-based pudding brand Noops said part of Hungryroot’s appeal is its openness to brand collaborations, said CEO Gregory Struck, who also happens to be Hungryroot’s former COO.

For example, Noops and Hungryroot created a seasonal line of packaging and products in six weeks, while large retailers and historic brands – Kraft-Heinz Jell-O and Swiss Miss from Conagra, in the case of pudding – n do not have this flexibility. At least not for free.

Noops is testing the GoPuff advertising platform, which launched earlier this summer. Struck said Instacart is the only retail media platform with the current scale to segment and target the brand’s primary audience while driving consistent ROI.

He also noted that Noops is open to using any online grocery advertising platform that is capable of targeting potential customers with a positive ROI.

But the typical attitude of an online platform towards brand discovery – i.e. paying for it or dying in the shadows – makes Hungryroot’s approach to promoting brand partners. marks a welcome change of pace through emails, recipes, social content and campaigns.

“With the shift from offline to online, you need to recognize that your product’s visibility on these platforms is an integral part of the marketing funnel,” Struck said. “And often just being on the platform isn’t enough.”


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