Thrive Market CEO talks private-label strategy as it expands into cleaning products

When Thrive Market began in 2014, it considered itself just a retailer, often described as “Whole Foods-meets-Costco-meets-Trader Joe’s—online,” according to co-founder and CEO Nick Green. But now, with its aim to offer healthy, affordable, and sustainable food and home goods, the platform has put on a few more hats.

“The mission basically led us to create a new business model where it’s like, hey, we’re a retailer, now we’re a CPG brand, and now we’re a data company.”

The membership-based marketplace first broke into private label with its own organic coconut oil in November 2015. Since then, its owned products have grown to 600+ offerings, raking in ~$100 million last year—about a quarter of its sales—per the company. It began, naturally, with a namesake food & bev line, followed by Wellmade (supplements), and its latest, a cleaning line called Rosey.

Going private

Rosey soft-launched late last year, but it is making its official debut today with an expanded product lineup: 26 items, most under $12, including laundry detergent, all-purpose cleaner, and dish soap.

It’s also the retailer’s first foray into reusable packaging, Green noted, a goal Thrive has been trying to make “financially tenable” for about two years.

• In addition to glass spray bottles, it worked to produce concentrates that can be effective even if the consumer doesn’t get the cleaner-to-water ratio exactly right.

“We do everything custom, so we’re never taking like the off-the-rack program where it’s just like, ‘Oh, give us the same program that you did for Kroger’s private-label product,’” he said. “We’re always taking out ingredients, adding other things in, removing stabilizers, fillers, all the crap that normally goes into not just cleaning products, but even food products. And so that just takes longer.”

When it comes to creating these products, Green said Thrive is “basically turning the traditional private-label model on its head,” while avoiding making knock-offs.

“The normal model is basically: See what is selling in your retail platform, copy it, cut out stuff from the supply chain, and sell it a little bit cheaper…Rather than copying third-party products, we actually look for gaps in the catalog and fill those in with our own brand.”

• While Thrive’s food brand does cover staples such as extra-virgin olive oil or raw cashews, it also has more niche items like organic avocado-oil potato chips and matcha-lemonade drink mix.

Mind of its own: To map its next move, Thrive uses the data it gathers on the platform, like what users are searching for but can’t find. (Its tech and data-science teams are its fastest-growing, Green noted.) Insights from influencers—who are on the “bleeding edge of all the trends”—also play a part.

• Brick-and-mortar stores, he said, largely rely on POS data for their private-label brands.

“We’re just able to do things now [with] our owned brand that a brick-and-mortar retailer could never do, because they just don’t have the data to move with confidence on doing something truly innovative,” he said.

Overall, Green said its objective with its owned-brand products is “leveling [up] on quality,” particularly in terms of sourcing. Beyond being non-GMO and nearly all organic, it’s working to integrate regenerative agriculture, he said.

Despite its private-label growth, Green noted that “if there’s a great brand who’s doing the innovation, that’s always going to be our first path.” It’ll only look inward if a product doesn’t reach quality or scalability standards—or isn’t affordable.

• About 50% of its 1+ million members are in the Midwest and Southeast, Green said, and ~half of those have an income of less than $100,000, so a premium-priced product is a “nonstarter.”

These shoppers aren’t necessarily coming from grocers like Whole Foods or Erewhon, he noted, so they might not have much brand loyalty, opening the door for private labels. Their rise has only accelerated in recent years, as consumers have become more “discerning” and CPGs have been “slow to respond” to ESG issues, Green said.

Once associated with “cheaper knockoffs,” Forrester retail analyst Sucharita Kodali told Retail Dive, perceptions of private labels have also shifted following the success of Target’s ever-growing collection of owned brands, 10 of which are worth $1+ billion each.

• A slew of companies, from GoPuff to JCPenney, have made recent pushes into private label, hoping to cash in.

“[Shoppers aren’t] just locked into buying their mom’s brand of toilet paper or laundry detergent. So I think there’s less loyalty to big CPG brands,” according to Green.

Looking ahead…Over the next year, Thrive plans to add “hundreds” of products to its owned-brand lineup, Green said, aiming to reach 1,000+ over the next few years.

• A line of mac and cheese just debuted, and whole-grain granola, turbinado sugar, organic date syrup, and no-soy teriyaki are coming by the end of March.

Beyond some commodities, it hopes to offer consumers something new.

“Most of what we’re doing in our owned brands—it’s like the innovation engine for the business. And it’s an opportunity to build trust and create differentiation,” Green said.