The country’s largest grocers are adapting to new shopping habits with a hybrid model that combines their brick-and-mortar footprint with online advertising platforms.
Although Amazon paved the way with its ad platform and 2017 acquisition of Whole Foods, grocery giants, including Kroger and Walmart, are also investing heavily in sponsored search and programmatic. And now delivery aggregator Instacart is in the mix as well.
But there’s another type of hybrid model that combines a retail distribution network and DTC deliveries with a consumer subscription service on the front end.
At least, that’s the plan for the online shopping and recipe company Hungryroot.
Hungryroot doesn’t have an ad platform or facilitate sponsored searches. And it doesn’t carry big-name food and beverage brands, such as Pepsi, Coca-Cola, Nestlé and Kraft-Heinz.
Even so, for regional or startup brands that also straddle in-store and ecommerce sales, Hungryroot can be a valuable channel.
Soup’s 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, because its fresh, perishable products couldn’t be fulfilled by Amazon. Although Nona Lim could ship items itself, the fees outstripped the price tag on many products, according to the company’s eponymous CEO, Nona Lim.
Since the start of the pandemic, Nona Lin added Instacart and Amazon Fresh to the mix. But it’s been working with Hungryroot since 2019, Lim said. The brand was looking for ecommerce partners that it could sell to akin to how it works with grocery chains, which take over fulfillment at a cost-effective 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 margin for performance marketers, Lim said, “and the cost of customer acquisition on social media channels is really high.”
A small brand can easily be outgunned on free-for-all ad platforms, such as Instacart and Amazon. And while Hungryroot doesn’t have paid brand promotions, it does feature brands in social media and recipes. Many Hungryroot customers order in-house meal kit-style recipes, rather than just picking groceries a la carte.
Lim says Hungryroot has also helped the brand reach out to micro-influencers and featured Nona Lim products in recipes. Because Nona Lim is no longer able to set up store installations due to the pandemic, influencer deals and recipe integrations are a priority right now as a way to get its products and potential cooking ideas to customers and prospects, she said.
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