Food Subscription Boxes: Market Map, Key Learnings & Tech Stack
Customers have been increasingly utilizing subscription food shipping services that focus on a specific category. Among the winners in this space were products focused on a particular category that consumers regularly utilize, like meats or produce. Since the rapid growth of eCommerce grocery over the past couple of years, some startups have separated themselves from the pack. In this market map, I am going to look into the players in the space, share some takeaways about those that have been successful, and highlight some of the startups powering this tech stack.
I break these types of food subscription startups into eight categories (meat, fish, carbs, dairy, produce, general marketplace, specialty, alcohol). These categories represent some of the largest categories that people spend money on at the conventional grocery store:
🥩- Butcherbox, Porter Road, Omaha Steaks, 99 Counties
🐟 — Wild Alaskan Company, Sizzlefish, Fulton Fish Market
🥖 — Wildgrain, Breadista
🥛 — Modern Milkman, Murray’s Cheese
🥕 — Misfit Markets, Imperfect Foods, Farm to People
🏪 — Thrive Market, Hungryroot
🎉 — Appy Hour, The Caviar Club, Iberico Club, Trade Coffee
🍷- Winc, Firstleaf, Pourmore, Tasters Club
Based on analyzing what food subscription businesses have grown, here are five criteria that impact whether a business will be successful:
- Uniqueness/specialness of the product
The biggest hurdle these companies face is convincing a customer that they should order online from them instead of picking it up on their regular shopping trip or adding it to their delivery order. One way to mitigate that is by having a unique product. If the startup is selling the customer a product they find at their local marketplace, chances are the online market will be capped. The only likely exception is if a company is focusing on a specific, underserved demographic, like Weee! (which focuses on Asian products).
The main similarity of the subscription services mentioned above is that, for the most part, none of them offer everything in the typical basket a customer needs. By having a unique product, you are giving the customer a clear value prop and a reason to purchase products from your portfolio as opposed to substituting it for others. It also helps build a brand identity when someone can associate your brand with something special, which also helps keep customers subscribed longer.
2. Target audience
Especially in the beginning of a food subscription box, it is very important to have a specific audience and grow from there. ButcherBox focused on people doing the Keto diet, Thrive Market focused on natural products, and Wildgrain focused on artisanal carbs. While you don’t have to stick to that audience forever, like Butcher Box adding pet food, it is important to have that base that allows you to hit a scale with some sort of cost basis similar to bigger food companies.
3. Frequency of use
Selling a product that is frequently used is very important to success. Some of the leaders in this space, like Butcher Box with meat, and Thrive with better-for-you products, focus on large categories that consumers are purchasing frequently and consistently. Additionally, consistent use of the product is key for these subscriptions, otherwise the value proposition will diminish. If the customer doesn’t buy enough meat and has to run out to purchase more, or ends up not using up everything by the next shipment, the company will experience customer churn.
The main exception is if the product is very expensive. Some food subscription products may have products that get rarely used, like Caviar, but it works because they sell their goods at a high price.
4. Cost
Cost is a big part of the decision around a food subscription box. Since most food is a commodity good it has competitive pricing that can be benchmarked relatively easily against the competition, whether online or in-store. Especially before the customer has ever tried the product and cannot see the superior value, it is super important that the cost is in line with conventional grocers. This price concern is why many companies offer steep discounts and free product incentives upfront.
5. Quality
Offering a quality product in a subscription food box not only ensures customer satisfaction but also encourages customer retention and positive word-of-mouth marketing. By providing superior quality items, the subscription service distinguishes itself from competitors who prioritize cost over quality, while also enhancing the perceived value of the offering. This strategy fosters loyalty among customers who prioritize quality and helps attract new subscribers through referrals and positive reviews.
In addition to these five takeaways that make these types of companies successful, there is a trend of similar tech stacks. Below are some of the most common tools utilized by these companies:
E-Commerce Website: Shopify (most common), Woocommerce, Squarespace
Subscription Management: Recharge, Chargebee, Recurly
Marketing — Klaviyo (SMS), Privy (SMS), Mailchimp, Fomo (Social Proof), Optimonk (Site Optimization), Refersion (affiliate tracking), Shoplyft (A/B Testing)
Logistics — Grip (perishable goods), Shipbob, Shipmonk
CS — Zendesk, Freshdek, Gorgias
Other — Forage (EBT)
Overall, while there is a lot of opportunity for food subscription from a shipping perspective, I am also very bullish on regionalized delivery-focused models, like a Pat LaFrieda Meat Providers, a NY-based restaurant distributor that expanded to consumer-focused. These services are able to meet the criteria outlined before while also having cheaper and more climate-friendly delivery options. Still, there will always be an opportunity for food subscription startups, especially those that have a unique product, clearly defined audience, frequently used product, high-quality, and good price. The food subscription space is going to be very exciting to follow as food continues to move online.
