With a history in brick and mortar and his heart in natural products, Jeremiah McElwee, senior vice president for marketing at Thrive Market, is helping take the spirit of the industry into e-commerce in a thoughtful way. McElwee says Thrive Market, described by Fortune as “Costco meets Whole Foods,” has a food access mission well matched to the goals of the best supplement companies. While some supplement makers fear online outlets like Amazon steal sales from the natural retailers that keep the industry growing, Thrive Market presents itself as something very different.
NBJ: What is the crossover between customers buying food and customers buying supplements?
McElwee: Traditionally, e-commerce has been driven primarily by health and beauty. When we emerged about two and a half years ago, we really thought there was a big void in food. So, we skewed heavily toward food. We subsequently built out that part of our catalog more. Interestingly enough, we’re kind of circling back and building out some more supplements, going deeper with some of our major brands. We’re still heavily skewed towards food at this stage of our business.
NBJ: What is the percentage of sales?
McElwee: It’s probably somewhere in the range of 70% food and then 30% non-food. Non-food includes supplements, health and beauty, bulk and food storage, diffusers. We have some toys and apparel. Basically, anything that you could possibly want in a sustainable version is what we’re doing with our catalog.
NBJ: In terms of supplements, what are you doing to differentiate from other online outlets?
McElwee: It goes back to quality standards and differentiation there. We are very diligent on having only the highest-quality products. We definitely do not get into any of the gimmicky products or products with over-the-top and/or illegal claims. We’re heavily focused on food-sourced, food-derived, food-origin-type products. Then, we also have a very large Paleo audience. Also, we’re geared on functional foods, crossover foods, things like Four Sigmatic Mushroom Coffee where there’s active mushroom ingredients which, back in the day, would have been almost considered a supplement product. Now, we’re seeing more and more of those crossovers.
NBJ: You’re vetting the supplement companies you offer. How do you communicate that to the customers?
McElwee: I’ll be totally honest with you, we’ve not done an excellent job. We benchmark on our quality. Throughout the site, you’ll see a lot of that messaging. We’re actually in the mode right now of building out that education and building out that dialogue with our members more diligently. Most of our activity over the last two years has been keeping up or ahead of the curve and trying to keep our head above water. We had some really big ambitions about content and how we’re going to evolve that and how we’re going to communicate some of those messages. We just have not been able to get to it. Long story short, we’ve got a lot of messaging throughout the site that talks about our quality guidelines.NBJ: Can customers research it on the site themselves?
McElwee: You’re able to sort on 70-plus different values on the site. So, you can sort vegan, Paleo, gluten-free, wind power. There’s a whole bunch of different ways you can sort, so that helps people looking for specific quality attributes. But, we’ve got a huge opportunity, in our mind, to really do a deep dive and give an education to our members around why we’re different, how we’re different. Also the brands we sell, why they’re different and what they’re doing on the quality side. We’re deep diving that right now and really excited to get into that this year.
NBJ: Well, in terms of that, or in terms of supplements in general, what have you learned from brick-and-mortar?
McElwee: That’s a funny question for me personally because that was my background for 20 years. Everything I brought, I learned from brick-and-mortar, but I think the big thing there is that there’s huge opportunity for educating a new generation of consumers. It’s funny, a lot of even the legacy health food stores and the regional chains and even some of the national chains, they’ve grown up, right? So, they’re 30-plus years old, and they’re not circling back and focusing on educating the next wave of consumers. It’s almost like, well, we read that book already; we don’t need to keep telling that story. I think that’s a big miss because there are so many new people walking into the aisle every day. That’s how we view it at Thrive Online, it’s like we’ve got a big opportunity to really educate and to talk about products and talk about ingredients and talk about benefits of said products and ingredients. It used to happen in brick-and-mortar, and it doesn’t happen enough anymore. We need to evolve that.
NBJ: How much of your blog content right now is supplement focused, and where do you see that going?
McElwee: We do a variety of topical content every day. We have six pieces of original content every day, so I don’t know what the percentage is. We tend to focus between products, categories, but then also just lifestyle items and life hacks and just living a healthier life. A lot of those blogs have references to nutritional supplements and how you can live healthier. Honestly, we continue to focus on just a 360 approach to healthy living and we do supplementation as part of that.
NBJ: You don’t know the percentage, but do you see that going up or down?
McElwee: It shifts with seasonality, right? We’re going to be doing a big push with supplements here pretty soon. We’ll probably have time periods where we’re focused more on back-to-school and we’ll probably mix in some kids’ vitamins then, and things like that. Then, we’ll probably get into the wellness season and as you know, it spikes back up with all the different supplements for immune function and just being healthier in general. If this was an interview focused on food and you asked me, I’d probably give you a very similar answer.
NBJ: Is there a balance between promoting health and promoting the healthiest brands?
McElwee: We’re very conscientious about not hammering people over the head with products all the time. We try to make that subtle and have links and have related products after our blog or after our different forums of content and on social media. Then too, we, like most retailers, love product, right? So, you’ll see a lot of our social posts are specific to a product that we love, and what’s great about it.
NBJ: Have any supplement companies expressed any unease about working with Thrive versus brick-and-mortar, and what do you tell them?
McElwee: I think some supplement companies have that general mindset of “online discounter” quote, unquote. For that, we’re very, very much always focused on our social mission. For us, we don’t view ourselves as an online discounter. Yes, we sell products at 25 to 50% off MSRP every day. We try to have a very competitive price for our members because you’re paying to shop on our site. But we also have a firewall up, so we’re not typically blasting out or cheapening brands saying, “Hey, save money on this brand.” We’re more focused on the lifestyle, living healthy, and our social mission that is making these products available to all Americans at prices they can afford. I think at face value, some companies may be concerned when they hear about us at first, but then they learn about our model and they understand what we’re trying to do and why we discount and how it’s a virtuous circle because every paid member that joins, we donate a free membership to a lower-income family, teacher, military veteran, or first responder. It’s kind of hard to continue to be critical of our model versus other online discounters that are all about price, price, price, race to the bottom. Most of the vendors that have concerns, we’ve been able to really alleviate. There are concerns about MAP pricing, which we are totally comfortable addressing with suppliers and we have do-not-advertise policies. We can absolutely make it so that brands aren’t being put out there in an uncomfortable position. We also have several brands that we sell at MAP that are very adamant about MAP pricing. We obviously want respectful, win-win partnerships. So, we’ll work with them. If our members are wanting the products and they want to partner with us and they understand what we’re doing with our social mission, we’ll find a way to make it work in general.
NBJ: What do you think are the biggest threats to online supplement sales right now?
McElwee: I think as with everybody, we’re always watching the media. There’s always suspect media reports and things like that which, to me, is a bigger threat to all supplement sales. For us, I think that’s always a really big threat. Then, in general, just competition, right? It’s a very heated landscape. We’re a little different, again, because of our social mission and our responsibility to our members and our Thrive Gives members that we’re not in that race to the bottom. We’re trying to have a competitive everyday price that is a great value when you shop every day for a long period of time, you’re going to save a lot of money. But, we’re also not trying to get in fistfights with every retailer on the block. I think it’s a balance of the overall threats that we all feel as retailers selling nutritional supplements and making sure we hold high integrity and we’re not making any fictitious claims or doing anything to jeopardize the landscape, and then just the general competitive pressure that we’re all facing.
NBJ: Do you see any dips in sales after negative media coverage on supplements?
McElwee: It can happen. It depends on the category that’s zeroed in on. Depends on the scope of the report, also how loudly it gets publicized. As you know, sometimes those hit and they only hit us in the industry. We’re the only ones who see them. Other times, they go viral and then everybody’s talking about them. When those things happen, we definitely see it. The interesting thing in my observation is, typically the impact is very targeted in that if there’s a negative report on coQ10, it’ll impact directly that segment for a short period of time. Then, it either rebounds or it stays plateaued. The overall category in general, you don’t typically see a major impact from those reports that I’ve experienced.
NBJ: How would you describe your geographic mix of the customer base, and is that changing?
McElwee: That’s what’s been most exciting for us. When we launched, we imagined that it would be concentrated in major metropolitan areas, that we would be kind of heavily skewed toward the West Coast, but in actuality it’s turned out that we’re pretty spread out. Some of the last demographic research we did showed that we were still running in line with the per capita of each state’s population. So, we were pretty evenly dispersed across the different states based on their population, and we’ve been continuously surprised. Also, very delighted because our mission has been spreading out access, whether that’s for price or just sheer availability of these products. So, it’s exciting to us that we’re reaching consumers across all the lower 48 states in a pretty even amount based on population.
NBJ: What do you wish you knew two and a half years ago that you know now?
McElwee: We had a great business plan, and we thought we’d be wildly successful, but obviously back then you sure do wish you could see it and plan for it and be a little faster even, right? I think our growth was so rapid that we were playing catch-up. Knowing that we had a sure thing would’ve been awesome. We could have opened our second 300,000 square foot warehouse a year sooner and been ready to grow as fast as we really wanted to go, because we’ve been riding the brakes a lot. We’re finally stepping on the gas again, but there were some growing pains for us. I think, too, we shifted over the last six months to really focusing on what we call valuable customers. Our first year and a half, we literally just cast a broad net and we were like, ‘We want everybody to join Thrive.’ Then, we found quickly that not all consumers are created the same. People were coming into the site, placing one order, and leaving. It was really hard for us to get a gauge on what they didn’t like or why they weren’t staying. That was mostly just because we were trying to get everybody to the table. We’re now realizing the importance of investing smartly in acquiring valuable customers that get what we’re trying to do and want to stay with us.
NBJ: What makes somebody a valuable customer?
McElwee: It has nothing to do with income level or education level or anything. It’s more just people who have an interest in healthy living and want to live a healthier life. Because we have some really amazing Thrive Gives customers that shop regularly, and are so grateful. We get incredible love letters from our Thrive Gives community. When I say valuable customers, it’s not about income level or how much they spend. It’s more just people who get it, who continue to purchase with us, make it part of their lifestyle, and give us feedback and have that two-way dialogue so we can grow and get better. That took us a little too long to figure out. Just to focus on that, and really focus on retaining our existing member base and growing them, rather than, ‘Let’s get more and more people.’