Business & Investment

Online grocery startups making big bets on the pandemic shift in grocery shopping

This is an installment payment First year of startup, A special series of interviews with The founders learned about the key lessons learned shortly after the first year of the business.

Grocery shopping has changed radically and perhaps forever in 2020. Consumers were still lined up in local markets across the country, but many shoppers bought groceries online. But it’s not just the Amazon-Whole Foods powerhouses that are enjoying the benefits. Many small, niche grocery startups are taking advantage of this opportunity.

Launched in late 2020 HiveIs a digital marketplace for premium and sustainable products. The company follows a set of rigorous standards before permitting a brand or product on the platform. This is a process internally called “Hive Five”.

Co-founders (Alumni of all Freshpet, Casper, and retail stores) consume to actually find, evaluate, and determine if one brand or product is better than another. I was dissatisfied with the hard work that people had to endure. The co-founders also learned how difficult it is to find smaller, more independent brands with great products and value, increasing barriers to entry both online and in stores.

Fortune I recently spoke with Hive co-founder and chief commercial officer Katie Tyson to learn more about business, lessons learned, hurdles to overcome, and Hive’s New Year’s plans.

The following interview has been summarized and lightly edited for clarity.

Katie Tyson, co-founder and chief commercial officer of Hive.
Courtesy of the hive

Fortune: Can you tell us a little about your background? What did you do professionally before launching Hive?

Tyson: I graduated from the University of Virginia in 2008 and studied business with a focus on marketing and management. My first five years of work were all in the advertising world. I started my career with several larger agencies, the first McCann Ericsson and Saatchi & Saatchi. Over the years, I’ve seen the world move to digital. At the time, many of the larger agencies struggled to do it effectively, so I went to Vayner Media, Gary Weinachuk’s digital agency. It’s also the place where you’ve learned a lot about social and digital marketing and first experienced the world of startups.

From there, I was fortunate to move to Fresh Pets, where I established myself as a Consumer Goods (CPG) marketer. I learned about Freshpet while working in advertising and was drawn to their mission and commitment. I stayed at Freshpet for four and a half years and built their digital marketing from scratch. Working there gave me the opportunity to learn about traditional brand management and marketing. We published the company while I was there. It was a great experience. I also won some big professional wins in building really compelling content and viral hits.

After Freshpet was released, I wanted to know more about e-commerce and direct consumers, so I joined Casper, who was the darling of the direct consumer (DTC) marketing space at the time. For two years at the company, I worked on building their marketing and consumer insights capabilities.

I’ve always had some entrepreneurial bugs, but I needed some confidence to pursue them. When I started Casper, I coached early startups and expanded the life coaching business I launched on the side. When Freshpet co-founder, president and chief operating officer Scott Morris approached me about Hive, I continued to coach in the startup and pursued it full-time. I was fascinated by the concept of creating a sustainability-based online marketplace where consumers could easily buy their values. The hive was a perfect convergence of all my passions, both personally and professionally. I saw the hive as a great opportunity, and the rest is history.

Hive is an online marketplace for sustainable premium products such as snacks, seasonings, cleaning products and baby products.
Courtesy of the hive

What influenced the launch of Hive? What is the reason for reducing the types of products you sell? Who is your target audience?

Scott came to me with the idea of ​​a hive. We believe that people are increasingly forced to shop in a sustainable way. People are tired of relying on government to achieve the big step changes we need to make and they want to get involved. They want companies to get more involved. We chose to focus on the grocery world because these items are consumed most often and have great opportunities to influence over time. I spent months testing the concept and seeing if people really wanted to shop this way.

First, we conducted a quantitative survey. I wanted to understand if people were motivated to shop more sustainably, but the results were very surprising to us in a positive way. The data to support Hive was there, especially when I created focus groups and started talking to groups of friends with this kind of thinking, and the data continued to grow.

During this time, we kept hearing that people were very motivated to buy their values ​​and that it was, in principle, really important to them, but it was also really challenging. They often had to spend a lot of time trying to figure out what was important and which products were working well, putting together an ideal shopping cart that spans multiple sites and stores. They received many individual shipments, which were also not ideal from a carbon footprint standpoint. At that moment, it became clear that something like Hive was in great need.

Our target consumers are, above all, thinking. Hive shoppers are those who care about what they are consuming. They care whether something is natural, organic and tasty, but also the impact of purchases in terms of sustainability and social mission. They care about brands that support the cause in a meaningful way.

I realized that I needed to put together my own criteria to determine which products would be on the Hive platform. We have a great team to scrutinize all our affiliated brands based on a set of criteria called Hive Five. Everyone on the team tastes the product, tries it out, and makes sure everyone is involved. In terms of social impact, we would like to partner with companies that are working on strong social objectives. In terms of sustainability, we are looking for brands that use less impactful ingredients and trade fairly or directly. Low carbon dioxide emissions are also very important and we are looking for companies to invest in carbon offsets or renewables. Recyclable packing is what you want your brand to have as much as possible. And in some categories this is very achievable.For others like chip bags and bar wrappers, we look for the best brands in our class, then we fill the gap with us TerraCycle program. This allows consumers to opt in and return packages that cannot be recycled on the curve side to Hive.

During the pandemic, grocery shopping became complicated, to say the least. Many retailers measure their customers by drawing a line around the block to reduce congestion and maintain social distance, but every customer has the time (or patience) to respond to it. It does not mean. How do you think online grocery ordering and delivery will evolve in the coming months and long term?

I believe online grocery stores will stay here. As more and more people experience the benefits and conveniences of grocery shopping online, it will become a larger part of our daily lives. I think it’s a big impetus in how the pandemic shapes the entire grocery space.

Anyway, there are many challenges facing online grocery stores today. For example, it is very difficult to meet in all categories, from fresh to frozen. In my view, the fresh and frozen side of the equation will be a bigger focus for the entire industry, but we need to introduce a new fulfillment mechanism to make it more mainstream among all players. There is. At Hive, we’re thinking a lot about how to expand our assortment and put it in the “difficult” category.

I think groceries will continue to be a big topic in the future. People are thinking more about where we get our food, who grows it, and what ingredients are in the given product. And in a way, it goes against the size of online grocery stores. Ultimately, online grocery stores that support smaller localized brands will create even greater splashes in the future.

The company internally uses a set of rigorous criteria called “Hive Five” to evaluate brands and products before allowing them on the platform.
Courtesy of the hive

It turns out that a recession is often a fruitful time for startups that can fill the void. What was it like to launch a grocery startup during this pandemic and the economic crisis? That said, how was it to secure the money for the hive? Is it privately funded or is it funded by venture capital?

On the business side, we were very lucky. We never want this global epidemic. What we were interested in during this time was how the pandemic shaped the way people embraced online groceries. Also, people are taking the time to pause and rethink their priorities, raising awareness of our behavior and their impact on the environment. The acceptance of the hive as a business was really great, but the pandemic also created a suitable environment for this.

Recession is a real challenge and we take responsibility as a business to make us as accessible as possible. We take the brand we bring to the community seriously and offer gradual pricing across all product categories. We have taken a better, better, best approach. For example, Hive has some of the best-in-class premium nut butter in all respects, but the platform also has nut butter that checks many boxes and is accessible at a low price. The pandemic has led us to think more about general consumption and how it can play a greater role in combating the US food crisis. We are also partnering with an organization to address this ongoing issue.

Hive is consistent with what people are thinking now, and there is data showing that conscious shopping resonates. At the same time, Scott’s excellent track record with an experienced team and very successful fresh pets has opened many doors that would otherwise be impossible. From a funding perspective, those who believe in Hive have a very mission. We are privately funded and funded by people who simply want to complete their environmental, social and corporate governance (ESG) portfolio, or invest in potentially harmful companies that violate our values. Not provided. We recognize that anyone who raises money needs to be philosophically aligned with Hive’s greater mission.

Where do you think Hive will fit in the industry five years after the pandemic?

What Whole Foods did for natural and organic groceries, Hive wants to do for sustainability and social impact shopping. Over the next five years, we hope that we will grow exponentially and that Hive will occupy a person’s consideration when it comes to where to buy groceries each month.

In an ideal world, we want to make a meaningful impact on the grocery store. We want to encourage independent grocery stores to create sections that focus on products rooted in sustainability and social impact. It will be a big victory. After all, it’s amazing if Hive helps shape and influence the entire industry.

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Online grocery startups making big bets on the pandemic shift in grocery shopping Online grocery startups making big bets on the pandemic shift in grocery shopping

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