Many startups are tackling food delivery, providing a box of edibles to your doorstep for a subscription fee. How are these businesses doing and which have been the most successful?
One of the early leaders in this space is British snack box company, Graze. The success of Graze, which started in 2009 and launched into the US market in 2013, has not gone unnoticed, leading to a flurry of food similar subscription-based startups.
From picking out food at grocery stores and supermarkets, to fast-food, to mail delivery services, subscription companies are taking your daily calorie needs to a whole new level of convenience. And the entrants into this market don't just provide packaged meals, but also ingredients, coffee, wine, chocolate, snacks, and even pet food.
The premise of such a business model is therefore not difficult to understand – shrewdly tapping on the rise of American consumerism, love for food and convenience, and caters to the average American’s busy lifestyle. There are two factors which sets food subscription services apart from food delivery services. The first is the element of surprise. Like receiving a gift or a bouquet of flowers, you might not always be expecting the delivery, or might not know exactly what is in the box. The second factor is automation. With people outsourcing more and more chores and errands, the ability to set up automatic and recurring deliveries is particularly attractive.
Among the many companies and rising entrepreneurs that jumped on the food subscription commerce bandwagon is Walmart Labs which launched Goodies.co in 2012. Despite having a competitive price at $7 per box, the company announced that it will be shutting down its services a year after it was launched.
So among the myriad of food subscription startups, which have been the most successful and how do they remain competitive?
Comparing a list of 37 companies, there are three distinct groups. The green box represents the early adopters in the subscription space, like Birchbox and Graze. These companies have DataFox scores of 72 and above, implying that being an early adopter in this sector might have allowed them to capture a larger portion of market and establish faithful subscribers before the emergence of competitors. The red box represents middle adopters with high DataFox scores of 64 and above. The yellow box contains many newer entrants with DataFox scores of 41 and below. A striking difference between companies in the yellow and red boxes is that those in the yellow box deliver mostly snacks (Knoshbox, Goodies.co), while those in the red box mostly deliver non-snack foods like ingredients for meals (BlueApron), meals (Platejoy), or coffee (Mistobox).
It is possible that the snack-delivery market is smaller than the meal-delivery market. The fact that there are many more companies that deliver snacks than other food types, plus the domination of the snack-delivery market by Graze and Birchbox, it is likely that the snack-delivery market is already saturated.
Ultimately, the success of such businesses will rely on the company’s response to consumer feedback and social media analytics, to create a product that will resonate with the needs and wants of their subscribers.