“We had been really focusing on offices,” said NatureBox CEO John Occhipinti, and managing partner at Wheelhouse Partners, which acquired NatureBox in 2018.
“We were in hundreds of micro-kitchens; our net promoter scores* were over 80, so we had highly satisfied, sticky customers…
“And then COVID hit, and all these customers said, 'We love you, but we’re putting our account on pause, because no one’s in the office…'
“We quickly saw the water coming into the bottom of the boat,” Occhipinti told FoodNavigator-USA. “And so then we said, hey what are we really good at? Well we’re really good at direct-to-consumer, so what if we took those snacks and said let’s deliver them to your employees’ homes?”
‘And then COVID hit… and we quickly saw the water coming into the bottom of the boat’
The approach hasn’t worked in every case, as keeping remote-working employees well-stocked in snacks is not high up the priority list for managers under pressure to cut costs, even if Redwood City-based NatureBox makes the mechanics of this super-easy given that it’s already geared up for home delivery.
However, many firms have been keen to continue offering snacks to show their appreciation for staff that are working from home in challenging circumstances, said Occhipinti.
"First we’ve reached out to existing customers with micro-kitchens and said let’s shift that budget to ‘work-from-home snacks’ and a number of them have done that.”
For $25 per employee each month, NatureBox delivers customized snack boxes directly to employees at home or at the office, he explained. To set this up, the office manager sets up a corporate account (no contract required), and employees can login to access a personalized account at NatureBox.com and choose their favorite snacks (they also get a free $30 membership enabling them to access deals on the site should they wish to buy extra snacks on their own dime).
“The second option," said Occhipinti, "is that even if businesses don’t have a budget for office snacks anymore, we work with them to give their employees access to better-for-you snacks that they can pay for themselves, so we’ve given them what we call a corporate free membership so they can offer value.”
Under this scheme, employees of a participating employer signing into NatureBox waive the $30 membership fee and get access to deals and discounts not available to non-members, said Occhipinti, who points out that this then gives NatureBox the opportunity to interact directly with multiple employees (instead of one employer).
“Facebook has free memberships [to NatureBox] for all of its employees.”
He added: “We’re also working on some really cool stuff, so let’s say you’re having a big company zoom meeting; we can send out snacks ahead of time.”
‘Our direct to consumer business has seen a really good uplift’
So how has COVID-19 impacted the original direct to consumer business at NatureBox, which began as an online subscription operation, but became more flexible as founders Ken Chen and Gautam Gupta recognized that consumers love shopping online but don’t necessarily want to commit to anything?
“Our direct to consumer business has seen a really good uplift [in recent weeks]," said Occhipinti. "People are spending more time at home and they don’t want to go to the store, they like the convenience of having snacks delivered.”
There are subscribe to save options for monthly boxes, as well as regular a-la-carte shopping, he said. However, the primary focus in on signing up members, who get significant discounts on every purchase.
‘They tried to grow too big, too fast…’
As you make your annual $30 membership fee back almost immediately given the member benefits, “Most people kind of feel like it's [becoming a member] a no brainer,” said Occhipinti, who said that NatureBox was one of many potentially ‘disruptive’ DTC businesses that “get into the VC ecosystem and kind of go big or go home.”
He added: “They had a really good run and built an amazing brand, but they tried to grow too big, too fast [co-founder Gautam Gupta, who departed in 2018, notes on his linkedin profile that his experience building NatureBox “gave me many hard-earned lessons in management, scaling, raising capital, and dealing with ‘shit-hit-the-fan’ moments.”].”
According to Occhipinti: “I raised some capital [via Wheelhouse Partners] and we acquired the business in 2018 and initially just focused on profitability and fundamentals.
“I felt like the DTC business was still exciting and interesting, and we started using that data to direct product development, but we moved more into corporate snacking, which has a more predictable revenue [coupled with the fact it’s more efficient to make one big delivery to an office supplying 50 people that to make 50 small deliveries].”
Bricks & mortar retail
The bricks and mortar retail strategy [NatureBox entered retail in 2016] has also evolved, said Occhipinti, who said NatureBox over-indexes with Millennials, but also does well with Gen X-ers and families looking for healthier snacking options for kids, targeting consumers that aren’t necessarily avid label readers, but want to know that someone has curated the snacks to avoid high fructose corn syrup, artificial flavors, colors or sweeteners.
“We pulled back on the retail business as it was losing money, although we have a decent business in Costco. The plan is to go back into retail in a smarter way in 2021 using the data from the DTC business to better inform what products we’ll bring into retail," he said.
“Over two million consumers have used NatureBox, so we have this unique dataset where we can say to a retailer, we know that this product sells well in your zipcode, and we know this flavor profile works well in New England, or Chicago.”
So is NatureBox profitable today?
According to Occhipinti: “I’d say we were well on our way to profitability and then COVID kind of threw a monkey wrench into things, although it’s created new opportunities for us, but we are leveraging what the founders had brought to the business, but building it back up more slowly.”
Adaptogens and CBD
Part of that involves creating more differentiated wellness products, said Occhipinti, who launched CBD-infused chews and other items last year, and has been developing a range of snacks featuring on trend adaptogens including turmeric, maca, ashwagandha, and moringa, from peanut butter maca cookies to turmeric black pepper popcorn and moringa dark chocolate bars.
New additions to the site include ready-to-drink coffee from Chameleon (the only branded product on the site except for packaged coffee), and protein bars featuring 10-11g of protein and “meaningful amounts” of maca and ashwagandha.
* A management tool that can be used to gauge the loyalty of a firm's customer relationships.