Thrive Market CFO on difference between membership and subscription models

Americans love getting food delivered straight to their doors. Thrive Market is an online platform that allows members to order healthy, organic, sustainable food and products from its curated marketplace.

But food delivery has changed a lot since the days of “30 minutes or less” for a pie. The pandemic and the rise of DoorDash, Uber Eats, and Instacart have made delivery of any type of cuisine and even just basic groceries as easy as putting on a Netflix show.

CFO Brew checked in with Hetu Patel, CFO of Thrive Market, to see how grocery delivery has changed over the years and how Thrive Market is competing.

This interview has been condensed and edited for clarity.

How is being the CFO of Thrive Market different from other CFO roles you’ve had?

Having a very sustainable long term business model—which was a choice we made and we continue to build upon—really ensures that we’re not reliant on flash-in-the-pan results, but really building something that’s long term.

So what does that all mean? First, we deliberately chose to be a membership model. We deliberately chose to have a hyper-curated catalog of a little over 6,500 SKUs, and just those two choices lead into multiple benefits when it comes to how we acquire members, how engaged our members are, and how much they trust the curation we bring to them. I think as a CFO, continuing to build those decisions from a long term perspective, building a solid membership model becomes critical.

How did grocery price inflation affect your business?

Households felt it on the grocery bills, particularly at a time when consumer confidence was a bit wavering. For us, when we look at a lot of consumers, we see one consistency, is the need and desire to have healthy living options available to individuals and families remains persistent. And in that environment, the desire to have better value, sharper prices becomes even greater. And I think that’s where Thrive Market really offers that easy, affordable solution…even through these macro changes. We saw that demand being very persistent, and in fact, our value proposition resonating even more. And really doubles down on what we believe our mission ought to be: Make that membership a no-brainer, by delivering ongoing day-to-day value to members as they shop for their healthy living needs with us.

Do you keep your eye on any interesting metrics or KPIs?

Grocery is a really large market, and we are only getting a small share of wallet. And then our household penetration is pretty low, around 1.5%. So from a macro perspective, when you look at household penetration, share of wallet, I think there’s a lot of headroom. We focus a lot on internal KPIs around how we’re doing in terms of raising awareness of Thrive Market, getting new members signed up, and then engaging members so that they are getting the maximum value out of their membership. We focus on our efficiency to get new members, making sure they’re able to maximize that value through engagement. That’s where we spend a lot of time and effort on driving member growth and member engagement.

How do you think of Thrive Market as membership vs. a subscription?

I think there’s a difference between membership and subscription. I think that’s a distinction we draw upon and we take a slightly different approach. Yes, we are a membership, but once members sign up, there isn’t a box getting delivered every month that the member has or hasn’t planned. We do have a scheduled order business.

Our scheduled orders get heavily edited, so the focus is locked on use and convenience, and we actually believe the membership keeps our approach in synch with the interest of the members, versus pushing a lot of ongoing subscription boxes…We design what our recurring or scheduled order experience is based on making sure the members are super informed and have the flexibility that they need to be able to get the grocery that they want at compelling prices, and really be aware of what’s coming and have full control over that experience.

If you weren’t a CFO, what would you be?

Most likely a teacher…My father was a professor for his entire career. He taught finance at business school. For me, that’s something I just genuinely enjoy doing, so that’s very likely what my ultimate career might have been.