Meal kit companies should embrace e-commerce to become true online grocery retailers and provide consumers with flexible, convenient meal solutions.
Meal kit demand surged during COVID-19, but consumers are not sold on subscriptions
During COVID-19, US consumers turned to meal kits in droves. These companies saw sales surge, as meal kits offered a safe, convenient method to get dinner on the table. As consumers become less dependent on meal kits, their stringent subscription requirements and other stumbling blocks will become more of a barrier.
While meal kit services will still appeal to some users, the greater opportunity in this space will come from following a trend that had already emerged pre-pandemic. Companies like Hello Fresh and Blue Apron have created online marketplaces for subscribers to add other grocery items to their meal purchases, such as produce, proteins and pantry staples.
There is an opportunity for meal kit services to transform more fully from subscription services into online marketplaces that offer more than just meal kits, and in a more flexible way.
Meal kit companies have an opportunity to broaden their customer base
Meal kit companies are missing an opportunity to attract new users by positioning themselves as a true marketplace.
Imperfect Foods and Misfit Markets are companies that originally launched by selling subscription boxes of “ugly” produce at a discount, and have grown to become more flexible online retailers that are being positioned as a dependable source of quality, affordable groceries. Meal kit companies should follow this lead and open their marketplaces to all shoppers, not just meal kit subscribers.
Food and drink manufacturers have new opportunities in online marketplaces
Nearly a third of consumers use online grocery shopping due to COVID-19; another third say they’ve begun using click-and-collect services. Consumers’ newfound ecommerce experience, alongside ongoing concerns of new COVID-19 variants, will create opportunities for food and drink manufacturers to sell their wares on the online marketplace that meal kits have created.
While all kinds of food and drink could benefit from being part of these ecommerce marketplaces, this new outlet could bring opportunities for specialty products. Online retail can provide smaller brands with exposure and drive trial, since regional distribution is limited. This approach has been employed in online shops such as Pop Up Grocer, which gives curious consumers a way to curate their own boxes of specialty food and drink.
Traditional retailers challenges and opportunities
Target’s meal bags, for instance, group a selection of the retailer’s private-label products into easy-to-assemble meals, taking out the guesswork of planning dinner while shopping.
What we think and key takeaways
In the coming years, meal kit subscriptions will continue to diversify their offerings to reach a wider audience. While many services have already expanded more into e-commerce (eg offering “extras” for their subscribers to add on to their meals), there is untapped potential to reach non-subscribers who are looking for convenient groceries and meals from the same outlet.
Traditional retailers will need to be aware of new competition coming from online marketplaces operated by meal kit companies but they also offer shoppers many advantages. Consumers seek flexibility in their meal preparation, and a majority of consumers point to the strict schedules of meal subscriptions as a barrier to adoption. Grocery stores, whether in store or online, give consumers the option to make regular purchases and the plethora of meal kit solutions that are now available in store.
Social shopping is on the rise
- Meal kit-branded “marketplaces” are the future
US meal kit services have expanded their offerings to include other non-kit options such as specialty food, pantry staples and ready meals giving companies the opportunity to provide more options.
- A new avenue for product discovery
US CPG companies, especially specialty brands, can become part of the new marketplaces that these online brands offer. This could be a viable alternative to sampling to promote trial and exposure.
- Online marketplaces could challenge retailers
Like Imperfect Produce and Misfit Markets, meal kit marketplaces give savvy shoppers an additional option for purchasing groceries. Traditional retailers can change by promoting the flexibility that they already offer, including single-serve meal kits.