In the world of online grocery, Hungryroot is a small player. It faces behemoths such as Amazon, Instacart, and the online operations of major Bricks & Mortar chains. Yet it’s continually growing in a sector where many have struggled. How? And what lessons does its story hold for enterprises outside its industry?
Combining Business Model and Jobs to be Done
The formula starts with Hungryroot’s business model. In any given week, the company is selling about 600 unique items. That compares with a small format retailer like Trader Joe’s offering 4,000 items, or an average grocery store with over 35,000. But the customer’s value proposition isn’t about buying a few things very inexpensively, like a club store such as Costco might provide.
CEO and Founder Ben McKean explains the difference. “We have 600 items, but we offer over 6,000 recipes using those items. That offers personalization and helps the customer know what they want to do. The recipes are always evolving with the assortment. In a typical grocery experience, there’s no element of discovery. But our customers are coming to us with other objectives like losing weight or improving blood work. We understand the Jobs to be Done, or fundamental motivations and problems to be solved, of our customers and help them achieve it. We’re effectively doing the grocery shopping, the meal planning, and the entire process for the customer. Because we’re doing that, it allows us to surprise them.”
Combining User Experience and Jobs to be Done
Second, the company crafts a unique user experience. Hungryroot asks questions upfront about preferences, like whether the customer has a sit-down breakfast and how they like sweets. After the first delivery, it has further questions.
McKean says, “We’ve been really thoughtful in optimizing the user journey so that we’re only asking the right questions that impact our algorithm at the right time. Oftentimes, then, we don’t need to ask you but infer it based on your user behavior. For instance, everybody says they want to eat healthier. But, for a subset of customers, when you automatically put healthy foods in their cart they take them out. For some people, they say they’re trying to do something that they’re not really doing, and for others their definition of healthy is different. We combine consumer insights around Jobs to be Done with data insights to come to conclusions.”
Hungryroot offers a distinct value proposition in a distinct way
Using AI to Create a Fundamentally New Experience
The third element comes from AI. McKean says, “Many people are using AI to take what they’re already doing and make it more productive. But we’re talking about what would be almost impossible to do without AI.”
Rather than have customers fill up an empty grocery cart, Hungryroot uses AI to combine hard preferences (vegans won’t eat meat), soft preferences (past buying behaviors), and machine learning (how a customer and ones like her responded to past suggestions) to pre-fill a user’s cart. Then it provides recipes which enable the user to make the most of those foods. McKean says, “That’s why our customers are very loyal to us. It’s a new experience. It’s highly differentiated.”
The company wants to go even further. On top of the algorithmic optimization and machine learning it now performs with AI, it’s pushing to add Generative AI that creates new text. It will use GenAI to articulate to the customer in written English why the optimization algorithm made the choices that it did.
Lessons for Others
What can companies in other industries learn from Hungryroot’s success? The firm illustrates several key principles:
1. Start with strategy: Hungryroot has a tight focus on a particular customer type who isn’t well-served by other online grocery experiences.
2. Deeply understand the target customer’s Jobs to be Done: Hungryroot does this through both formal customer research and deep data analysis, so that it grasps the customer’s fundamental motivations as well as their observed behaviors.
3. Think holistically about the User Experience: Leveraging those insights, the company creates a unique experience – not just about shopping, but about meal planning and execution.
4. Develop an appropriate business model: If Hungryroot mimicked a typical grocery’s huge assortment, it might lack the buying power to get the best pricing. So it plays a different game of having a small assortment, which fits with its unique value proposition and user experience.
5. Figure out how technology can re-invent your industry: Hungryroot’s formula could not work without AI doing the shopping. The company has not just used technology to boost productivity, but to re-imagine its sector within the vast grocery industry.
