New competitor for supermarket giants
Subscription-based business offering top goods at lower price
An online grocery service, founded by the owner of factory-to-consumer e-commerce business Container Door, has launched, hoping to undercut the supermarkets.
The Honest Grocer, which offers delivery only in the North Island at present, aims to offer premium grocery products at up to 50 per cent cheaper than the major chains.
Ben Nathan says The Honest Grocer was founded to offer greater choice and better prices for the consumer.
It also aims to disrupt the $15.8 billion duopoly of the country’s two big supermarket chains by giving suppliers and manufacturers another channel to sell to.
Speaking to the Business Herald exclusively, Nathan said the Penrosebased business would operate on a membership basis, similar to the Costco model, whereby it charges an annual fee for shoppers to access exclusive savings and deals.
Its Silver Tier membership is free, while its Gold Tier membership is $2.99 per week for a minimum commitment of a year, which gives shoppers access to better deals on meat, wine and spirits.
More than 1000 products including meat, cheese, cereals and pantry essentials are live on its site, with more to come in the next few weeks.
Nathan said the business had already begun to ruffle feathers within the grocery industry.
Nathan thought up the idea for The Honest Grocer and registered the brand two years ago and Covid-19 accelerated development.
“When we were in level 4 lockdown we were inundated with New Zealand suppliers who were selling to restaurants and cafes and they had no outlet and so my inbox was filling up with all these people really worried about their business
. . . and they asked if we could start selling food on our existing platform Container Door,” he told the Herald.
“We started getting brands that were selling to supermarkets saying ‘Hey, can you sell our product’ and it started to snowball, and hasn’t really stopped, so we decided we would build a whole new separate website to deal with the demand.”
Nathan said he had for a long time been frustrated by New Zealand’s high food prices, and could not understood why locally grown beef and other proteins were so expensive.
“The supermarket duopoly needs a shake-up and I think there is a power imbalance, where both consumers and producers are losing out to the might of the big chains.
“Our business model offers very competitive pricing with minimal stock risk by cutting out all unnecessary links in the supply chain that add to cost. “It means more money in the hands of local suppliers and greater savings . . . passed on to customers.” The Honest Grocer is designed to offer staples for the week ahead rather than a full grocery shop. The business plans to expand delivery to the South Island once it has established its courier networks. Longer term, it intends to extend its offering to fresh fruit and vegetables, readymade meals and meal kits for catering. It wants to be the largest online supermarket in the country.
The Honest Grocer leverages Container Door’s overheads; sharing its head office, warehouses and workforce, which has meant it has not needed to raise capital to start the operation.
I think [both] consumers and producers are losing out to the might of the big chains.
Ben Nathan, Honest Grocer founder