Grove Collaborative thinks it has found the way to become the Chewy of sustainable household products.
The company has been around since 2012, but has gone through many iterations. For years, it had focused on being a subscription service that delivered curated baskets of its products — like paper towels and soaps — to people’s homes. It has tested private labels as well as wholesale partnerships with stores like Target.
The company went public through a SPAC in the year 2022 and has faced some tough terrain – including a threat of delisting. Last year, Amazon veteran Jeff Yurcisin joined as CEO. His focus has been putting the company on a solid footing.
“The goal was profitable growth,” he said on the Modern Retail Podcast. “But we felt like we had to start with profitability.”
For the past four months, Grove has reported positive adjusted EBITDA. Similarly, the company announced a recent investment to help it pay down its debt load. However, in its most recent earnings, it posted a net loss of $10.1 million. According to Yurcisin, these are the initial steps to make the company an online leader in natural and sustainable household products.
He talked about how he approached this transformation and what is on the horizon.
The first major change was implemented as the removal of mandatory subscriptions. “From my perspective, I wanted to enable subscription, but I wanted to create an incentive for customers to subscribe — not force them to subscribe,” he said.
Similarly, Grove has focused on operational changes to improve its business. He focused on improving the customer experience to make checkout smoother, as well as paying off his debt. It has also refocused its technology group, which has included the move to Shopify. According to Yurcisin, these changes are now starting to pay off. The focus now, he said, is to add more customers to the group so Grove can reach its potential.
“We believe it’s an addressable market of 57 million people in the United States,” he said.
Here are some highlights from the conversation, which have been lightly edited for clarity.
Changing the subscription strategy
“When I arrived, there was a subscription model. And what that meant is, if you came in as a new customer, there was a certain basket that we suggested you buy that included a bunch of free gifts. And then we would often introduce our products to these customers – and they loved them, and they came back regularly. If someone calls and says, ‘Hey, can I cancel my subscription?’ Of course we would – like, our NPS scores are through the roof. But this was not the most customer friendly approach, in my opinion. It limited our addressable market. You had to really love subscriptions. And so when I arrived, I thought one of the most important things we needed to do was just bring to the table some of the best practices from e-commerce. And many of these come [down] to work backwards from our customers’ needs and say, ‘How do we meet those needs?’ And so, from my perspective, I wanted to enable subscription, but I wanted to create an incentive for customers to subscribe – not force them to subscribe. So we opened it – on February 29th of this year we launched – and it almost felt like a new business.
Focusing on profitability
“What we did was: When I arrived, we assembled our team. We surrounded ourselves with customer feedback to make sure we were listening to customers. We were trying to figure out where our business was—not just financially, but from a customer experience perspective. And we said, look, the goal was profitable growth. But we felt like we had to start with profitability. So, for four consecutive quarters, we’ve had positive adjusted EBITDA. This is not the ultimate goal. For example, I care more about cash flow than adjusted EBITDA. But now, here we are. And then growth – we’re getting closer to real sequential growth, which will lead to some kind of continued growth going forward.”
Grove Co.’s addressable market
“What I believe is the same way that Chewy went after a certain segment, the same way that the apparel players — whether it’s Quince in the private markets or Shopbop in the early days — there are so many players out there that are carving out a niche . And I think we have this place. We believe it is an addressable market of 57 million people in the United States. These are customers who buy natural products – who care about human environmental health. And we will serve them. We will become obsessed with serving them better than anyone out there.”