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Misfits Market eyes growth after integration of Imperfect Foods
Online grocer expanded product roster by as much as 40% via the acquisition and is folding Imperfect’s private-label items into its own Odds and Ends brand.
4 Min Read
With the accquisition of Imperfect Foods, Misfit Market's product lineup has grown to about 700 SKUs, about 120 of which are produce. / Photo: Shutterstock
Online value grocer Misfits Market has put itself in a stronger position for growth, according to Chief Operating Officer Corey Farrell.
About a month ago, Misfits Market completed its integration of fellow online grocer Imperfect Foods, which it purchased in November 2022. With the acquisition, Farrell said Misfits now offers delivery to about 90% of all U.S. ZIP codes.
Misfits has also increased its product offering by as much as 40% through the addition of Imperfect and is now folding Imperfect’s private-label products into its own Odds and Ends brand. The process is expected to take a few more months and will enable the company to begin launching more new products in 2024, Farrell reported.
Misfits Market, founded in 2018 with a concentration in the East Coast, and Imperfect Foods, founded in 2015 with a concentration in the West Coast, both launched with the strategy of purchasing produce with cosmetic imperfections that were traditionally discarded or sold for some purpose other than human consumption.
"They expanded beyond just selling these produce items with cosmetic imperfections ... into traditional CPG grocery products where there's opportunity to sell short-dated products, products with upcycled ingredients and to have a more comprehensive offering,” Farrell told Winsight Grocery Business in an interview.
The company’s goal is not only to capture products that it can sell at a discount—up to 40% off grocery store prices, according to the Misfits website—but also to reduce food waste, which Farrell said is a “massive inefficiency” in the supply chain and contributes to greenhouse gas emissions and climate change.
Prior to the acquisition, Misfits offered about 500 to 550 SKUs in its online store. That has since grown to about 700 products, with roughly 120 of those being produce items, according to Farrell. In addition to items approaching their sell-by dates, Misfits’ CPG offerings include products that have been mislabeled, rebranded or are near the end of the season.
Farrell said Misfits has built relationships with manufacturers and brands to identify and purchase their products. The online grocer also works with companies like Boston-based technology firm Spoiler Alert, which connects CPG companies with retailers to help manage excess and aging inventory. Some of those products are sold at a discount, while others are upcycled and added to the Misfits private-label brand.
“A good example is broken pretzel pieces that we then cover in chocolate and sell as chocolate-covered pretzel pieces,” Farrell said. “As we've brought the two companies together, we're going to be moving forward with a combined, single private-label brand that will feature both high-quality, high sustainability-oriented products that meet a good price point for consumers. This is kind of the traditional private label model, but we're also out there working with manufacturers to develop upcycled products as well that are truly differentiated and very aligned with our mission.”
That assortment of private-label offerings is expected to eventually make up roughly 30% to 40% of the Misfits inventory, Farrell said.
Misfits is also benefiting from the acquisition due to the consolidation of Misfits’ and Imperfect’s delivery networks, Farrell noted. Most companies that operate at the scale of Misfits and Imperfect use third-party services like FedEx to deliver packages to their customers. Before the acquisition by Misfits, Imperfect had deployed a fleet of middle-mile delivery trucks and last-mile delivery vans for its own workforce to deliver orders, and that enabled Misfits to cut out its use of third-party delivery services and “deliver a great customer experience because we have full control over the time that product leaves our fulfillment centers and gets to the customer,” Farrell explained.
Delivery consolidation also helps Misfits with another part of its mission: environmental sustainability. “As we move deliveries from a third-party … we’re able to reduce the packaging in the box because we have more control over it, and we have more control over the temperature of the product throughout the delivery journey,” he said.
Bringing delivery in-house has also allowed Misfits to pick up packaging and recycle it for customers, Farrell added. “We receive a lot of positive feedback on the fact that we picked up the gel packs that we use to cool the products. We actually reuse them, too,” he said. “So it's another piece of waste that we're not contributing to, and then we also pick up the silver foil liners because a lot of those are not curbside recyclable.”
Misfits is also keeping a close eye on possibly incorporating reusable boxes into its business model. "We’re just constantly trying to find ways to take waste and inefficiency out of the whole supply chain process,” Farrell said.
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