Farmstead’s Refill Discount Program Reframes Grocery Loyalty - pymnts.com

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Grocery app Farmstead is reimagining loyalty with its Refill & Save program. Rather than just rewarding frequent visits, the company also rewards loyalty to individual products, offering a discount on select staples for repeated purchasing. The company recently announced the national expansion of the program. In addition to offering a refill discount (typically around 5 percent) on the program’s products, the program also works as a marketing platform. Suppliers in the program, in exchange for a manufacturer chargeback, have their items recommended to Farmstead customers and through the online grocer’s newsletter.

“It's about the offering the ease and convenience of weekly shopping to our customers,” Linda K. Lee, the eGrocer’s head of business development, told PYMNTS in an interview. “So it's focused on weekly staples that folks need and want to replenish, and the great thing is, they get savings on the price … With respect to loyalty, it’s really offering value, at the end of the day, to our customers.”

The nationwide launch comes after a successful Refill & Save pilot test in the San Francisco Bay Area, in which more than 70 percent of Farmstead customers enrolled in the program.

Consumers have more ways to get their food needs met than ever. They can go to restaurants, order off-premises meals through digital channels, subscribe to meal delivery services, shop at the grocery store, or purchase groceries online. Plus, within each category, there are countless options to choose from. Accordingly, programs that offer value and encourage loyalty are becoming more important than ever to win customers’ favor in the highly competitive connected “eat” ecosystem.

Creating Value For Suppliers

While consumers benefit from the discounted rate, suppliers can benefit from the opportunity to win customers’ loyalty. In exchange for a manufacturer chargeback, suppliers get to expose more shoppers to their products. Given that the goal of the program is to encourage weekly replenishment, the program is intended for suppliers that sell the sorts of staple items that shoppers typically need to restock regularly.

Lee notes that Refill & Save’s returning participants “see the value not just in price and cost savings, but the quality of the products that are that are made available there too.”

Additionally, the program can also serve as a way for suppliers to take advantage of Farmstead’s data tools, tracking inventory and consumer behavior, which can in turn give suppliers a better sense of how to market their product through other retailers as well.

Lee explained that the program provides suppliers “a place where they know they can reach customers, drive growth and retention, and be able to track that together as they're looking for additional insights when it comes to how their products are moving online and how they can better target those customers for that growth.”

Going National, Going Local

While the program may be expanding to all of Farmstead’s locations, it is going to look a little different, depending on where the customer is shopping.

“Each market is somewhat unique — the tastes differ region by region,” said Lee. She added that in the San Francisco Bay Area, “a really unique market,” the program’s participants include local suppliers that “have a really loyal following from their customer base.”

While these sorts of suppliers perform very well when selling in their home market, the appeal may not translate nationally. Accordingly, the company is looking to identify “those similar types of local suppliers” in each of its markets, suppliers that might be interested in deepening and expanding their customer base in the area, tapping Farmstead’s audience, and utilizing its data analytics. Lee noted that the online grocer’s head of procurement and merchandising is currently seeking out these suppliers.

In addition to its Bay Area home base, Farmstead currently operates in Charlotte and Raleigh-Durham, North Carolina, and it is soon to enter Nashville, Tennessee; Miami, Florida; and Austin, Texas, with at least 12 more markets planned throughout the rest of 2021. As far as attracting new customers for the Refill & Save program, Lee said, “We’re still an early-stage company and we’re focused on national expansion this year. We’re only going to see those volumes grow overall.”

Give The People What They Want

Farmstead is known for its data-optimized inventory and its predictive artificial intelligence (AI). As Pradeep Elankumaran, the company’s co-founder and chief executive officer, told PYMNTS in April, “The ability to predict means that we control the experience — and the more the experience is under our control, [the more] we can deliver customers a phenomenal experience, and the more customers get a phenomenal experience, the more they tell their friends.”

The company takes the same sort of data-optimized approach to surfacing products for customers. Lee has previously spoken to PYMNTS about how the Farmstead’s artificial intelligence (AI) allows it to present “the right products to the right customers at the right time.” Now, discussing Refill & Save, she added, “We want to make sure that we're surfacing items that are going to really encourage that to add them to the cart and actually make a purchase.”

She added that the data used to make these recommendations includes a customer’s purchasing history as well as items that that customer has put in their cart that did not end up purchasing.

“[Grocers are] looking at ways to provide that omnichannel, seamless,” said Lee. “And so when it comes to that, I think personalization is top of the list — making sure that the customer feels that the grocer knows them, and understands their needs, their wants, and their interests.”