While more and more meal kit companies are veering from the online model to in-store sales, a new partnership between Walmart and Gobble is countering that strategy with a deal that will sell Gobble meal kits through Walmart’s e-commerce site — and not in the retail giant’s stores.
Gobble founder Ooshma Garg announced the deal in an interview with Fortune yesterday, which Walmart confirmed in an email statement, which read in part, “With more than 75 million items on Walmart.com, we continue to look for new options to offer customers. This includes specialty food items like the meal delivery kits by Gobble, farm fresh crates and snack boxes that give customers convenient options to plan and prepare meals.”
Despite a currently challenging environment for meal kits — pioneer Blue Apron saw its stocks drop 29% in July while Chef’d abruptly shut down last month, then was purchased by True Food Innovations a week later— Gobble is optimistic that its niche will be successful. Launched in 2010, Gobble meal kits are dishes that can be prepared in 15 minutes or less and require only one pan. Each kit contains two servings and costs about $24.
“This is a game-changing partnership for Gobble with the world’s largest retailer,” Garg told Fortune. “It leapfrogs our customer reach to the very highest level. Private companies entering similar deals in the past now show up to 70% of their sales coming from nationally dominant retailers like Walmart.”
Fortune estimates Gobble brought in between $25 million to $50 million in annual revenue last year, but the company has not yet made money.
Walmart earlier this year began offering its own meal kits and simpler “one-step meals” in its stores and expects to roll out the service to 2,000 stores this year. The meals were developed and tested in the retailer’s Culinary and Innovation Center and are made and assembled fresh in-store daily.
Walmart’s two-pronged approach — developing its own in-store meal kits while partnering online — is a strategy that Rick Stein, vice president, fresh foods at the Food Marketing Institute, has anticipated, telling Supermarket News in June, “Meal kit brands need the retailer as much, if not more, than the retailers need the digital partners. The online meal kit brands are also challenged because consumers don’t always want to commit to a subscription. I believe that in the short term retailers will partner, but longer term I believe they will develop their own brand and establish a successful private label offering.”
He continued, “Retailers are fully aware that consumers desire the convenience of meal kits. “They will continue to develop their own meal kit initiatives or develop partnerships as fast as possible to meet the growing demand. Partnerships allow food retailers to mitigate shrink and optimize meal kit offerings sooner than later, but eventually I think retailers will prefer to develop their own offering as long as it is profitable.”