Walmart gets into subscription shopping with Goodies Co

The food subscription service delivers a box of treats to customers' doorsteps for $7 a month

The box-o-stuff subscription-based retail model is brilliant.  What better way to guarantee repeat business than by getting your customers to sign up for a payment plan in exchange for a monthly “surprise”?  It reminds me of the “win-win” scenario of the daily deal model back in 2010.  Swarms of startups and celebrities are jumping onboard to get a piece of the subscription action.  And just like how Google and Facebook essentially legitimized the daily deal model by creating their own daily deal platforms, a big-name retailer is “baptizing” the subscription box-o-stuff model.

Walmart unveiled its very own food subscription service, Goodies Co., on Wednesday.  For $7 a month, subscribers can get a monthly box containing five to eight hand-picked taster samples of foods ranging from healthy and organic to artisan and ethnic.  The Goodies Co. service is the brainchild of Walmart’s social and mobile commerce division, @WalmartLabs (the result of Walmart’s acquisition of Kosmix). 

So, why food exactly?  The Walmart brand isn't typically associated with artisan food.

“The charter of @WalmartLabs is to innovate at the intersection of social, mobile and commerce for the next generation of e-commerce. With the rising popularity of monthly boxes and food being an inherently social activity, we felt this was the right offering for us to come to market with at this time,” said Ravi Raj, VP of Products for @WalmartLabs. “People love to try new foods and flavors then talk about it online via Facebook, Twitter, blogs and more, and we are seeing this with our beta program.  Walmart's strength in groceries also dovetails well into this business.”

Raj tells me that the idea is to delight customers with new foods that they haven’t tried before, so most of the sample items in the boxes (which are coordinated around monthly themes, such as “Trick-or-Treat Sweets” for Halloween, and “Easy Entertaining” for Thanksgiving) come from small or new businesses that just started distributing their product this year.  Each product goes through a tasting process in the Tasting Lab, where it’s reviewed by select participants.  The highest reviewed items make it into the box.

There’s also a larger social component to this.  Customers are encouraged to review items in their boxes (by doing so, they can earn points that can later be redeemed for items in the store or future boxes), which establishes a social consumer community.  More than half of the site’s 3,000 beta testers have reviewed products on Goodies Co., and more than one third have reviewed every single item in their box.

This trial and feedback process comes in handy for merchants as well, who can use the reviews to tailor their product more closely to consumers’ tastes.  So not only do merchants get a distribution channel for their product, but a customer feedback system as well.

One thing that really caught my eye about Goodies Co. is the fact that the service only costs $7 a month (with free shipping and handling to boot), but the value of the items in the box might be double that.  The Thanksgiving box, for example, is worth $15.  The site generates revenue when customers discover an item that they like and go to the Goodies Co. website to purchase a full-sized version.

“In the coming months, we are looking to scale and enhance the customer experience,” said Raj.

You might remember the curious conception of @WalmartLabs when Walmart acquired social media data and analysis company Kosmix last year for a rumored $300 million.  Walmart already has an e-commerce branch in the form of Walmart.com, so the deal left many perplexed.  Kosmix has since become @WalmartLabs and doubled its team while producing products like Walmart.com’s search engine Polaris; Shopycat, a social gift finder; back-to-school shopping program Classrooms by Walmart; Get on the Shelf, a crowdsourcing contest to unearth new products for Walmart; and Social Media Analytics, which analyzes social chatter to determine which items should be carried by Walmart.

Kosmix founders Venky Harinarayan and Anand Rajaraman left @WalmartLabs in June 2012.