October 28, 2013, 2:36 PM

No more online Goodies for Wal-Mart shoppers

The retail chain ends its grocery subscription service.

Lead Photo

An online food subscription service backed by Wal-Mart Stores Inc. has shut down. The move comes as other subscription retailers add sales channels or otherwise tweak their models.

The Goodies Co., a subscription service from @WalmartLabs that launched as a test late last year, announced on its site that it is shuttering its operations. Goodies subscribers received a surprise box of food items at their doorsteps once a month for $7 a pop including taxes and shipping. @WalMart Labs is the chain’s e-commerce research division.

The retailer, however, hinted in its announcement that it may use some of the consumer insights it gleaned from the program for its larger retail business.

“When we launched Goodies Co as a test from WalmartLabs, our goal was to build a completely new, affordable way to discover and buy new products,” the message on Goodies.co reads. “Your input has been invaluable and we're eager to bring a bit of that Goodies magic to the world of Walmart shopping. We can't tell you much more about what we're working on just yet, except that we're excited.”

To receive Goodies, consumers signed up for the service not on Walmart.com, No. 4 in the Internet Retailer Top 500 Guide, but at Goodies.co. After consumers signed up, their names were placed in line to receive an invitation to join the Goodies community. Once a consumer received her invitation and signed up, she began to receive her first box within a few weeks and a different assortment of food items monthly. Each month had its own theme. October, for example, focused on Halloween treats.

The $7 boxes typically contained an assortment of items that combined would typically sell for at least twice as much from other retailers, Ravi Raj, vice president of products for @WalmartLabs, said at the time of the launch. Most of the goods, which ranged from healthy and organic to artisan and ethnic foods, were not sold in Wal-Mart stores. The food arrived in a gift box that described each item in detail. Consumers were encouraged to head to Goodies.co once they received their packages and leave a review of the box and its contents, post a picture or rate the box. The subscriber earned loyalty points for each of those actions that they could redeem for a free box of Goodies. If consumers liked the products, they could also go on to Goodies.co and buy full-sized versions.

Several e-retailers that began as subscription-only are trying to turn the subscribers they recruited into return shoppers on conventional e-commerce sites.

Subscription retailer NatureBox.com, which sells healthy snacks for $19.95 per month, later this year plans to start selling full-sized versions of its food on its web site, giving it another revenue stream.  And Birchbox.com's subscription service is designed to help consumers test new makeup and personal care samples in the hopes they will return to buy the full-size versions.

Birchbox Inc., which launched in 2010, offers both subscriptions and traditional e-commerce. It has shipped more than 5 million monthly subscription boxes to more than 400,000 shoppers at $10 each for women and $20 for men. And its traditional e-commerce business is growing, too. Birchbox says its full-sized sales are on track to more than triple in 2013 from 2012, though the retailer declines to reveal sales. 15% of online orders at Birchbox.com come from non-subscribers, Birchbox says. Birchbox is No. 720 in Internet Retailer’s Second 500.  

JustFab.com, which sells shoes and accessories, also is trying to expand its customer base beyond subscribers. Last year the former subscription-only retailer started letting non-subscribers make purchases on its site, albeit at a higher price than what subscribers pay. A subscriber, who pays $39.95 a month, can log in and use the monthly fee to select one item among several JustFab has selected for her, buy more for $39.95 each or ask to skip the month and not be charged. Non-subscribers pay between $49 to $69 per item to buy items without becoming a member. JustFab.com is No. 201 in the Top 500 Guide.

Earlier this year JustFab added a third sales channel with the unveiling of its first bricks-and-mortar store, in Los Angeles. Offline, the store similarly caters to JustFab members, who pay online prices while walk-in shoppers pay a premium. If store shoppers want membership prices, they can enroll in the store. JustFab, which generated $28 million in sales in 2011, says it is on track to grow sales from $100 million last year to $250 million this year.

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