Dive Brief:

• E-grocer Misfits Market announced on Wednesday the launch of a private label line of pantry staples called Odds & Ends. 
• The line currently includes coffee as well as snacks like nuts, dried fruit and dark chocolate-covered mini pretzels. The e-grocer plans to expand the number of products under the line and is currently working on adding olive oil, Kai Selterman, the company's chief strategy officer, said in an interview. 
• The line is Misfits' first venture into private label at a time when consumers are showing low brand loyalty amid rising inflation.

Dive Insight:

After starting in fresh foods, Misfits Market is looking for items that complement its assortment and build out consumers' baskets. With Odds & Ends, the e-grocer sees an opportunity to stock core grocery items that shoppers rely on week in and week out, Selterman said. 

Prior to this, Misfits has dabbled in exclusive product releases, like an "upcycled" stroopwafel it launched last year in partnership with Brooklyn-based Belgian Boys.

"Sometimes the assortment can be ephemeral. It comes in and out. We get deals on these products and then they're replaced with other products ... but private brands offers an opportunity to have the same consistent product week over week," Selterman said. 

The new private label follows what Misfits’ characterized as “record-breaking growth” in the first quarter, primarily due to its expansion in the lower 48 states and the launch of its mobile app. In February, Misfits added wine to its online assortment, letting customers choose from curated bundles that included three or six bottles.

"It's not a category that there's a ton of availability online," Selterman said, noting so far Misfits has seen a trend of bigger order sizes with wine in the basket. 

With Odds & Ends, Misfits was attracted by the higher margins grocers typically see with private label and having more control over product development and sourcing, Selterman said, adding Misfits expects consumer acceptance of own brands to continue to grow. 

“A lot of customers are embracing private brands as an option that they're comfortable with ... especially with the younger audience. They're just a little more willing to purchase private brands, so we felt to fit into the portfolio quite nicely," Selterman said. 

Misfits is promoting the private label line as high-quality, sustainable and affordable. While affordability and values shopping can often be at odds with each other, Selterman said private label gives the e-grocer control over sourcing, upcycling and offering sustainable packaging as it strives to meet customers' desires for eco-friendly products at an affordable price point. 

The company noted it’s able to offer products up to 40% off traditional grocery store prices. 

Misfits took a similar approach to wine, marketing it as high-quality and also noting that it's sustainably produced. The wine is shipped in recycled cardboard boxes that are 100% recyclable and have eco-friendly padding.

"We can really capitalize on these unique sourcing opportunities where we wouldn't be able to do that if we were just going out and buying the brands that are out there," Selterman said. 

Ultimately, Misfits' customers are increasingly using the service as a full grocery shop, Selterman said. 

While some grocers, like Albertsons, are feeling supply chain pressures for their private label alongside and national brands, Misfits noted in the announcement that its Odds & Ends line was designed to circumvent those issues by working directly with farmers and producers. 

“By paying fixed, stable prices, Misfits Market helps insulate the growers from potentially harmful market volatility and ensure they do not have to sell them at a loss,” the e-grocer noted about the coffee.  

Founded in 2018 and headquartered in the greater Philadelphia area, Misfits has sent out nearly 13 million orders and saved more than 230 million pounds of food. 

In September, the company announced it completed a $225M Series C-1 led by SoftBank Vision Fund 2 to speed up category and market expansion. That round brought Misfits’ valuation up to $2 billion and raised its total funding to $526.5 million.