In this episode, Keith Anderson interviews Kari Morris, co-founder of Martie, a venture-backed online surplus discount store specializing in shelf-stable groceries. Kari shares the company's inception, emphasizing its mission to address surplus in the food industry. The conversation explores Martie's rapid evolution, its retention mode, and the strategic balance between discount and higher AUR items. Kari also discusses customer engagement through live shopping events, the role of influencers in their model, and Martie's unique approach to capturing a new customer base. 

TRANSCRIPT BELOW:
Keith Anderson: Welcome to Decarbonizing Commerce, where we explore what's new, interesting, and actionable at the intersection of climate innovation and commerce. I'm your host, Keith Anderson, and together we'll meet entrepreneurs and innovators reinventing retail, e-commerce, and consumer products through the lenses of low carbon and commercial viability. 

Welcome to the Decarbonizing Commerce Podcast. I'm Keith Anderson, and my guest today is Kari Morris, a serial entrepreneur, but most recently co-founder of Martie. Which is a just venture backed, online, surplus discount store for the moment for shelf stable groceries, but who knows what the future holds.

And I find this entire, surplus grocery space so fascinating because in the landscape of solutions for Decarbonizing our industry, they are among those that are the most commercially viable. That is, consumers love them because, as you'll learn about Martie, they can get great food products anywhere from 40 to 60 percent off.

What they're, maybe even more, what they're used to paying in conventional brick and mortar grocery stores. The suppliers love them because they get to recover some revenue of inventory that otherwise might have gone to waste. And it, it's a good business for Martie as well. And all of that is independent of some of the, climate and environmental benefits.

So I was really eager to learn more about Martie and how they arrived at the business model that they're in and where they see it playing alongside some of the other models that exist. And I learned a ton. So I'm excited for you to hear more from Kari Morris, co-founder at Martie. 

Kari it's great to see you. Congrats on the fundraise and thanks so much for joining us.

Kari Morris: Thanks so much for having me.

Keith Anderson: Well, fundraisers are always exciting. And when I first saw the news, I was mistaken. I thought the company was just launching, but in fact, the company's been around for a few years. I thought maybe to start, you could tell us a little bit about Your journey to co-founding the company and then as we get to the funding, maybe talk a bit about the evolution from then to now.

Kari Morris: Yeah. Yeah, of course. So, Martie really is, uh, born out of necessity. My background really is in food production. I had a brand called Morris Kitchen in New York about 10 years ago, producing small batch syrups, cocktail mixers, and, sort of found my way to Los Angeles after selling the company. I met my co-founder, Luis Fritjofsson, and she and I, started working on some concepts in food, building CPG brands, that were direct to consumer, and really sort of like pushing, pushing that envelope of what we could do with, with influencers, which was, which was, which was interesting.

We found ourselves in December sitting on quite a big load of ginger holiday cookie mix, which we knew come January, we weren't going to have a place to sell it. So we sat there and we thought for a minute and, and, you know, our goal always was to really push the envelope in the food industry.

Really do something that was meaningful, impactful, was going to We wanted to be a way to bring better for you brands and quality ingredients to the masses. We sort of knew at that moment that we weren't going to be able to push to this next level, with our own sort of CPG brands. We sold off the holiday cookie mix and the wheels started turning.

And about four months later, we had created, the first sort of iteration and, and deck for Martie and went out to fundraise on this new concept. And about four months after that, we launched our site. So I think that's, that's sort of like the, the initial phase, the push into, concept to reality.

It happened pretty quickly for us in 2021.

Keith Anderson: Four months is pretty quick.

Kari Morris: Yeah. Yeah. We, we move fast. We move fast. And so we really set, we, we set out really to, to find brands that had this product to really create like the value prop around needing to offload, but also this is still good quality food and we can offer it to our customers at a discount.

So better for you brands, but really like. Meeting, meeting the masses where they are, offering discount. At the time we were going through COVID, there were supply chain issues. There was a lot of inventory available. People were getting very comfortable with shopping online. And so we sort of hit this spot where we loaded an inventory.

We put it up on the site and we, you know, we kind of instantly found our, our customer. And started to then build out, you know, the value prop even more to say, well, what are the products and what's the product mix that we need to sustain within this, to really get people to come back every month? Like, what is that retention model that we have that's really sticky?

And Martie is a shelf stable. We, we are grocery first and foremost. And. So within that, we really stuck to like, those core shelf stable grocery items that we knew people would come back for. Your coffees, cereals, nut butters, jerkies, fruits, nuts, like snacks. So much of, you know, that CPG marketplace, especially with better food brands, is dominated by snack.

And so, we leaned into that pretty heavy, and Really, yeah, built out the model on that, first and foremost.

Keith Anderson: So, you've already mentioned the retention model and driving that return trip. Doesn't look like there's a membership at the moment, is that something you considered?

Kari Morris: Absolutely, yeah. Yeah, it's, it's, it's something that we believe will benefit our customers. If not today, in the near future. In terms of what, you know, adding more value and sort of creating. Creating the ability for, for members to have more perks, whether it be discounted shipping rates or, first dibs on limited products that we have.

Those things all sort of get baked into the model, but for now it's really, as we build that SKU count and, you know, find our footing there, I think it's, it's more important for us to allow people to come in and shop and learn what Mart 

Keith Anderson: Makes sense. And you mentioned building the skew count. Roughly, how many skews are in the assortment? I'm sure it's a moving target, just given the nature of the model, but roughly how many skews?

Kari Morris: Yeah. Right now we're, we hover around 500. And so for, for grocery, that's quite small. When you think about like center store shelf stable, it can be, you know, up to 3000. So we're, we're, 

we're just sort of crack cracking that, and figuring out what are the things that were critical to the model.

Keith Anderson: And how do you think about what optimal might be? Is it a function of What you can source based on who has surplus inventory, is there a sweet spot where you've got enough selection that, you're driving the Return frequency that you're looking for, or?

Kari Morris: It's a, yeah, it's a, it's, it's a good, it's a good question. And it's sort of a moving target. You know, we, we need to, we need to put every order in a box and send it to your house. So as you can imagine, we have to sort of optimize that box. So we're looking to sort of have a product mix that allows us to get people great value, whether it's through discount or, you know, lower priced groceries.

But then also some higher AUR items that help balance out that basket and get us to a place where. All of a sudden the unit economics makes sense for us to then put a label on it and ship it to your door. So core categories like we've talked about are, you know, essential, coffees. Bars, higher AUR items.

We always want to have, plenty of these items so that when you come back to Martie, if you've bought it before, the site is going to optimize to show you that again. We have implemented some tools in the site experience, so when you are logged in, based on what you've purchased in the, in previous, orders, we'll start to feed you things that are more customized to you.

Do you have kids? Do you have a pet? Those things will start to be in your feed more, so sort of like learning who the customer is and then feeding them the right product mix. That is a retention play, but also. Yeah, just looking at like that mix of AUR and making sure that like, when you check out, we've done our best to try and get you into one single box with a high AOV.

And then you're going to go through that in about 30 to 45 days and come back. We kind of think of it as like shop Martie first. So of course you're not going to get your produce or you're frozen. But if you scan the site before you go to the grocery store, chances are you're going to be able to fill your basket with things that you would otherwise buy.

And you're going to have a really nice feel good moment when you say, I just saved 50 or you know, whatever that moment, that total cash value is, it's real and it's a really like kind of fun moment to fold that into the shopping mix for the customer and really see that value. 

 

Keith Anderson: I, I think you've definitely got the treasure hunt, dynamic going for you, and I think that there's all kinds of discount models, but as I browse the site, to your point about the, materiality of, of the savings, I think it, it's a clear contrast to a lot of the discounting that You see these days in the sense that it's a pretty significant savings per item.

You mentioned building baskets and unit economics. There's no order minimbut there is a minimum for free shipping. Is that right?

Kari Morris: So it's 25 to check out

Keith Anderson: Okay. So there's a 25 minimum. Gotcha.

Kari Morris: then 50 for free shipping.

Keith Anderson: And are there any other behavioral nudges or incentives you're using to keep growing the basket? Or is it for the moment, mostly about inspiration and personalization?

Kari Morris: Yeah, there, there, there's some tools that we have in terms of, as you're checking out, we, we have sort of built in suggested for you, sort of moving inventory through that, you know, isn't slated to sell through those will get discounted. Those higher discounts always move very quickly for us. So we use those as incentivizing tools and emails and push notifications to sort of

get people, over the line, if you will. And then using back in stocks as well on like brand level or category level.

Keith Anderson: Oh, got it. So if something that I saw and was interested in, is no longer available, I can set a notification or is it happening automatically?

Kari Morris: Um, It's not happening automatically yet, but it's something that we will push out as we get things back in. So, Peace Coffee sells out really well. When we get it back in, we will send out a push notification for those who purchased in the past. so much for

Keith Anderson: And I, I also see things like, you know, 

Kari Morris: we look 

Keith Anderson: the detail page. So somebody that is on the fence can see if, if they don't act now, they might miss it. One aspect of the model that you've mentioned that, I'd love to learn more about is the influencer side of things. I see the live shopping, section on the site, but maybe you can talk a bit more about

the role that influencers play in the, in the model.

Kari Morris: Mhmm, yeah. Uhm. What we actually... we, we use more of an affiliates model. We, we've seen a lot of organic growth through those channels. Uhm. The, the live shopping is really cool. It is, for us it's like a way to really engage with the customer and I think the way that I like to think about it is like at Home Shopping Network, modernized. But really it's a way for people to get to know some of the products we have. Because they're such a deep discount, I think it's important for us to really showcase those products and, give people an opportunity to ask questions and sort of validate that these are quality products.

Just at a discount because they need to move quickly or, you know, needed to find a new supply chain channel. So it's, it's, the live shopping really is like a, it's a, a marketing play if you will. And it's sort of like an open, place for our, our community to come and ask questions and learn.

And then, yeah, affiliates, influencers, you know, that, it, it, it's a steady growth, and the more that we get out there, the more that it sort of snowballs and takes. It takes on a life of its own. We do use a referral program. So there's a give 10, get 10. Which is an easy way for people to, to kind of latch on and try before you buy.

Or, you know, try the product and try the service. And, yeah, get a little cash back in your pocket for making the recommendation. So, yeah, all of these sort of play into our, our overall capturing new customer model.

Keith Anderson: And think I saw in the fundraise announcement that there may be ambitions or plans to broaden into other categories. Is there anything you want to share about that?

Kari Morris: Yeah. It kind of goes back to that, product mix and talking about what is our customer looking for? Where are they looking to save? What helps us continue to offer the best discounts on grocery and still make the model work? Right? So you think about like health, beauty, home goods. Typically the margins there are much stronger than you'll see in food.

And so as a whole, as a basket, when you balance those out, it helps everything come together in a more sustainable way for, for us as a business, because at the end of the day, we really want to continue to offer quality foods at a great discount. In order to do that and ship it to your home, we have to continue to innovate what that means to us as a company and how we can continue to add value, keep those discounts incredibly high for the customer.

And yeah, work on that, that, that AOV basket mix.

Keith Anderson: Yeah, it's sort of the story of, modern retailing history in a sense. You know, marrying the high velocity consumables with the high margin non consumables or non edible consumables. So the, the slogan or the tagline is savings for the pocket and the planet. Maybe we can spend a little time unpacking what role some of those principles play in, you know, everything from how you've decided what to carry to how you operate and what are some of the savings for the planet.

Kari Morris: Yeah. Yeah. So big picture, I think, you know, these numbers are, are pretty staggering, but 38 percent of food in the U. S. goes unsold or uneaten, right? So there's a lot of opportunity to improve that. And we all play a part. A lot of that's happening, you know, at the farm, foods that don't even make it to market, some of it's happening, sort of more in our bucket, which is, post production and on the way to grocery channels, and that's where Martie really has an opportunity to help, and then, you know, some of that's happening at home.

So, I think, for me, Martie plays, plays a role in this in part by educating the consumer about why this food exists here. It fell off the supply chain for a reason, and it's perfectly good food, and you're getting it at a discount, right? So educating the consumer about that, and as well as, expiration dates for Best Buys.

And sort of giving, like, empowering our customer to know that, like, just because something says Best Buy, It doesn't mean you need to throw it in the trash, right? So we can get more comfortable with pushing those limits and opening up, like, what we're comfortable with in terms of best buys. And I think there's a lot of education that can still happen there.

And so that, that's something that we really like to push through the site experience, through Martie, who is our, our Earth mascot, you know, the idea is really that he's there to help guide you through and learn about food waste and, and how to really like feel like you have a part that you can play to help, move the needle here.

And on the vendor side, the supply side, you know, that a lot of these brands we work with are just emerging. They're, they're finding their footing within this, this landscape of food and they've chosen to really invest in, in more sound. Sustainable supply chains, ingredients, packaging, et cetera. They, they're, you know, they're competing with, the larger CPG portfolios that have the shelf space.

They're paying to, you know, to be on the shelf and to hold that space down and, It's, it's challenging, right? So, Martie is a way for them to reach new audiences, which they wouldn't, might, might not otherwise reach, and really to take excess inventory, from a failed purchase order from a store, seasonal products, or things that just didn't sell through and have kind of come to their last, expiration date.

Line where it can no longer be sold in a traditional grocery store. So we're talking about maybe 60 days to expiration or best buy. That product through Mari, they can realize some cash. Typically if they were to donate this product, there wouldn't be like a tax benefit. At, at early stage, you know, CPG brands.

So we can turn around, pick up the product. Give them cash, allow them to continue to sustain their next production run, focusing again on the products that are thriving for them, right? So there's always going to be a need for balancing inventory, in this space. And, so for those brands that are investing in better ingredients, It's, it's really an opportunity for them to thrive. 

Keith Anderson: Is, is there a set of criteria that you've established that, a brand has to clear in order to play on the platform.

Kari Morris: We kind of let our customers drive that, you know, what are they looking for? What are they coming back for and asking for? That will help us decide whether or not we want to bring a brand on site. We do have some larger, more commercial products. And. You know, from where we sit, that, that's okay.

We don't, we don't discriminate on food. We want to get as much food as we can into as many hands as we can. So while we might focus on some quality, we're not going to say no because, because of a specific ingredient, you know, we have our values, but we're, we're really here to say food should not go to waste.

It shouldn't end up in a landfill. It should be distributed and eaten. Especially at a discount when people need it,

Keith Anderson: Yeah, as I, as you and I were speaking before we started recording, one of the first things that occurred to me when I was getting acquainted with your model was it seems to sit nicely alongside some of the local store based, surplus food marketplaces like Flashfood, like Too Good To Go, even Olio, which is sort of a peer to peer, at least in the U.S., there really hasn't until, until Martie been sort of a national ship, centrally fulfilled, shelf stable, surplus food platform with, this kind of selection and, and, Value proposition.

Kari Morris: right? And, and, you know, I'll say, like, closeout liquidation, opportunity buys, it's not new. It's, it's always been around. I think, and I'll speak for myself, being on the other side of it, it was, it was just sort of an icky word. And it was something that as, like, a supplier, a vendor, you wanted to stay away from, and you kind of wanted it, that inventory to just disappear or go away, and I think what Martie is doing is really taking the idea that surplus food or this like liquidation doesn't have to be, you don't have to be ashamed of it, it exists, and we can, you know, we can interact on the internet and talk about the discounts we have and why we have them in a way that, I think brands can now celebrate and instead of saying like, I'm going to just try and sell this off and I don't want to see it, it's going to be a, you know, lower price, we can talk about what we're doing here, you know, we're we're making a difference in, in, food waste, carbon emissions, you know, we can break it down to all the things that, you know, having food just end up in landfill does.

And for our brands, you know, we can deliver back to them, you know, metrics around what they've done and how they've contributed and, and that's a fun share back for, for them as well.

Keith Anderson: Hey folks, this is the part of the show where we say thank you and see you soon to the general audience, plus and higher tier members of Decarbonize.co, stay tuned for the rest of the episode.

Kari, if people want to, get in touch with you or learn more about you, where would you send them?

Kari Morris: Gosh, good question. LinkedIn or, yeah, through the site, you can always get in touch with me, through our customer support.

Keith Anderson: Very good. Well, thanks again so much for joining us.

Kari Morris: Thanks so much for having me, Keith. 

Keith Anderson: Thanks for listening. I'm Keith Anderson, the executive producer and host of Decarbonizing Commerce. Sonic Futures handles audio, music, and video production. If you enjoyed the show, we'd really appreciate it if you took a moment to subscribe and leave a review or share it with a colleague. For the full episode and more member exclusive insight and analysis, join the Decarbonizing Commerce community at Decarbonize.co. Thanks for listening and we'll see you on the next episode of Decarbonizing Commerce.