United Natural's (UNFI) Community Marketplace to Boost Online Sales
United Natural Foods, Inc. UNFI is keen on strengthening its e-commerce business. To this end, the company launched Community Marketplace — a business-to-business digital e-commerce solution. The platform is designed for emerging brands, which will help the company expand distribution with United Natural’s customers.
Incidentally, Community Marketplace will help brands to reach out to grocery wholesalers and allow several emerging products, currently unavailable at United Natural’s distribution centers, to be ordered via its Easy Options website. These orders can be shipped directly to retail customers throughout the United States. We note that United Natural’s Easy Options is available for a number of businesses like convenience stores, independent grocery retailers, restaurants as well as natural food and supplement stores. Customers can purchase from more than 20,000 grocery and wellness products via the Easy Options website.
Well, the online marketplace helps suppliers to use the company’s digital infrastructure to endorse and sell their products to customers. Thanks to the platform, United Natural’s customers can access a larger assortment of different and local products. Also, consumers can order from different sources at once though this online platform while taking advantage of flexible order sizes.
What Else Should You Know?
United Natural’s sales are benefiting from e-commerce strength, thanks to increased e-commerce solutions offered by the company. In its last earnings call, management noted that 70% of the company’s Independents channel and a greater proportion of Chains channel now provide e-commerce solutions to their customers. Further, United Natural offers digital platforms and the support required by customers. Impressively, the company’s e-commerce sales surged 97% in the second quarter of fiscal 2021 on the back of new business as well as higher sales to the biggest e-commerce player. Retail channel e-commerce sales remained strong, with about a 190% jump at Cub. The company has seen a number of new customers on its e-commerce platform since the beginning of the pandemic and expects these trends to continue.
Apart from this, United Natural is benefiting from solid retail demand amid the pandemic. In fact, the company expects at-home consumption to outpace away-from-home consumption through fiscal 2021. Incidentally, work-from-home trends are likely to stay for a while. Also, a number of Americans are focused on managing their household budget efficiently, as part of which they opt for reasonable options like dining at home. Apart from this, increased demand for better food options with ingredient transparency works well for United Natural. Certainly, United Natural is committed toward optimizing distribution networks, creating increased operating benefits to its Value Path initiative, curtailing the cost structure and making technology-related investments. Also, management is optimistic about its recently-extended deal with its biggest customer — Whole Foods Market.
All said, we believe that the launch of Community Marketplace by United Natural is a step closer toward bolstering its e-commerce operations. Shares of this Zacks Rank #2 (Buy) company have more than doubled in the past year compared with the industry’s growth of 28.5%.
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