FOOD STAMP REVAMP

The online grocery market remains closed to Americans on food stamps. A digital upstart is asking why

The goal is simple in theory: Get more customers to buy groceries online.

But allowing the more than 40 million Americans on food stamps to use the benefit to purchase groceries on the internet will require some high-powered negotiating. Enter the two founders of online health food retailer, Thrive Market.

After 20 months pushing the issue, Thrive Market’s Nick Green and Gunnar Lovelace on July 11 and 12 will visit the East Wing of the White House, where they are scheduled to meet with Debra Eschmeyer, the Obama administration’s senior advisor for nutrition policy. The pair said the plan is to discuss the future of a government policy excluding online retailers from the list of approved outlets at which food stamps can be used. Lovelace and Green said they will also meet with congressional lawmakers and staffers at the US Department of Agriculture, the federal agency that administers the Supplemental Nutrition Assistance Program (SNAP).

The trip to Washington DC coincides with the pair’s online petition, which urges the federal government to ask all US states to implement and upgrade the technological systems food stamp beneficiaries would need to buy approved foods online.

“It’s crazy that in the 21st century you can buy anything online—whether it’s sex, guns or drugs—and you still can’t use food stamps on there,” said Lovelace. “We want to make sure that they scale this out as fast as possible.”

The USDA said that in August and September it will look for a handful of online retailers to volunteer for a pilot program it plans to begin in 2017, a spokesperson said.

Thrive Market targets the 70% of Americans who don’t live within driving distance of food retailers specializing in organic or healthy foods such as Whole Foods. Since its launch in November 2014, the company has built a consumer base of more than 5 million registered users and 300,000 subscribers. Like Costco, it charges a yearly subscription fee and prices its goods at a discount. Thrive Market’s annual fee is $60 and its food prices run between 25% and 50% below normal retail levels. Average orders are about $80, and 2-3 day shipping is free for packages over $50.

By opening up sales to food stamp recipients, Thrive Market can expand its customer base while giving poorer people better choices, the company says. Its curated catalog aims to stock non-perishable foods with low sugar content, as well as those with fewer chemicals, preservatives and less processing.

“We’re not going to say vegan versus paleo is better, but we will tag every product on whether it’s vegan- or paleo-friendly,” Lovelace said.

By stepping into the Washington DC debate over food stamps, Thrive Market is entering a political minefield. SNAP benefits have long been part of a tug-of-war between Democrats who seek to expand the program, while Republicans have fought to diminish it, citing abuse and fraud.

Of the 258,632 firms approved to accept take food stamp benefits, 3,711 (about 1%) were investigated (pdf) by the US government for compliance issues in 2015.

“I think one thing that [Green and Lovelace] are doing is bringing some new people to the debate who aren’t shy about saying, in many instances, that this is between people being able to have kids and have healthy food or not,” said Ken Cook, head of the Environmental Working Group, which advocates for expanding SNAP.

The company on June 27 told the New York Times it had raised $111 million (paywall) from investment firm Invus in its latest round of financing. In July 2015 it had raised $30 million in Series A financing from Greycroft Partners.

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