How Grove Collaborative revamped its business model to focus on profitability

Grove Collaborative thinks it has found the way to become the Chewy of sustainable home products.

The company has been around since 2012 but has gone through many iterations. For years, it was focused on being a subscription service that delivered curated baskets of its products -- such as paper towels and soaps -- to people's homes. It has tested out private labels as well as wholesale partnerships in stores like Target.

The company went public via SPAC in 2022 and has faced some difficult terrain -- including a delisting threat. Last year, Amazon veteran Jeff Yurcisin joined as CEO. His focus has been getting the company on a solid footing.

"The goal was profitable growth," he said on the Modern Retail Podcast. "But we felt like we had to start with profitability."

For the last four months, Grove has reported positive adjusted EBITDA. Similarly, the company announced a recent investment to help it pay down its debt load. Still, at its most recent earnings, it posted a net loss of $10.1 million. According to Yurcisin, these are the initial steps to get the company to become an online leader in natural and sustainable household products.

He spoke about how he's been approaching this transformation and what's on the horizon.

The first big change implemented as getting rid of mandatory subscriptions. "from my point of view, I wanted to enable subscription but I wanted to create an incentive for customers to subscribe -- not to force them to subscribe," he said.

Similarly, Grove has focused on operational changes to streamline its business. It focused on improving its customer experience to make checkout more seamless as well as paying down its debt. It has also been refocusing its tech stack, which has included moving onto Shopify. According to Yurcisin, these changes are now beginning to pay off. The focus now, he said, is adding more customers to the fold so Grove can reach its potential.

"We believe it's a 57 million-person addressable market in the United States," he said.