How This 19-Year-Old College Student Outsmarted the Entire Grocery Industry

0:00We had probably about four weeks of cash left in the bank. And I was like, hey, we need to do something fast.

0:12Hey everyone, welcome to Shopify Masters, your companion for starting and scaling a business. I'm your host, Adam Levinter. Did you know that 30 % of produce from farms never actually make it to the grocery store simply because they're not aesthetic enough? Divyogia created Odd Bunch to save the ugly produce that supermarkets reject and deliver them to customers for 50 % less. We've been profitable from the get-go. We've gone from 87 customers to now in the six figures. Farmers make more money, families can save hundreds of dollars, and our landfills aren't nearly as full. People have started to make decisions very consciously about what they're buying, why they're buying it.

0:53They're part of something bigger than just getting a box shipped to their door. Divvy is here to chat all about disrupting existing systems and developing a loyal customer base. Divi, welcome to the show. Thank you for having me. Really appreciate it. If you were to describe Odd Bunch to a layperson or to your mom or to a perfect stranger, how would you describe the business and what you guys do? I would say that Odd Bunch is a online subscription platform that connects imperfect or surplus produce from farms, greenhouses, distributors to households in the community. So as a subscriber, I can just click get produce shipped to my door.

1:35Is it the next day? Depending on where you live, it could be next day. But yeah, essentially, that's exactly it. You could shop on the website and choose exactly what box you want and save anywhere from 30 % to 50 % on your grocery bill while reducing at the minimum in every box 12 pounds of food that was otherwise destined for landfills. And the frequency of these shipments, are they coming monthly, weekly? Weekly is default. Perishable nature of produce. Most shoppers typically do stock up once a week or in about 10 days. So that's why we went with the default being weekly. But there's consumers that are on a bi-weekly or a monthly.

2:17It is flexible. And I'm getting an automatic shipment unless I cancel my subscription. Yes, exactly. So you can manage it. You can manage your subscription up to eight weeks in advance. So if you're, you know, you're away, you know, you have the flexibility to skip, pause, but yet you're not tied into a contract. So you're absolutely able to cancel without penalties at any time as well. So a hundred thousand households is a pretty far cry from 87 where you started. 87. How long has it been now? It'll be eight years in a month and a half. Do you see this as a major milestone or do you think like we are just getting started?

2:52both 100 ,000 households. That's a substantial amount of people. I don't surely didn't see it coming when we started. And for a very long time, it was not growing at this rate. But I do still think, yeah, we're just getting started, especially because of our product offering being so laser focused right now. I think as we continue to add that, we should get bigger within Canada. Canada only for provinces. Correct. Ontario, BC, Quebec, Alberta? Correct. What's the percentage of households that Odd Bunch now reaches? For us, the splits, I mean, Ontario is definitely our biggest market in terms of who can purchase a subscription.

3:36It's about 50 % of total postal codes in the country. So we've definitely added a lot in the last nine months. That's come off of the backs of the Vancouver expansion and Calgary-Edmonton shortly thereafter. but they're both in their infancy stages. The markets are not. I mean, Ontario, we've been running under Odd Bunch for over three years now. So the penetration is just not comparable. How did this idea start? When did the seeds get planted? That's a tough one to answer. Honestly, I think subconsciously, it was the whole growing up with that culture at home where food was a very almost sacred thing that you just didn't waste, right?

4:18And like it wasn't not even a grain of rice on your plate was allowed to sort of still be there when you were done with your meal. And I guess that was part of it. And just growing up before the age of 16, living in four different countries, just being exposed to that sort of at the subconscious level, I think had something to do with it. It was the end of my first semester at Western when I was in my first year where I came across articles about food waste and just seeing staggering statistics about how much never actually makes it off the field. is never actually consumed while food prices continue to rise, food insecurity is rising year over year.

4:54So I think that was my first exposure. I didn't really think that there was a business there. It was just curiosity. It wasn't until probably about five, six months later where things just kind of fell off the tracks with an internship. And I decided to see if I could take a crack at bridging the gap here between supply and demand. Was the internship where you started to ideate? I did. I wasn't supposed to, but I found myself not very interested. I was always a numbers person. I still am. I like numbers. I think of myself as far more analytical than creative. So I thought that that was a natural progression to take up something in the field of finance and banking.

5:37I thought I'd enjoy myself, learn something. And maybe that was a bit of 18, 19 year old ego where I felt like I was doing unimportant work. So I mentally checked out very early. It was like, I'm here. It's been five days. Why am I not doing something serious? Why am I not speaking to clients? Why am I not? Right. Which I get it now. Right. But in that moment, I think that is what pushed me away. And I said, okay, I want to do something where I feel like my work is valuable. I definitely was researching in the six, seven weeks that I spent there. I was definitely not focused on wealth management for all of it.

6:14But I think that was sort of my calling. Correct me if I'm wrong, though, between idea and first box delivery is something like 47 days. Yeah, that's fast. Yeah, yeah. So what's happening during that 40 plus day period? I've been asked this question, and I've thought about it long and hard. And I've termed it, I've come up with a term, naive optimism. That's what it was, right? And I think every entrepreneur, every founder, especially the younger ones, need that, right? And I think at 19, I looked at the food system and I said, yep, I could fix that, right? And at 26, 27, you kind of realize, okay, there's a lot of depth here.

6:56But sometimes when you start looking at things overcomplicating, overthinking, you never actually take the most important step, which is the first step. So I think it all worked out perfectly. Because at that point, you know, you don't know what you don't know. I looked at a problem, defined it, said, okay, I think this is what I can do to solve it. Let's do it. What was that first step for you, looking back? The first step, I think, was to verify that that pain point existed on the supply side. I think that was a natural first step. as any new founder or first-time founder. I mean, I was obsessing over names and logos and how the brand would look and feel, but I think that fizzled very quickly and probably had a lot to do with my lack of skill in that domain.

7:44So I jumped to sort of my strong capability, which is I wanted to speak to people. I wanted to build that relationship. I want to verify whether this pain point, which was documented in articles, really manifested itself in real life. so yeah turned to google found this buy local buy fresh flyer or pamphlet i don't even know if they publish them anymore for chatham kent and windsor essex and leamington that that area and i just i think it was like 47 farms on there or something like that just started calling them one after the other and i didn't get too far with that approach and it had their addresses on there and i just was like okay if they're not going to answer my phone i'll just drop by like why not right but i I was smart enough.

8:24I was smart enough to not just go in and just pitch them on something and like try to sell them on my brilliant idea that I had come up with six days prior. First couple of times I'd drive down and just sort of understand, you know, why they do what they do. When did they get into peach farming? There was literally an orchard that I visited that was in business since 1881. Wow. Like, I was like, okay, it's a long time. So yeah, once, twice, three times. And I think, yeah, I think by the third or fourth time that I just came down and said hello, they were like, okay, what do you want? Right? You're not driving from London every other day to say hello.

9:00Right? So that was kind of the start of it. And yeah, they verified the problem. They verified that, yes, this is very normal. And, you know, in our local community, we try to share within, you know, our neighbors and family and friends. And if there's still product that we can't sell, then it's either animal feed or we sadly just have to dump it, right? And that kind of was the first, okay, it's real. I wasn't concerned about what scale or how much or what price. It was just like, okay, the problem's real. So I think that was a big, big first piece, big anchor piece. What's the marriage between the pain point that those farmers have and the pain point that resonates with consumers?

9:44Is it food waste on a macro level? I think it is food waste on a macro level. I think it is transparency. It is making intentional purchases. And at the end of the day, it's also about value. And I think that's the piece that's really grown tremendously. I think value is the reason why we have gone from 87 customers to now in the six figures is because people have started to make decisions very consciously about what they're buying, why they're buying it. You know, since about 2020, there's definitely been a bit of an uplift in being okay with the idea of not seeing or touching or feeling your groceries before they show up to your door.

10:26So adoption from that standpoint has also gained momentum. But I think for consumers, it is knowing that they're part of something bigger than just getting a box shipped to their door. As a founder, were you looking at other use cases, either south of the border or globally, and saying, look, this business model has worked in these markets. It's just not here yet. Or for you, was this sort of net new? For me, it was net new. But by no means was that the first time that the idea was being executed or implemented. Because even in those early conversations with the suppliers, the business model wasn't there.

11:04I had verified the problem. I was like, okay, there's commodities that are worth not much to this grower that I could perhaps purchase, but then want. So that piece hadn't crystallized. And it wasn't until probably the week after where it was like, okay, if I can orchestrate collection between these six farms that are in Chatham, then I could probably create this bundle. right and maybe people could choose between the bundle and get more of tomatoes and less of peppers whatever and i would bring it back to a place and i would then sort it and then deliver it like that sort of crystallized afterwards and yeah i started looking at businesses that existed that were in the space and at that time i think there were a couple in the u.s that had just started i believe hungry harvest was probably about a couple years old at that point imperfect food i think or imperfect produce it was called back then was about a year old And largely the most dominant player in the market globally today, Misfits Market, didn't exist.

12:07So they actually started in 2018. So yeah, the space has evolved drastically in the last eight years. And the U.S. was definitely a couple of years ahead of us, even when we were starting. Okay, let's talk about the demand side for a moment. So you're talking to farmers. You recognize there's a problem on the supply side. The demand for something like this is a whole other question. so you spin up a brand you call it food fund called it food fund and you get a buddy of yours to design like a front-end website or something in exchange for a ride yeah yeah essentially yeah so yeah the scrappiness and just getting stuff done unconventionally is definitely a theme it's the mark of a good entrepreneur i guess so i guess so or just yeah yeah there's just there relentless focus of I need to get this done and I can't do it myself because I'm not skilled enough and it would take me too long to learn it.

13:05So what do I do? Right. So yeah, I had a hunch that demand would be there, right? I wasn't concerned too much about demand. I was concerned about supply in the beginning because I figured if I could sell someone something for 50 cents on the dollar and have it show up to their door and they're doing something that's good for the planet, Why wouldn't you do that? I was sold on my own story. Sure. Right? On demand and actually got a lot of pushback from the suppliers. I got pushback from the farmers. They're like, well, why do you think anyone would buy this? We can't sell it. I was like, that's fair.

13:41These guys can't sell it. These guys have been in this business 130 years. But they're selling to grocers or wholesale distribution channels? Yeah, yeah. Yeah, some of the, I mean, the primary business was selling to a bigger distributor that would then ship it off to a retailer. Yeah. But they all had their little farm stands and like farm markets. And they'd have people in the community sort of drive by and just buy from them. So in their experience, they struggled selling some of those great outs, even to people in the community. So they're like, why would, you know, how are you so confident that you could take it for 20, 30 cents on the dollar?

14:19No problem. Are you sure you're going to be able to sell it? So, and then that was sort of my piece where the demand side started to crystallize that, okay, I need a website or at least a landing page turned to Shopify. So this is quite a full circle moment, I guess. And that's where I called a buddy of mine who was at that time, he'd finished up his first year at Waterloo in SoftEng. I called him, I remember I called him and he was just like, what do you want? He was packing. And he was like, I don't have time. I need to get to Richmond Hill. Like I need to get out of here. This is my last day here, student res.

14:51and I'm like, how are you getting there? He's like, well, I don't know. I'm like, well, I could drop you. I can help you pack. He's like, what do you want, right? I'm like, no, no, just nothing. I'll come hang out. Got there with my laptop. I'm like, look, I'll pack the rest of this. You just do this. You focus on this. Give me a landing page by the end of the day. Did it. He did it. Simple landing page, couple of products, few photos, checkout, good to go. And I was like, okay, now. Transactional. Yeah, yeah. And I was like, okay, now what, right? I have this domain and this page and whatever, but it's like no one knows it exists.

15:25So that was the next piece. Your buddy spun up this website. It's fully transactional. It's ready to go. Well, what's next? I mean, it's the marketing. It's the awareness. Where are those first subscribers, those first customers, where do they come from? Yeah. So this took a while. So we had the website ready, well, a while, 10 days. But that was a while. I hadn't thought that far. So we kind of hit a bit of a dead end there with a nice website, simple, good to go. But every day I would go on there, the app, and it'd be zero sessions, zero visitors. And then, you know, maybe I'd look at it three times and it'd go to three, said, okay, people need to know, okay, what do I do?

16:07What's the highest leverage tool that I have? Didn't have very much money. So I mocked up a couple of flyers and figured, you know, my time is worth very little right now. Might as well get these printed and just walk around the neighborhood, knock on doors, talk to people. I can do that decently well. So I said, you know what? This is probably worth my time. Did that. Didn't do too well. Did okay. No one bought anything, but there was encouragement, enthusiasm. I don't know if they just felt bad for me in like 35 degree heat with flyers sweating, maybe. And then I was like, okay, something's got to give.

16:41Like I can't walk around the city. That's not good enough, right? so I remember there was a lady who was at a farm actually at the same time that I was there talking to the farmer and she was overhearing some of these conversations and she was like oh this is a great idea you should post about it in in a mom group like I said mom group yeah on Facebook said I'm a 19 year old male right and she's like no no they'll be okay I know like a couple of admins in the London area. Like you could, I'll message them. I said, okay. Two, three days later, I was in the groups and I made my first post and got traction and people were commenting like, oh, this is a neat idea.

17:21Started by a student. Like it has a feel good factor. And it's like, maybe I'll try it. Right. And I remember it was a mom group and it was a vegan group. There were two that did really well. And I think that was the first sale on the 16th of August at like 10 a.m. It was the first time we sold a box and the app went cha-ching. Oh, that was. It wasn't a subscription at the time. It was. It was? Yeah, yeah, yeah. We had it all. From day one. Yeah, we had it all set up. That was a piece I can take credit for because I was like, okay, this is not recurring. So then I went and configured the back end with bold subscriptions of was at that time.

17:56A shout out to Jay Myers at Bold Commerce in Winnipeg. Exactly. Yes. So that was sale one. and kind of then I went down this rabbit hole of joining virtually every mom group that existed in Southwestern Ontario till the point they got sick of me. But I would say the majority of the first 87 people that signed up in that 10-day activation period, probably 80 % came from that group. When did you pivot from Food Fun to Odd Bunch and what was the reason for the rebrand? It wasn't a choice. So we never wanted to pivot, right? I think we were committed to, and I was very sold on the idea that customization was the business and people wanted to choose and people valued tailoring their subscription to their needs.

18:45And if that piece didn't exist, the business would not be successful. So just so listeners understand, when you say that, as a consumer, you figure that I want to choose right down to the last apple, banana, carrot, what I want in my box every single month. Correct. That was my hypothesis that I didn't really test very deeply. But I was, again, very convinced that that was the case. So that was the direction we started building. It was a subscription build-a-box, and you could go in and configure it based on your likings, and there would be a set amount of products that you could pick from, and they would rotate based on what's available.

19:26And the model worked. Where things started to get a little bit complicated was when we started to pivot from produce to now start dabbling with non-perishables or less perishable food, like shelf-stable, pantry, and all that kind of stuff. And our SKU count started to creep up. We got to 200, we got to 250, we got to 300. And it was just, it was madness. The operational side of it was just, there was no consistency. There was no foundational processes that were repeatable across subscribers. And yeah, we grew partly through the COVID, sort of that six months where a lot of people turned to online groceries, but it was short-lived, right?

20:05Because there were loopholes in the way that we were packing and fulfilling orders. It just was not something that was infinitely scalable, at least not without significant capital. Okay. And so today's version of the model is courtesy of that pivot, right? Where subscribers every month get a box of fruits and veggies, and it's by what? Number of family members? Is it by weight? What are my choices? Essentially, there's really three parameters. You decide whether you want a conventional box or an organic box, you decide whether you want a mixed box and all fruit or all veggie, and you decide whether it's small, medium, or large, right?

20:45So it's really three choices. And we break it down by the number of people in your household, give people a sense. And we also list out exactly what you can expect in each box every week. That was sort of our happy middle between removing that customization piece where you couldn't choose exactly what was in the box, but you knew exactly what was in the box. So there was things that you knew you were not going to eat. You could still substitute them. Or, you know, if you just thought that this week, the box is just not for me, you could still skip it. We weren't sending you things that you were going to waste anyway.

21:20That would be counterintuitive. So that was our happy middle. And yeah, the pivot was, as I said, it was not really a choice. We got to a point where the business started to decline because they, as I said, operationally, we were just not efficient. There were packing errors and fulfillment errors. And it's just the burden of carrying that skew count across so many geographies with suboptimal scale just basically eroded margin. And we got to a point where we had probably about four weeks of cash left in the bank. And I was like, okay, we need to do something fast. How do you level set expectations for your current subscriber base right now in terms of the quality of the products that they're getting?

22:03because they understand the mission. They're behind the mission, certainly. They understand a lot of this produce isn't making its way into a grocery store for whatever reason. They get value on the dollar, sure. But what is their expectation upon receipt of the box? That's changed as well and has changed significantly, I think, in the last six to 12 months. By and large, because of our commitment towards educating users through social media and just through making noise, right? Where people understand that they're not going to get things which are perfect looking all the time, but they don't need to settle for something that is subpar quality.

22:43And I think that was a big, big piece that we had to overcome where people were on the fence and didn't want to take a chance where they got something that was substandard and said, well, sure, it's cheaper, but if I'm not using half of it because it's just coming rotten or moldy, that was a problem, right? So we tried to address it upfront and really talk about it through our socials where we had a good engagement with our community. And that's the piece that we've really doubled down on the last six to 12 months as well. And user generated content reviews, all those things help. A lot of the common first box complaints, if you will, are what's wrong with this?

23:21There's nothing wrong with this. Why did you say it was odd? So it's like there's a piece that's almost a complaint. It's like they were expecting things to be completely disfigured. Well, that's just not the case. There's so much that makes it into our boxes, not because it's wonky looking, but just because it's surplus. You can't control so many different elements in the food supply chain. And you can have three hot days followed by a rainy day and have too much yield. There's so much education to do. But I think we've been able to overcome some of these challenges and set expectations as to it may not be pretty looking, but it will always be fresh.

23:56And sometimes you won't even be able to tell the difference between what you've been used to buying for many, many years now and what shows up to your door. How do you manage the supply chain now? You're working with, I think, 80 plus suppliers across, imagine, multiple provinces. Correct. You have to ensure that they're bought into the mission, right? I mean, they are ultimately supplying you with your product. You can't possibly oversee, from a quality control perspective, 100 ,000 plus boxes that go out on a monthly basis. So is there a certain element of trust that you have to have in your suppliers, in your supply chain?

24:39Just walk me through that aspect of things. Yeah, the short answer is yes. There's a lot of trust. And that's not exclusive to us in the industry. I think this industry, and for that matter, probably all perishable food products, operate on a level of trust, right? There's processes, don't get me wrong. And there's a reason why there's 20 different grades of carrots and 20 different grades of apples. Because someone in the Okanagan needs to be able to communicate to someone in Newfoundland what this product is, right? So it's well thought out the way that the industry codes things and refers to things.

25:18But when you play outside that domain, when you say that, okay, we're not looking at Canada grade A. We're not looking at the fancies and the extra fancies. We're looking at perhaps grade B, grade C, sometimes ungraded product that's mixed into an 800-pound bin. Those lines and those codes are very quickly blurred. So yes, there's a lot of trust. And then over time, there's a need to develop internal systems. Although we've got a good working relationship with most, if not all of our growers, we've taken it upon ourselves to allow them that liberty and that flexibility to send us product. And we're accountable for going through and doing quality assessments and quality checks.

26:05Your team. Correct. And I think that was a big piece of that buy-in from the supplier side, where they've been burnt before. They've sent stuff, they've sent product to enthusiastic buyers that said, oh, we'll take the not-so-perfect grade and eventually to have to deal with refunds, to have to deal with credits, to have to deal with delinquent customers, essentially, that basically took the product and never paid. Because, oh, the product wasn't good enough. right so that was a big hurdle as well where they bought into the problem but they knew that what had happened in the past so for us it was almost again how do we win that trust and and taking that responsibility saying listen you send us what you think you have we'll deal with it right and now i mean we've obviously at five suppliers in 10 and 15 it was very different at 80 or 100.