Misfits Market Takes a Page From Amazon to Rewrite Grocery Logistics

Watch more: Monday Conversation: Misfits Market, Abhi Ramesh

There’s a lot more to the Misfits Market story these days than ugly food. What began with misshapen carrots and off-size avocados has grown into a full‑stack grocery and logistics platform that now sells household essentials. and increasingly looks like a new model for how perishable commerce works online.

Misfits Market’s business model is changing accordingly. Founder and CEO Abhi Ramesh says the company is no longer a niche “rescued produce” seller. It’s building a different kind of supermarket on the internet, one designed around supply‑chain inefficiencies, smarter merchandising and a growing array of categories that extend beyond food.

“We’re ultimately trying to build a new type of grocery store online,” he told PYMNTS CEO Karen Webster. “Today Misfits looks and feels like an online grocery store. It has a couple of thousand different items from produce to meat, seafood, deli, dairy, pantry staples, prepared meals, [and] beverages. The unifying themes are: tackling food waste and inefficiency across categories, a better‑for‑you assortment, and good deals.”

That expansion now includes non‑food. The company has added cleaning and household products, curated over months to emphasize safer ingredients, fewer chemicals, less waste and real performance. Ramesh says it brings harder‑to‑find, values‑aligned brands under one roof and making them available on a simple, recurring purchase schedule. The pitch: Make “clean” claims mean something, cut the clutter of traditional grocery shelves, and let shoppers attach home‑care staples to their weekly food basket.

From ‘Rescued’ to Re‑Architected

Ramesh’s “new grocery store” thesis rests on two big changes. First, Misfits works directly with farmers and manufacturers to buy what traditional retail can’t or won’t. These are often cosmetically imperfect produce, items in old packaging, mislabeled inventory, or packs with minor dents and turns that friction into shopper value. Many products aren’t near their expiration date. They’re simply “ugly,” overproduced or transitioning labels. Forecasting tools (including artificial intelligence for short‑dated packaged goods) help the team decide which lots to buy and how quickly they can sell through them online without the constraint of physical shelf resets.

Second, Misfits is commercializing the infrastructure it built to do that at national scale. “We’re not just building the customer‑facing grocery store, we’re also building the entire back-end supply chain, like perishable infrastructure, logistics and fulfillment from the ground up,” Ramesh said, citing one reason the company has raised about $500 million to date.

That’s where B2B enters. While Misfits doesn’t yet sell food wholesale in a formal program to restaurants or grocers, it already generates B2B revenue by letting other companies tap its warehouses and delivery network, the perishable equivalent of third‑party logistics. Internally, the team even named it like Amazon: Instead of Fulfilled by Merchants it’s Fulfilled by Misfits, or FBM.

Adapting the Amazon Playbook

If the consumer site is the front of the house, the largest share of Ramesh’s focus sits behind it. Misfits runs a network of regional distribution centers and frequently arranges its own trucking to move pallets where forecasted demand will be strongest. “We’ll split [a buy] across distribution centers based on forecast. It’s a big operational logistical equation we solve every time,” he said.

To keep that engine humming, the company built core technology in‑house. No off‑the‑shelf ERP, WMS or inventory suite could handle Misfits’ blend of perishable purchasing, cross‑country fulfillment, and last‑mile delivery.

This is where the Amazon analogy gets more than rhetorical. Ramesh expects the consumer business to drive the most revenue but believes higher‑margin profit pools will accrue to the services that monetize excess capacity again, like FBA and AWS did for Amazon.

“My hunch is the consumer part will always be the lion’s share of revenue. But we’ll see a similar dynamic over time where the consumer business drives volume and other higher‑margin ways make the infrastructure profitable,” he said.

The customer mix is shifting as the model scales. Contrary to the stereotype of an urban, sustainability‑first shopper, Misfits increasingly over‑indexes in the suburbs and exurbs. Over the past year, the company has seen “a pretty notable shift toward customers who live 45 minutes to two hours outside of a major metro,” households that may lack easy access to organics, grass‑fed meats and “higher‑attributed” items at a single nearby store.

Price sensitivity is also up, and Misfits has responded with membership and merchandising levers. A paid plan (think Costco) delivers deeper discounts. Bundling lowers unit costs further. Ramesh says consumers are trading down from big names to private label across grocery; Misfits aims to meet that moment while maintaining a discovery‑led storefront where half the homepage is “net new” items each week. That discovery bent sets the stage for a nascent retail media business focused on emerging brands that need storytelling more than shelf slots.

Just as telling: While there’s no formal wholesale program today, Misfits already sees order patterns that look like small‑business procurement. “Who’s ordering a $2,000 box this week?” Ramesh joked. Often it’s a neighborhood café or restaurant using the consumer site as a back‑door B2B channel. It’s evidence, he says, that a structured offering will find demand once Misfits decides to flip the switch.

Tariffs, Entropy — and Opportunity

Macroeconomic crosswinds have made planning harder for everyone in food. For Misfits, that chaos can create advantage. Ramesh points to on‑again, off‑again tariffs, weather volatility in the Americas, and shifting ingredient sourcing. Those changes force packaging or formula updates and create “transition” inventory that traditional buyers won’t take, which is exactly the kind of misfit Misfits can move quickly. One investor’s term for it, Ramesh says, is “pro‑entropic”: a model that thrives amid entropy.

Have tariffs killed entire products, pushing them wholesale to Misfits? Not often. More commonly, a brand swaps an imported ingredient for a domestic one, which triggers label changes and short‑term overhangs. That’s the window where Misfits plays “an off‑ramp” role, keeping goods out of the landfill and cash flowing back to producers.

Buy, Build and Reuse

Misfits has also used M&A to accelerate its platform. Ramesh led the acquisition of Imperfect Foods in November 2022, moving the combined company closer to profitability and scale. Earlier this year, Misfits acquired The Rounds, a Northeast‑focused service whose reusable packaging techniques are informing Misfits’ own circular logistics program.

Those circular ambitions show up at the doorstep: In markets where it’s feasible, Misfits picks up boxes, liners and gel packs for reuse, shrinking costs and waste at the same time. And behind the scenes, the footprint is now vast. It’s approaching a million square feet of refrigerated and frozen warehouse space, plus a fleet of 300-400 vans and trucks with Misfits’ own drivers. None of that, Ramesh concedes, was “plug‑and‑play.”

So Misfits is no longer merely monetizing “ugly” groceries. It’s rewiring how perishable goods move from farm and factory to a national network to the consumer or businesses’ front door. Now home‑care essentials get curated, priced and delivered alongside them. The company says it has already saved more than 228 million pounds of food from going to waste and delivered $155 million in “rescue revenue” back to farmers and producers. With FBM, retail media, subscriptions and discovery layered on top of grocery margins, the unit economics begin to look less like a specialty box service and more like a modern commerce platform.

“Using the Amazon analogy, it still feels like day one here for us,” Ramesh said. “We have a lot of work to do, and we’re excited about it.”

PYMNTS CEO Karen Webster is one of the world’s leading experts in payments innovation and the digital economy, advising multinational companies and sitting on boards of emerging AI, healthtech and real-time payments firms. She founded PYMNTS.com in 2009, a top media platform covering innovation in payments, commerce and the digital economy. Webster is also the author of the NEXT newsletter and a co-founder of Market Platform Dynamics, specializing in driving and monetizing innovation across industries.

Abhi Ramesh is the CEO and founder of Misfits Market, a direct-to-consumer online grocery marketplace focused on sustainability, affordability and accessibility.