Many small start-up food and beverage and consumer products companies contact us looking for ways to get their products into the hands of consumers. Some hope to see their new food product stocked on shelves of grocery stores; others are seeking ways into the non-commercial foodservice sector, selling in high-traffic, niche channels like airport kiosks or highway rest-stop concessions — or college and university campus bookstores or hospital cafeterias. There are a world of options for how and where to market and sell your new food product.
However, there’s a lot of work that needs to be done by you before you can negotiate a deal with food brokers or grocery distributors; read more about food brokers in our post here – ‘Everything you Wanted to Know about Food Brokers‘. Yes, we can and do develop marketing plans for food product businesses, but like a food broker or wholesale food distributor, we want to be sure the product really has a target audience before we get on board. It’s important for any new food product company to show proof of demand — and at least modest sales — before seeking out marketing, distribution, and/or retail partners.
So what’s a food or beverage product start-up company to do? It’s a little like the chicken and egg conundrum: you need to show demand and sales before you can earn broader exposure for your product, but you need some exposure if you’re going to generate demand and sales. The answer is to take your product direct to your consumer via e-commerce.
Direct to Consumer Website vs. Ecommerce Marketplaces
A true Direct to Consumer approach is where you sell to consumers online with no middleman; your job is to drive traffic to your ecommerce website and make sales, assemble a database of customers/followers/subscribers to whom you can continually market, and build your own audience. Your website might be running on WooCommerce, Shopify, Big Commerce, or any website outfitted with checkout functionality and a way to accept payments.
TIP: A good choice for the absolute beginner is Shopify as it provides a range of tools and services for merchants to optimize their ecommerce sites and offers ideas for driving traffic to them.
Marketplaces are third-party ecommerce websites where you can list your products for sale, Amazon, EBay, Etsy and Walmart.com being among the largest. These sites already have huge amounts of web traffic and consumers searching on their sites so they are an important aspect of ecommerce.
Marketplaces are not, strictly speaking, direct to consumer because you are selling not on your own branded website but via these third-party marketplace sites. To get found in a Marketplace you need to do a lot more than just listing your products — you may need to advertise to get found.
There are other drawbacks to selling your products exclusively through a Marketplace. For example, to accommodate faster shipping speeds, Amazon prefers to stock your product in their warehouses and ship them to customers for you — for which they charge fees. Also, Amazon may not promote your product if they find out it is sold for a lower price outside of Amazon. Amazon always wants to be your lowest price outlet.
Another big downside of selling via a Marketplace is that you do not get to keep the consumer data of your customers, you don’t know who is buying your products. Without that information, you will never learn what is working; who your audience is, their demographic composition, their buying behavior. That’s why many ecommerce experts suggest you never rely entirely on third-party platforms even if you do use them for some sales.
So where should you be selling your products?
It’s recommended that you do both. Have your own ecommerce site so that you can build your own audience and customer database, and supplement that using some third-party Marketplace platforms as well. Large manufacturers like Adidas sell their older, discontinued products on Ebay, for example, reserving new merchandise for their own ecommerce site. Another example is Levi’s jeans, selling its higher-end jeans exclusively through its own ecommerce site and its own company stores, and selling its more moderately priced jeans through other retailers, like Macy’s and Target.