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When Your Food Business Should Go Online

Technological disruption is present in all industries, and the food industry is no exception. Amazon and other companies with large technology platforms are changing the nature of how food companies connect with consumers and what products are available online. And, the amount of consumers purchasing food online is increasing, with some predicting that 70% of all consumers will purchase at least some of their food online by 2024.

However, going online may not make sense for all products. Due to the physical nature of food, many types of products are cost prohibitive to ship to individual consumers via an e-commerce site. This includes heavy products, products that spoil easily and products that need extensive temperature controls. Even if you have a direct to consumer or subscription business model facilitated by an online platform, the potential upside in terms of margins might be eaten away if the product is not a good fit for that platform.

Customer expectations are also a factor in choosing what and where to sell online. In our podcast this week, Shari Leidich from Know Brainer has found that their individual shelf-stable creamer products have had the most traction with consumers when sold online through Amazon and their own online store. However their multi-serve product is more of a conventional grocery item, necessitating launching that product in physical grocery stores. In the end, they placed their products where their customers expected to find them and where the economics of that placement made sense with their business model.

Another consideration when venturing into online sales is how the company will relate and respond to their customer. In a conventional grocery store scenario, the products that do well have brands that resonate well with their target consumer, getting off the shelves for (hopefully) repeat buys. It takes a lot of marketing spend to get to that point, but brand building is about forging lasting relationships that lead to long term financial sustainability. It can be more difficult to maintain the essential emotional and cultural connection to the consumer through your brand via an online platform, no matter how seamless the user experience.

Food businesses should know the role that online sales will play in their revenue stream and in their business model. Consumers are starting to become omnichannel in their food shopping expectations, and many food businesses will need to follow suit. Like most things in food entrepreneurship, it is best to let your customers lead the way, and if they expect to find you online, go online and conquer.


And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Food and Beverage Business Models

Business Model Insights

Raising Capital

Raising Capital

Grocery Store Shopping

CPG/National Brands

Grocery Store Produce Section

Market Trends

 Regenerative Agriculture

Farming and AgTech

Mergers and Acquisitions

Deals/M&A

Events

Industry Events

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