At the beginning of 2020, Hilary and her husband, Dan knew they wanted to start a food business. Microgreens seemed like a great entry point, and Hildan Produce was born.
How do you go from an idea to starting a full-fledged business? Let’s break it down.
Many business owners, established or just starting out, are seeing the potential of selling their products online. With online sales, there’s the ability to grow and reach a wider customer base. The Census Bureau of the Department of Commerce estimated that total e-commerce sales in 2021 in the US topped $870.8 billion, a 14.2% increase compared to the previous year.
The potential is there. All you have to do is get started. Here are the six components of starting a successful online food business. Let’s jump in:
The first step to starting your business is defining what you’re going to sell. Your product offering will define your target market, sales channels, and marketing strategies. Also, will define your delivery area, methods, and lead times. Some options could be:
Whatever you specialize in, be sure you don’t have an overly competitive local market. The more niche your product offering, the more likely you won’t have to compete with other vendors. Find the gap in your market and explore it further.
The second key is to know your customers. You want to market to attract those who will value the product you are selling. Who will value your product enough to pay what you will charge for it?
To understand what those people value, you first need to understand who those people are. Use the questions below to design several customer avatars or ideal customer types.
Questions to think about:
Answering questions like this can help you narrow down what your brand needs to look like. It will help you visualize who you are selling to and make marketing decisions that will attract this customer.
The next step is which sales channels you are going to sell to. Different channels have different pros and cons based on your production yield, location of your business, and type of products you sell. Let’s go through a couple of options:
Farmers' markets are the most popular sales channel for small-scale farmers. They have a low barrier to entry, they allow you to sell your products for the highest margin, and the market brings the customers to you—all reasons why a lot of farmers start out at farmers' markets.
Take the farmers’ market online by offering pre-sales for the market through your online store and use the market as a pick up location. Selling online removes the disadvantages of bad weather. If you have leftover product after the online ordering, you can always bring it to the market to sell.
A CSA connects the producer with consumers in their community. Customers support a farm by pre-purchasing a share of the produce grown that season. In return, the customer receives a pre-determined value of the product over the season, such as a food box or a number of products per week.
Take your CSA online by selling shares through your online store. During the season, you can also offer the buy-down CSA model where customers can shop your online store weekly and their purchases get deducted from their initial share credit.
Selling to restaurants and chefs is another possible sales channel. Chefs are always looking for more ways to incorporate local food into their menus. Be that option for them!
This sales channel provides you with a way to scale up production quickly and is a great alternative if the logistics or time commitment of selling at the market is not possible for you.
Take your wholesale sales online by sending chefs in your area a link to your online store. This way they can order the volume they need weekly and pay directly through the platform. No time spent communicating back and forth or confusion on when and how to pay invoices.
Running an online store and selling directly to your customers offers you a lot of freedom compared to selling at the farmers' market. You are in charge of your own hours, prices, and availability—and best of all, you can do it all from your own home.
You need an online system to run your online food business. Your platform plays three essential roles:
Your online store is where your customers can order directly from you. Instead of sending them a list, or connecting via email or message, your online store does all the work for you. Automated inventory, customer information, delivery and routing… the list goes on.
On the back-end, your online platform can be HUGE for your business. The automated sales data it collects on which products are most popular, what your average order size is, and where your customers are concentrated are just a few examples.
Local Line is the leading e-commerce platform for local food. Its features are built specifically for the needs of perishables producers, such as flower farmers and vegetable growers. Not only does Local Line offer a beautiful online storefront, but has plenty of administrative features and reporting that will allow you to keep track of your business.
To set up your online store, you’re going to need high-quality photos and enticing product descriptions! Once you’ve taken the photos of all of your products, upload them into your online store, write your descriptions, and set your inventory. Before you know it, you’ll be able to start collecting orders.
Online sales can help ease many inefficiencies in your business. From clear, easy-to-access sales data to owning your own sales channels, it can make a huge difference in your day-to-day operations.
But, to get people ordering, you need an effective marketing strategy. Some of the best marketing strategies to get started are:
Pick a few strategies and make a plan. How often will you send an email or make a post? What are your indicators of success? Writing down your marketing plan will keep you accountable and help you better reach your goals.
➡️ Need help with marketing? We created the 365 Days of Marketing!
The biggest difference between selling only at the market and selling online is order fulfillment. How are you going to get your products to your customers?
An easy option? Take pre-orders for the market. Customers can order what they want the week prior and pick up their order at the market. This way they ensure they’re getting what they wanted before it’s sold out, and you’re ensuring profit for that week. Alternatively, you could also offer additional pick-up times at different locations throughout the week to cater to those who can’t make it during market hours.
You can also offer pick up at different community hotspots, like the local cafe, small-scale retailer, or even from home!
In the future, you can also strive towards offering delivery to customers. This is the ultimate form of convenience for customers, but you have to ensure it’s feasible and profitable for your business.
Local Line gives you the ability to define and manage your unique pick up and delivery options. When customers order through your store, they can select the option that best suits their needs. This saves you time from having to communicate when and where they can collect their orders.
In addition to determining how you’re going to get products to customers, you need to think about the best workflow for packing orders. This starts with store hours. If your pick up day is Saturday, you’ll need to give yourself time to harvest and organize orders.
You do pre-orders online for pick up at the market on Saturdays. You open your online store on Tuesday morning at 9:00 AM and send a reminder email to your customers. On Thursday evening at 9:00 PM you close your online store for orders.
On Friday, you download your pick list from Local Line and start packing. Saturday morning you bring the pre-orders and extra product to the market. Customers can come to you with their order slips and collect their orders.
Pre-defining your plan will help you avoid any confusion and keep your sales process efficient and clear.
Starting an online food business is an exciting venture! It will take some trial and error along the way before you find your niche, reach your customers, and run your order fulfillment efficiently.
Something not working? Always remember to look at the data, assess the problem, and try again! Before you know it, you’ll have orders flowing in!
Hilary’s advice: try it out.
“If you're hesitating [about selling online] and probably the reason why you're hesitating is that you think it's going to be confusing or overwhelming or you're going to have to pay a lot of money [for] no results and or no actual care.
Get Local Line! No, seriously, try it. Use it for a week for free and just see what you think. If you don't like it, you don't have to go forward. But my guarantee is [that] you're gonna like it and you're gonna want to go forward with it because the numbers don't lie and my numbers have just skyrocketed since we started.
And I know that it was because of Local Line and the help that you guys have given us."
