The business model for farmers has evolved in recent years. With traditional sales channels changing and customer preferences shifting, finding new ways to reach your customers is more important than ever.
This is where online sales come in. Selling online allows you to reach your customer base without the need for a retail store or market table. With selling online comes home delivery.
We were very excited to ask Darren Stott from Greenchain Consulting for his best tips and tricks when it comes to successfully (and efficiently) offering home delivery to your customers.
As the director of marketing and purchasing at Spud (one of the largest stand-alone organic home delivery companies in North America) for 10 years, and then helping food hubs get their products into restaurants, institutions, and retailers, Darren has over 20 years of experience in local food.
We asked him for help. Here’s how to successfully, efficiently, and affordably offer home delivery for your farm. First, let’s review the benefits of home delivery services for your farm.
First, you need to ask yourself the question, “Why offer delivery for my business”? It is not easy to do. You need to be able to manage costs and meet a threshold to make offering this service worthwhile. However, there are many benefits of offering home delivery services for your farm, such as:
If you are currently selling at markets or wholesale, offering home delivery is another possible sales channel for your farm.
COVID-19 acted as a major catalyst for increasing online shopping. Many customers have become accustomed to the convenience of home delivery and may now prefer it.
Offering home delivery gives those who enjoy the ease of online shopping, or those who may still be cautious, a reliable way to purchase from you.
An online farm store allows you to take control of your farm inventory. You can sell exactly what you have, versus meeting a quota for wholesale, etc.
Here are seven steps to help you offer farm-to-home grocery and produce delivery efficiently, ensuring your customers receive fresh, local products on time.
A lot of grocery home delivery businesses popped up as a result of the pandemic, so the competition is steep. As a farm, you need to find your unique position in the market. How can you compete with larger grocery and supermarket retailers?
As a farmer, you are offering fresh, local products directly from the farm. Perhaps organic produce, grass-fed meats, or pasture-raised goods. Your products are better for people and better for the planet. Use this.
Also, do NOT compete on price or convenience. Instead, you are offering a unique, premium product. This is your selling point. Luckily, customers are now willing to order from multiple home delivery services to get the products they want. Your customers will more than likely be ordering from Amazon, Costco, Walmart, Instacart, Whole Foods, and other major grocery retailers or other online stores. None of these offer your direct from the local farm product.
Good packaging can make or break your business. Farm produce must maintain the quality of the product during transportation. This means that the products remain fresh and at a safe temperature during transit. No dirty or flimsy cardboard boxes.
You need to pack produce and meat in a way that prevents any damage to the product such as wilting, bruising, or breaking. Also, in regards to damaged products, be sure to have a good return or credit policy. Great customer service, and knowing how to respond to customer complaints, will keep customers coming back to you.
Packing is also an essential part of your home delivery business. This needs to be efficient and cost-effective. Darren recommends to layout all products in order over two shelves, in front and behind the packer. This allows the packer to move very little and identify what needs to be packed in the bin.
Ideally, you want to be packing at least 7 to 10 bins an hour, depending on your product range. Reducing friction and making the packing process more efficient will save time and reduce costs. To make this process even smoother, you can use Local Line's pick and pack lists feature. Local Line allows you to easily download pick lists for each order cycle, ensuring you never miss an item from an order. This feature also eliminates the need for manual entry and provides multiple pick list formats, making it simple to organize packing for different delivery locations or vendors.
Additionally, be sure to map out days and certain times of the day for packing. If you work with packers, this allows you to map out when they’re needed. Incentivize packers to be more efficient by offering bonuses if they meet thresholds and disincentivize damaged goods.
After packing, the delivery aspect of your business needs to be efficient. Densely packing your routes allows you to reach as many customers as possible in a short period of time. Start with only certain neighbourhoods or areas before offering delivery to your entire customer base. You need to ensure that you’ll have a sufficient number of stops in one area to make deliveries worthwhile. Some larger food delivery businesses ask for a certain amount of residents to join before beginning delivery in that area.
Be sure to make deliveries efficient. Ideally, you want to spend between $5-10 per delivery. If the truck is 70 cents and you’re paying staff $15-20 an hour, the cost for that delivery day could be $200-300. This means that you need to do 30 to 60 deliveries a day. Always do your research before offering delivery. You want to be sure the margins are good and you are remaining profitable with each delivery.
Home delivery and CSA (community-supported agriculture) services are infamous for having bad customer retention with a high turnover of customers each season. There is only a finite number of people that will subscribe to farm-to-table home delivery services, so you must work hard to keep them. Otherwise you either lose sales quickly or you must spend a lot of money on marketing to attract new ones. Apart from the obvious ones such as good customer service, fair prices, and high-quality products to retain customers, Darren suggests these other tips.
For customer service be personable and share your stories, even daily. Get to know your customers as best you can and try and surprise and delight them (e.g. free product on their birthday). You can also build effective farm email marketing campaigns to encourage customers to place another order or to return as a regular customer.
Finally, another key tip is to encourage shoppers to place standing orders with you (like a CSA). Spud has been doing this over 20 years and even offers a 5% discount on any item added to a standing order.
A standing order is a recurring order that customers set up to automatically receive products at regular intervals, such as weekly or monthly, without having to manually place an order each time.
This is commonly used in subscription models like online CSA programs, where customers commit to receiving regular deliveries of farm produce or other goods. It ensures a steady stream of orders for the business and convenience for the customer. Local Line makes it easy to manage a CSA online with our integrated food subscription software.
👉 Learn more about how to sell subscriptions online!
A key essential to running a successful home delivery business is to keep your store up to date. Offering out-of-stock items can have a large impact on the success of your online store. The last thing any customer wants is to have something in their basket that cannot be delivered. Additionally, it puts extra work on you to manage customer success if this is the case.
Operate using a live-automatic farm inventory management system, so that when a customer purchases a product the inventory gets automatically updated. Using a Local Line farm e-commerce site, you can do this.
A common mistake Darren sees with many farms getting into home deliveries is growing before they are ready to. Many people jump into renting large warehouse space, buying a new delivery truck, or bringing on too many people too early. Before jumping into anything, look at what you already have and how much time it takes to pack and deliver orders yourself. Look at borrowing or renting a delivery truck on a short-term basis.
Growing too early can seriously hurt your cash flow and may not be worth it at the time! Invest some budget (about 3-5%) into marketing and customer retention to ensure sales. Use our free farm marketing templates to get started.
The last tip is for if you offer products from other suppliers. If this is the case, be sure to have long lead times (at least 48 to 72 hours). This gives your suppliers sufficient time to harvest and pack the orders. You do not want to carry any excess inventory.
As a farm, you do not lose any inventory and your customers get the freshest product with a longer shelf life. Longer lead times also allow you to offer a wide range of products because your business is not carrying the inventory. The wider the range of products you offer, the more convenient your business is to your customers.
Setting up a farm delivery business can be a tricky, but is a successful business model for farms. It is all about making good margins, efficient packing and routing, and providing excellent customer service. We hope these tricks and tips will help you start or continue to run your grocery home delivery business successfully, efficiently, and affordably.
For more tips on making your food businesses greener and more profitable, check out Darren Stott at Greenchain Consulting.
Thank you Darren for your helpful insight and best practice tips!
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