Farms and ranches are always searching for new markets and opportunities to sell what they raise and grow. One of the biggest opportunities is at their fingertips and the fingertips of their potential customers.
E-commerce sales grew 7% from 2022 to 2023, totalling $1.119 trillion USD, and accounted for 22% of all retail sales in the US. It is safe to say that e-commerce is here to stay, and food has a special place in this growth.
By 2026, grocery is set to be the largest e-commerce category. Currently, only 13% of the $1.6 trillion USD of US retail grocery sales happen online, giving e-commerce plenty of room to grow.
Customers are now more comfortable receiving fresh food and frozen meats shipped directly to their homes, along with the plethora of consumer packaged goods and food products available online. Farms and ranches wanting to sell online can rest assured that customers have no problem buying food online but prefer it in many ways.
In addition, direct-to-consumer (DTC) farm sales grew 35% to $10.7 billion in 2020 vs 2019, proving the growing demand for consumers to connect directly to farms and ranches. The combination of growing e-commerce grocery sales and DTC farm sales marks a crossroads in agriculture for farms to take advantage of these two trends and control their business future.
Online food subscriptions are a proven market winner for farms and ranches selling meat online. In fact, the retail domestic meat market in the US is close to $150 billion USD, demonstrating a strong market for DTC meat sales. With such a large demand for locally sourced meat, farms and ranches eager to sell their farm products online shouldn’t feel that the market is already saturated or that they are late to the game.
Selling food online takes on many different forms, and a meat subscription business is just one business model farms can mimic. Every farm has its circumstances and limitations, so different e-commerce business models will make more sense depending on your context and goals.
Here are four popular types of e-commerce business models for farms to consider.
As mentioned above, subscription boxes can be a wildly successful business model and are not limited to meat subscriptions. You can adapt a unique subscription and provide customers with a recurring experience of vegetables, fruits, herbs, baked goods, and so forth.
Subscriptions provide farms with recurring revenue, more predictable orders, and a consistent fulfillment schedule.
Local Line makes selling subscriptions for your farm easy, with their built-in subscription option already integrated into their e-commerce platform. Your farm may not exclusively sell subscriptions, but it is a powerful option to offer to repeat and loyal customers so they can automatically get what they regularly need without having to order themselves again. Learn how to sell subscriptions using your online farm store with our How to Sell and Management Subscriptions e-book!
Remember, it’s easier and cheaper to get an existing customer to make a repeat purchase than to constantly acquire new customers, and subscriptions simplify those recurring sales.
Some farms and ranches value-added what they grow and raise to create consumer packaged goods (CPG) products they can sell online. If you aren't familiar with the terminology, CPG products are akin to what you’d find in the grocery store aisles. Farms can take their raw ingredients, process and package them, and then create a shelf-stable product that the end consumer can enjoy immediately without having to proc➡️ess it themselves.
For example, Pretty Road Co. Farm Store turns their farm-grown lavender into a delicious London fog concentrate. This allows them to sell more of their lavender product and creates a more shelf-stable product that they could then ship to a broader audience.
Integrating the value-added process directly onto your farm can be daunting and expensive, but the returns on the initial investment can be outsized if executed effectively. Farms can also partner with co-packers to process, manufacture, and package their products.
These value-added products are more shelf-stable than their raw counterparts, making them ideal for cross-selling and upselling to boost your order size, or selling online and shipping to broader markets. If done correctly, the pricing is almost entirely up to you. You have much more control over the pricing, especially if the value-added product is phenomenal compared to alternatives.
This approach takes much strategy and forethought, along with marketing experience. Besides selling through e-commerce and finding customers online, your farm’s CPG product now stands a better chance of being sold in retail grocery stores regionally or nationwide.
Before proceeding, ensure you understand the legal implications of processing your farm’s goods into a packaged product. Laws vary from country to country and state to state.
This route isn’t for everyone, though I believe that every farm should be growing its social media audience regardless. You’ve probably seen some farms or ranches that have amassed huge social media followings or launched their podcasts. Believe it or not, this channel can be more lucrative than any other model.
If you aspire to grow your farm on social media and become a creator, remember a few things. It can be a long road to gaining enough followers to pitch brands, but it can happen quicker than you think. A lot of time will be initially devoted to building momentum and creating content you won’t get paid for. Plus, you can run the risk of platforms switching or becoming less popular, so it’s best to spread your audience and content out amongst the popular ones to ensure you can have touchpoints across social media while also building an email list you own.
There are various ways to generate revenue through social media and content creation. Often, the route involves sponsorships from brands that you partner with. These brands will pay you for association and impressions through your social media followings and podcast episodes, especially if you have many devoted followers! I’ve heard of brand deals in the mid-six figures for some agriculture influencers, so if done correctly, your financial future is bright.
Indirectly, you can also use your exposure to drive sales of your farm’s products. This model can be an entire business or work in tandem with your farm’s e-commerce store.
I added agritourism because farm hospitality has steadily grown worldwide as travellers seek more sustainable and tranquil accommodations. It’s part of this e-commerce business model for farms list because of the ease of opportunity presented through existing online book platforms.
Platforms like Airbnb, VRBO, and Hipcamp make finding guests easier than ever. Emerging platforms, like FarmStay, are dedicated exclusively to farm hospitality.
Adding hospitality to your farm’s offerings can be very lucrative but does contribute complexity to your operation. Hospitality is a different industry than agriculture altogether, but they can complement each other exceptionally well.
Before listing your property anywhere online and taking guests, check out local and state regulations regarding lodging to ensure you have proper permits and tax status.
If you want to take advantage of the growing e-commerce trend, you can ask yourself a few questions to determine which business model(s) make the most sense for your farm. A combination of them will likely be best, but like everything in farming, it depends on your unique context.
Starting out, it’s essential to identify your target market and create your farmer buyer persona.
Consider the following questions:
The answer to these questions will highlight where your marketing efforts online should be prioritized and focused on.
Next, ask yourself, what are your business goals and vision for the farm?
Do you have ambitions to create a brand and market yourself more? Choosing a farm name, and professional farm brand and logo that resonates with your business model will be important.
Are you committed to utilizing e-commerce to find customers? You may need a substantial volume of customers to move enough products to make it worthwhile.
If you dream of your farm feeding your customers delicious and nutritious foods directly from your farm, then go for it. E-commerce is by far your best bet in building a DTC business for your farm.
Also, regarding agritourism, do you have the capital or access to build new housing or renovate existing buildings? If your goal is to diversify your operations, adding a hospitality option could be crucial to the health of the finances and future of your farm.
Regarding building a CPG brand, are your goals to enter grocery retail and create a product that people enjoy nationwide? Depending on your ambitions, this route can be very lucrative, but time-consuming and capital-intensive.
Understanding the capabilities of yourself and your farm is crucial to entering and growing your business utilizing e-commerce successfully.
Consider the following questions when assessing your farm’s capacity:
These questions take immense honesty and can harm your farm if you take on more than you can reasonably handle.
If you’ve answered the questions above honestly and decided your farm is an excellent candidate for e-commerce, the next step is to determine your marketing and sales skills.
For success in any business online, marketing and building attention are crucial components that cannot be overlooked. Do you have experience with digital marketing? Leverage your skills and make it happen. If not, you can reach out to a professional who can help you out, like Local Line!
Local Line can help you with your farm's digital marketing needs, like email marketing, content creation, SEO, and paid advertising, to generate new customers for your farm!
