I love Batman and Robin and I can’t think of a more successful duo — I think foodpreneurs and techies are like them, they need one another to really succeed in building a thriving food business.
Over the past 2.5 years building Crowdfooding and after thousands of meeting with amazing food entrepreneurs I’ve come to the conclusion that most of them would all have built more thriving businesses if only they were to approach growth like techies do.
Especially in the UK I’ve noticed that most food startups see gaining distributions in the major retailers as the panacea for their problems.
Often times I hear entrepreneurs’ rants about the following:
- it’s hard to reach the people with decision-making power
- payment terms are often times not aligned with startups’ dynamics
- takes ages to build a relationship with the buyers and get a listing
and the list goes on and on…
Here are the challenges I see for this approach:
- Competition: to gain distribution within the old retail guys, multinational companies pay (hefty) listing fees → startups can’t compete with them
- Margins: most startups’ manufacturing scale is not big enough to be prices and COGS-competitive (vs corporates)
- Marketing support: most startups have limited resources to invest to boost demand and support the sell-out (eg. sampling, ATL & BTL marketing budget)
Now, if I look at what most tech startups do when it comes distribution I see that ‘they actually build their own distribution channels’ to drive sales, primarily through their e-commerce and over the internet.
Here are the competitive advantages I see for this ‘techie’ approach:
- Distribution channels are (almost) free = Thank god, internet has no fixed listing fees (yet) 😉
- Digital products are usually (more) scalable + margins are high(er) vs physical products
- Digital advertising can help foster demand when needed (‘pay as you go’ model) and enable viral mechanics (eg. referral programs, competition, flash sales) that are quite cheap to bring to life
I appreciate someone could question that tech startups work differently and tech industry’s dynamics are different from food ones, but I do believe that ‘growth hacking’ can be applied to food startups and can lead to amazing results.
Below I’ve listed a few examples of food start-ups which I admire for their ‘strong’ growth-hacking approach to sales:
- Exo: cricket-based bars
- Four Sigmatic: mushroom coffee
- Back to the Roots: wholefood products + gardening kits for kids
- Collect data: emails collection is really important, after a few seconds on their site you get the pop-up below
2. Engage: Refer-a-friend program — 10$ credit for each referral (note: need to make sure LTV is higher than CAC)
3. Be ‘top of mind’: a simple & humorous (automatic) email with a promo code and a clear call to action “stock up” every 3–4 days
I feel, a new breed of entrepreneurs looking to leverage their expertise and passion from food and tech is already contributing to change the existing food industry’s dynamics. These ‘batman & robin’ have now the opportunity to build their own methods of sales and distribution and access to new global marketing platforms (eg. Amazon).
I believe food startups through their own e-commerce and online retailers like Amazon or Ocado can far outgrow their community and build sizeable businesses more quickly (and perhaps more profitably) than through traditional distribution channels. Plus this approach actually allows startups to create more demand for their products to a point where the retailers will come knock on their doors with listing opportunities as their online customers may be looking to buy them also from physical stores.
- Own your sales channels → be obsessed about capturing data (eg. email addresses) to create more direct relationships with your customers
- Be always ‘top of mind’ → email marketing can be really powerful if you put discipline to grow your sales/demand for your products
- Hustle your way there → most ‘growth hacking’ tools are free and lots of tutorials are available to learn how to use them
- Mingle with tech folks → attend tech meetups/conferences to identify people who can help you discover and learn how to leverage these tools
It is a natural evolution that I believe will push foodpreneurs to increasingly partner up with techies to focus their marketing efforts on e-commerce as they realize it’s can be a very relevant and more profitable channel for distribution.
I believe the Amazon WholeFoods deal is just the beginning of the retail revolution — So, foodpreneurs let’s get growing!