Here we go again…;)
In the last few months I had some great chats with a few budding foodpreneurs about online sales to really wrap my head around how they usually go about unlocking business growth through their online shops. The more I talk with startup founders about Cost of Consumer Acquisition (CAC) and the Lifetime Value (LTV), the more I realise there is a long way to go (at least on this side of the pond) when it comes to identifying which tools they should be leveraging to grow their online sales.
As I mentioned in my last piece ‘Why foodpreneurs should think like techies #1’:
‘…I believe food startups through their own e-commerce and online retailers, like Amazon or Ocado, can far outgrow their customer base 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 knocking on their doors with listing opportunities as their online customers may be looking to buy them also from physical stores…’
I believe the best way to consider how these channels can complement one another is through the lens of companies of the likes of Four Sigmatic Foods, a mushroom + superfoods company, or Back to the Roots which sells indoor gardening kits and aquaponics fish tanks for producing organic mushrooms, herbs, and vegetables at home.
These entrepreneurs are pushing the boundaries of traditional ‘category creation’ norms by devising ‘creative’ go-to-market strategies: new and unique ingredients (see: mushrooms, DYI growing kits), new marketing platforms, and, maybe most importantly, new methods of sales and distribution.
When Four Sigmatic first launched in 2012, they had no category to tap into — mushroom coffee was a new-to-the-world product. They knew they had to educate consumers about the health benefits of mushrooms while also building a loyal and engaged community of consumers. Thus, they started selling their products online through their company controlled e-commerce platform. This enabled the team to test and launch new products with their early adopters/loyalists, who were excited by new discovery opportunities. Once they validated this model, the company launched its leading product line: mushroom coffee.
I find this approach really fascinating as it proves that in order to build their own category they needed to be creative about their go-to-market strategy. Indeed, as a consumer I was impressed by how they followed up on my order sending customised (probably automated) emails to ensure that the purchasing experience was seemless — of course it tricked me to buy more.
Thus, after perfecting their products by incorporating some of the feedback collected from their most loyal customers, Four Sigmatic mushroom coffee was launched on Amazon. It quickly became a trending product by reaching the top of the instant coffee category, most likely driven by its passionate consumer base.
Fast-forward a few years later and Four Sigmatic is enjoying ‘exponential’ growth, competing with Starbucks Via for the bestseller slot in instant coffee on Amazon; in fact it reached #7 in all coffee and #59 for all grocery (1 spot behind Cheerios).
The incredible online success led to inbound interest from Whole Foods which eventually allowed Four Sigmatic to start getting their products listed in some of their physical stores. Fast forward to 2017, the company will be rolling out nationwide with Whole Foods Global this coming Fall. In addition to this, by focusing on online sales in their early days, Four Sigmatic has expanded from sachets, single serve units into bagged and pod formats which I think is an incredible result given ‘the innovation stagnation’ experienced by the Coffee industry in the past few years.
I believe this story proves what can be achieved via a bold and creative ‘go-to-market’ strategy implemented early on to establish a new category as a first-mover. It is indeed great to see how a brilliant deployment of that strategy can allow a company a few years later to enjoy fully-fledged multi-channel distribution. To this end I can’t express enough how excited we are at Crowdfooding to support more food startups via our platform by allowing them to design and deploy marketing campaigns to tap into ‘alternative’ sales channels to achieve similar results.
Coming up: Back to the Roots case study and how they’ve gained nationwide retail distribution via retailers through their online strategy.