Can Going Direct-to-Consumer Save Your Business?

Before the COVID-19 pandemic, a whopping 54% of America’s food purchases came from foodservice. Not anymore. With dine-in restaurants, food courts and cafeterias now closed throughout much of the nation, consumers must transfer their food dollars elsewhere. Some are going to brick-and-mortar grocery stores, other sales have migrated online. But perhaps the most significant shift has been the sharp increase in direct-to-consumer food purchases.

In the last six weeks or so, companies that direct-marketed their products before the coronavirus crisis have seen their sales skyrocket, some by 400% to 500%. Since these companies already had the infrastructure in place—online ordering capabilities, delivery, packing and shipping materials, etc.—they’ve been able to, as best they can, handle the surge.

Several factors are driving this trend. For one, even though grocery stores, big-box retailers and club stores like Costco remain open, social distancing makes the shopping experience tough, and many people are skittish about stepping into a retail setting for fear of virus exposure. Also, brick-and-mortar stores are having a hard time keeping their shelves stocked thanks to squeezes throughout the supply chain. To avoid these hassles, many shoppers are instead buying groceries from Amazon and other online retailers—but these places too are struggling to get in product and fill orders in a timely fashion.

Buying food direct from producers eliminates many of these challenges. On top of that, in scary and uncertain times such as these, people want to know where their food comes from and reduce the number of hands it passes through from farm to fork. Joining a CSA, buying beef from a local farmer and ordering snacks straight from artisans accomplish these goals.

Of course, once the pandemic abates, some consumers will go back to their old buying patterns. But plenty will not. Once they’ve connected with a family farm, come to appreciate weekly meat pickup or realized the convenience of food landing on their doorstep, many people will stick with these programs. So, while direct-to-consumer food sales may not maintain their current sky-high levels, they’ll almost certainly be stronger than pre-pandemic.

Realizing this, many food brands and farms that hadn’t direct-marketed and are now suffering sales losses are exploring adopting this model. But how will it work? How can a company pivot to a new and unfamiliar channel? Will the required investments pay off? Should they go it alone or try to team up with another business to spread out the work?

These are all great questions, and the answers will depend on each business’s situation. That’s why it’s wise for food and farm entrepreneurs to connect with other food and farm entrepreneurs to learn how they direct-market or plan to pursue this path. Joining FFI’s weekly virtual huddles is an excellent way to make those connections. Also check out our latest podcast with Bryce and Jen Riemer from Riemer Family Farm to see how they’ve built a successful direct-to-consumer business for their grass-fed, pasture-raised proteins. We also suggest scrolling though our library of past podcasts to find more inspiring and info-packed interviews.

We know we’re amidst a very strange—and for many, very difficult—time in the food industry. Even so, when we all work together, we can not only endure this uncertainly but also emerge stronger.

Edible-Alpha® has created a short course that introduces three key ways to sell online: your own direct to consumer site, Amazon, and other online sites.

Topics include forming your online strategy, logistics and operational considerations, keywords, advertising and promotion, and metrics collection. Our hope is that this overview helps you start or grow your online sales. This course is being offered for free as there is an immediate need for all businesses to branch out to online sales amid this pandemic. View our course here.

And now, our roundup of the best food and beverage finance news, events and resources from around the web…

Consultant With TabletBusiness Model Insights

Raising CapitalRaising Capital

National Wholesale BrandsCPG/National Brands

Grocery Store Produce Section Market Trends

Regenerative AgricultureFarming and AgTech

Mergers And AcquisitionsDeals/M&A

COVID-19-Related Resources for Food and Ag Businesses