Specialty Food Magazine

FALL 2017

Specialty Food Magazine is the leading publication for retailers, manufacturers and foodservice professionals in the specialty food trade. It provides news, trends and business-building insights that help readers keep their businesses competitive.

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Page 86 of 107

BY JULIE GALLAGHER T he fastest-growing e-commerce food businesses selling direct to consumers tend to possess a key differentiator, whether it's low price, selection, or service, and have four additional attributes in common, said Tony Cox, founder of the 5th Food Group, a direct marketing consultancy, to attendees of the Specialty Food Association's Business Summit, held earlier this year in Chicago. Learn the five common traits shared by online direct-to-consumer food businesses experiencing the most expeditious growth. Making E-Commerce Work for Your Specialty Food Business "There aren't a lot of new categories out there that aren't already being serviced by another competitor in that space," said Cox, "so ask yourself, why should they buy from you and how will you establish that leadership?" Cox provided as examples best-in-class steak brands such as Omaha Steaks, which he said boasts a wide selection; Allen Brothers Steaks, which offers the highest quality; the Grass Roots Farmers' Cooperative, which hangs its hat on grass-fed beef for less; and American-bred Wagyu beef provider Snake River Farms, which capitalizes on a specialized niche. Another common trait possessed by successful direct-to- consumer sellers is an adequate number of products to drive traffic to the site and a high enough profit margin to make the math work, Cox explained. "The lower the price point, the more items you'll need to make the business viable," he said. "Protein companies can do very well with just a handful of products since it's a center of the plate product, there is a higher price point, and the math works out that way." A business focused on low-priced items can also be prof- itable if the products and categories represented have broad enough appeal or a high enough consumption rate to generate an acceptable average order price, added Cox. "We have found that with an average order price much below $40, it's almost impossible to make any money on a business," he said. "By the time you've downloaded the order from the site or answered the phone, paid the credit card merchant fees, bought boxes, dry ice, and with all the hands touching the order, it's very hard to make money." Specialty food businesses don't have to offer free shipping to be viable, according to Cox, who noted that "the giants" specialty food maker "In every test we've run, visually appealing pictures sell more food." 82 ❘ SPECIALTY FOOD MAGAZINE specialtyfood.com

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