The world, as a collective, is going through a hard time right now. No one could have prepared us for the wreck that the COVID-19 / coronavirus outbreak has unleashed upon us. There is not a single aspect of our lives that has not been affected by the widespread COVID-19. Every industry and business felt COVID-19’s effect on it. The world has gone into a lockdown to tackle the coronavirus, and it comes with a price. The food and beverages industry and local farms are one of the biggest victims of COVID-19.
Most businesses all around the globe are struggling on many fronts to keep going while adjusting to the new normal. The impact of social distancing and restrictions on group gatherings to certain consumer-facing businesses like restaurants, hotels, and pubs has been far more devastating than others and extends to the entire supply chain, like the wholesalers and farms who provide them with food & drinks and leave them in a state of limbo.
COVID-19 is an unprecedented event that none of us were fully prepared for, but on the bright side, it has been enlightening. It has taught us how important it is to be prepared for similar unexpected events and got us thinking about how to fight such situations. The food and beverage wholesalers, including the local farms, were left with a considerable amount of perishables that had to be sold and fast. The only plausible solution under the current circumstance is to sell retail and embrace a direct-to-consumer model fast.
There are a number of factors that make this simple, common-sense solution worth looking into. The most important one is that shopping online has become an absolute necessity of life from being a convenience factor, simply because the choice of leaving home might be the biggest risk one can take right now.
Catering to the consumers, meeting everyone's most essential need within the safety of their homes is going to be the most potential opportunity for Food & Beverage Wholesalers, farmers, and distributors who have historically functioned as B2B businesses catering to the other businesses. An omnichannel strategy addressing the need for both B2B & B2C customers can become your golden opportunity to not only withstand the current downturn, but a long term strategy to prosper but also to help your local consumers who are in dire need.
Why are Food and Beverage Wholesalers Switching to eCommerce?
With the restaurants, hotels, and pubs closing due to government restrictions, all the food and beverage wholesalers are pushed to adapt for survival. The industry saw their market disappear overnight. To get through this situation and to keep their company up and running, relying on selling digital has become the only viable option.
Normally, the B2B approach to your eCommerce would be sufficient, but considering the state of things today, it is always better to have a B2C web component for your business. Optimistically speaking, I think the COVID-19 has presented you with a chance not just to sustain your business but expand it. At the moment, it’s not about making more money. It’s about keeping your company alive and getting through these hard times. However, in the long run, it’ll not just act as a backup plan but also as a new channel of income.
It is always good to be prepared for unprecedented events like the COVID-19, but that doesn’t mean that it has to stop you from earning more from your business. The B2B market may have been your niche in the past, but your business now has an opportunity and a need to be diversified and adaptable to change.
eCommerce provides superlative flexibility for businesses. With eCommerce, you can sell to both B2B and B2C. You can give different prices to different customers, and you can even sweeten the offer for individual customers that you don’t want to lose. All your processes can be automated, making it easier to manage your business with the help of an eCommerce store.
If COVID-19 has taught us anything, it is that life is unpredictable, and you have to be prepared for any eventuality. There is no way that any company could be unaffected by COVID-19, even if it had an eCommerce store and an omnichannel strategy. However, having a sturdy eCommerce store with B2B & B2C capability would ensure that you can break the fall when something unprecedented happens.
The Challenges Involved
Now that you know WHY you need to expand your food & beverage business to both B2B and B2C using eCommerce, let’s talk about the practical challenges that you will face. The first difference you’ll notice about a B2B and B2C business is the number of products. On the one hand, we have B2B, where products are bought in bulk, this means less number of delivery trips, and easy one time packing. On the other hand, we have B2C, which definitely offers a large market opportunity, but the orders are on a small scale when compared to the 40-tonne loads that you are used to.
But, staying in your comfort zone can only get you so far. To ensure the safety of your business during a time of crisis like the COVID-19 pandemic, you need your business to be flexible and adaptable to change. The point of this is not just to have a backup when push comes to shove, but also to thrive your business and boost revenue on the good days.
Food items are often perishables, and hence time is critical when it comes to dealing with food. As an eCommerce expert who has worked with the online sales of perishable goods, we can guide you to make the right choice for your eCommerce store. You can add logistical functionality to your eCommerce store to set the date & time of the delivery as well as use expedited shipping. Furthermore, the admin can track all the orders from the back end and even group them together geographically to make shipping simpler.
Since we are dealing with perishable goods, product handling is a lot more complex than typical eCommerce. You might not be at the capacity to set up a pickup service for everyone or every locality. One way to tackle this problem is to provide a pickup option to the locals near you or your warehouse from where the products can be directly collected from you. Even in the case of delivery, please keep in mind that consumers are already used to paying delivery fees to UberEats and InstaCarts.
For any business, trust is the central pillar that holds the company and the customers together. At times like this, when people can’t even trust their friends due to COVID-19 you need to make sure that your customers can trust you. Make it clear that you are taking all the necessary precautions. Avoid physical contact with the customer during delivery by letting them submit precise delivery instructions and cashless payment. You could also leave the delivery at the door or place it on a clean surface near the door. Small details like this reduce friction and encourage your customers to buy from your store.
“Constumer” - A Revenue and Profit Opportunity in Disguise?
According to the popular F/B website FoodNavigator “Convenience and quality, not prices are driving consumer purchase decisions.” This is even more true in Gen X and Gen Y as per the report from SuperMarket News. And according to NRF (National Retail Foundation), “convenience has become the most important reason for buying even over quality and price.” Gen Z has always preferred convenience over price or anything else, and it remains true even now.
When someone makes a purchase, regardless of which generation they belong to, they take four factors into account. They are price, quality, convenience, and brand. The younger generation almost always go for convenience
Although Millenials and the earlier generations used to prefer online shopping for convenience as well, it has transcended into something much bigger. Shopping online is now a necessity if not a matter of your very existence. The need for being alive is far greater than the comfort of convenience, which means that even the people who initially shied away from shopping online have now switched to eCommerce. In short, our lives have changed after COVID-19!
What this means is that convenience comes with a premium price and consumers are already willing to pay that premium price. People don’t want to go through the trouble of finding the product after hours of searching. In fact, they don’t even want to drive to the store because that’s an inconvenience to them. Now, under the current circumstances, this convenience has a new definition, “existence”. Because at times like this when something as simple as going grocery shopping could put you and your families very “existence” at risk. And the price of existence is priceless.
To summarize, going DTC (Direct to Consumer) can become a significant new source of revenue. If you price it right, consumers would not even mind paying for that premium price wholly or partially bringing you additional revenue. If you do it intelligently, the impact on the consumer for that premium can be reduced using disintermediation by passing on some of the savings from avoiding the middleman to your “newly found”, local “constumer” (newly coined term warning ) base. Or you may decide to keep savings from the disintermediation to yourself increasing your profits.
Traditionally, Consumer is someone who uses the product and the customer is someone who buys the product or services. Consumers have very intimate knowledge/use of the product but the customer may not necessarily have the same level of knowledge/use of the product or service being bought. The knowledge gap between the consumer and customer has been narrowing as the information and even knowledge become readily available for anyone anywhere at any time. Leveraging features a flexible buying process has also enabled the merger of both consumer and the customer, producing the “constumers”.
Advantages of Food and Beverage Wholesalers in eCommerce
Food and beverage wholesalers have the upper hand when it comes to selling perishables online. The sales of perishables in the United States goes through a lot of regulations before they can be sold. Now, being a Food & Beverage distributor, you are already familiar with how to store, pack, and transport it. As far as your B2B business is concerned, you are merely automating your process. In fact, your business will be even easier once all the accounts are digitized.
On expanding your business to B2C, the only practical difference you’ll experience is that the packages are smaller and the orders are more frequent. Except for meat, poultry, and certain egg products, the FDA regulates all food items sold. It’ll be relatively easier for you to sell food & beverages online as you are already a seller with certification.
The knowledge of handling perishable goods is quintessential when it comes to selling food items online. You are already well aware of the risks involved, how to handle stocks, and inventory management, which can make all the difference. This, in turn, means that you can keep any major mistakes from happening and stopping yourself from learning things the hard way.
Apart from this, you can sell your products on the retail price to your B2C customers. Avoiding the middle man causes your revenue to go up higher. This is not just an alternate mode of income; the omnichannel strategy makes sure that you have somewhere to turn to under unprecedented circumstances.
Legal Aspects to Consider Before Selling Food Online
The sale of any food items in the US is taken seriously and the FDA regulates all foods and food ingredients sold online. It is absolutely essential that you follow these regulations under all circumstances. You need to stick to strict operational practices to ensure food safety and quality. If you fail to do so the consequences could be severe. It’s advisable that you consult with a lawyer with experience in the food industry. In addition to this, you can follow the general guidelines listed below.
Trace the Supply Chain
If your food products don't come from your own source/farm, you will need to trace the supply chain and ensure the safety of the product. If you have a supplier, ask him/her questions, get referrals on them, and cross-check.
Lab Test Your Products
No matter how reliable you or your sources may be, you still have to build trust and prove it to your consumers and local regulatory board. In order to do that, you need solid reports from certified labs. A lab test can help you trace all the elements in the products, and you can find out if there are any undesirable components present in it.
Keep a thorough record of the products, inventory, and sales. You are bound by law to provide this record whenever it is requested by the FDA. So it is advisable that you keep track of everything that goes in and out of your facility.
Get a Liability Insurance
Liability insurance protects you from your end consumers from eating your product and getting sick or any damage caused to your workspace.
In summary, when this is all over life will have changed for everyone. Good or bad, COVID-19 will always remain a milestone in all our lives. And it’ll divide our history into two: life before COVID-19 and life after COVID-19. It has shown us again that there is only one thing constant in life and that is Change. Whether it is your personal life or business life, you will always find change. Some changes are big while some are small and COVID-19 brought in a change of monstrous proportion. But on the bright side, Big changes always bring with it big opportunities as well.
Big changes like the COVID-19 can only lead to three different outcomes depending on how you react to this change. And the same holds true for every industry out there. You could perish or you could sustain or you could thrive, and it all depends on you and how you act during these times of change. Those who choose to do nothing about the change and just wait it out is like to perish. Whereas, those who embrace the change and figure out a way to adapt to it are very likely to sustain.
Then there are those who work hard to see things differently and sense the new opportunities opening up in front of them. They figure out a way to re-invent themselves either by offering new products/services or the same products/services in a different way. They are the ones who are going to be thriving in these challenging times.
Then the most important thing for you to ponder is what type of business you are running? One that is going to perish, sustain or thrive?
Now, more than ever, going digital, using eCommerce to meet the needs of the “constumer” is going to play a vital role for those who want to thrive. And that is Virtina’s forte - to help you figure out how to thrive your business even at dire times like this. Contact us today & schedule a meeting to start your winning journey.