In the last several months I’ve interviewed many amazing Shopify entrepreneurs. Interestingly enough, several of those entrepreneurs have built ecommerce businesses in the Food and Beverage industry. Each of their stories have fascinated me due to the unique complexities associated with building and streamlining a D2C F&B business. In this piece, I’ll outline several lessons distilled from these ecommerce pioneers so that you, should you choose to follow in their footsteps, are prepared for the journey ahead.
The presence of a compelling personal story may seem like the catalyst behind every successful ecommerce brand, but from my experience that isn’t true. Many financially successful D2C widget-sellers make money merely due to CRO and great ad targeting. More often than not, the ecommerce shops I encounter lack a unique brand voice and story.
But when it comes to the F&B stores I’ve interviewed, as well as those I haven’t, almost all of them have a unique and personal brand story. The entrepreneurs who built these companies built them on a foundation of passion. They created their products out of personal need. They grew them because they knew other people must feel the same way they did.
For example, Pureé Juice Bar's Amy Waldman embarked on her homemade juice detox to improve her health, but once she discovered its profound mood and energy-changing effects, she had to share it with others. First, she only made cold pressed juice for her friends and family. But realizing the lack of such a product in her town, and therefore the opportunity, she soon opened a brick and mortar juicery in Bethesda, Maryland. Now with three physical locations, she’s begun shipping her organic cold pressed juice all around the United States.
Similarly, Hydrant’s John Sherwin’s long-time, personal obsession with hydration and hacking his energy levels led him from using off-the-shelf hydration salts to creating his own tastier concoctions that help him and thousands of others feel fresher each and every day.
The stories above are simplified versions, of course, and they may even sound obvious. But there’s a lesson here for potential F&B brands.
Don’t manufacture a product. Instead, build a product framework around your personal story and passion.
There are several massive benefits from this strategy:
If you don’t have a personal story that you can weave into your F&B brand, here’s what I suggest:
Whatever you choose to do, don’t start your F&B brand without a story. If you do, you’ll be at a severe disadvantage.
The next lesson I’ve learned from these intrepid F&B entrepreneurs is the power of niching down. It’s a lesson that can be applied to many other businesses as well, but it’s especially powerful when it comes to the products we consume.
Niching down is critical in F&B because, at least for most of the people reading this article, we have an abundance of choice when it comes to the food we eat and the beverages we drink.
The average supermarket contains between 40–50K products, including multiple brands of the same product type and multiple varieties of the same product for each brand. Think about the cereal aisle, for example.
So when it comes to creating a new ice cream brand, how on earth will you compete with the tried and true flavors we all love and the convenience of the shop down the street?
That was the challenge presented to Louis Armstrong (not the spaceman), a fitness freak and founder of Killer Creamery. Louis created the world’s first, mass market keto ice cream. I spoke with Killer Creamery’s marketing director, Tate Glasgow, and here’s what he said.
"With the keto ice cream, we really didn't know what to expect at that point," Tate said. "You know, keto was being talked about, but it wasn't forefront in everybody's mind. We got something up and running and online and then man, our keto ice cream just took over our sales. People were going crazy about it, and we shifted our focus in that direction entirely."
Instead of being yet another delicious ice cream brand, Killer Creamery went all in on the nichiest niche they could find (based on their personal and brand story), and it did absolute wonders for top-line revenue. What’s more, the online sales data generated from this niche population has given Louis and Tate ample ammunition to take to major grocery chains throughout the country.
Going niche is something every ecommerce entrepreneur should consider, F&B or otherwise. We the people simply aren’t interested in generic products anymore. We want products perfectly tailored to our needs and desires.
These days, if you’re not niche, your not relevant.
When you’re selling something that people ingest, the regulations placed upon you are far more strict. What’s more, people are far more discerning about what they put in their mouths than they are about the fabrics that drape their bodies.
Therefore, each of the Judge.me F&B entrepreneurs spent a disproportionate amount of upfront time and effort on product development.
John Sherwin, who I mentioned earlier, took great care to formulate, identify and produce Hydrant’s first flavor of hydration sachets. Here’s an excerpt from my interview with him.
“I knew it had to be below 25 calories or less,” John told me. “And it had to have 260 milligrams of sodium, 200 milligrams of potassium. I had picked all these numbers from playing around with existing products on the market and from reading research. We were basically setting our ingredient levels based on the science that I had read. The other piece, even before getting to formulation was building up a proprietary database of hydration research. So I leveraged myself and some doctors at Oxford University.”
Johns first attempt at a flavor was lemon-lime, which was chosen because it’s the most synonymous flavor with the sports drink industry. However, the concoction tasted oddly soapy so he simplified the formula, and dropped the all the flavoring except for real lime juice powder.
“In this process I learned that I personally have an aversion to added flavoring,” John told me. “So we pulled out this lemon flavor that was in V1, and ended up with a lime product that was very simple. It was sugar, electrolytes, a tiny bit of citric acid, and lime juice powder, which is just dehydrated lime juice. And that made for a super simple product that checked all of the boxes that were in the design constraint and that was what we went to production with.”
Amy Waldman of Pureé Juice Bar has a similarly strict approach to product development. She spent years creating juices for herself, friends and family, as well as researching the best methodologies before going to market.
As such, Amy is as concerned about the ingredients as she is the production method. Her fruit and veggies have to be organic, and the juice has to be expressed using the cold-pressed technique rather than the centrifugal process. That’s because centrifugal juicers have a spinning metal blade that generates heat, which destroys enzymes and oxidizes the nutrients, rendering the end product less nutritious.
Lastly, take a look at Parachute Coffee's CEO Michael Potters. With an insatiable customer base (us coffee lovers are like that), he knows that detailed customer data is critical to Parachute Coffee's product development process.
“It’s really important first and foremost that you understand who your customers are and why they would buy from you,” Michael says. “What are their problems and what are you solving for them? We took a laser-focused approach and invested a lot of resources in understanding the answers to those questions. Not every company does that. Some build a product based on their intuition. In our case, we wanted to be sure we were doing it right from the get-go.”
To ensure they did get it right, Michael and the team at Parachute Coffee conducted a comprehensive qualitative and quantitative consumer research study designed by Nielsen.
“The aim is to understand in a granular way what pain points our customers are experiencing in their coffee ritual. How can we build a better solution for our customers? That was the first step. We realized what features they needed, and built our ecommerce experience from there.”
Each of these entrepreneurs took a different path to developing their products, but one thing is 100% clear: they care a lot. And so should you. Anything less than that commitment to product development will be something akin to The Office’s (US) Kevin reselling store-bought ice cream to pay off his bookie.
Dealing with logistics is probably the toughest challenge when it comes to F&B ecommerce brands. This section isn’t so much a tip as it is a warning, though there is a tip at the end.
Of the four F&B brands we’ve interviewed for Judge.me, two ship highly perishable goods, one falls somewhere in the semi-perishable category, and the last has developed a product with a near endless shelf-life. Here they are:
Each of these companies, save the last, has had to overcome difficult shipping hurdles and develop unique supply chains to ensure the quality of their product is top-notch when it arrives at their customers’ doors.
While it meant some slight compromises for Amy Waldman, the national demand for her product drove her to begin nationwide shipping of her cold pressed juice. But doing so came with some challenges:
After extensive research, Amy found some solutions she could live with that wouldn’t compromise her values of health and sustainability. They were:
Luckily, ice cream is already shipped frozen, so there wasn’t much concern in the public perception department.
That said, shipping ice cream direct to somebody’s door is still quite expensive. It must be shipped in refrigerated trucks which is a pricier shipping method than traditional shipping. The packaging is also taken up a notch with insulated lining. What’s more, it must be shipped quickly or risk melting before it arrives.
It’s for that reason that Tate Glasgo, Killer Creamery’s Marketing Director, says the online store is more of a marketing tool for the brand than a distribution channel.
"The best part about Shopify for me is the ability to pull data based on location," Tate said. "So right now we're already in a bunch of stores on the west coast, but on the east coast, we don't have very many stores. But we're able to continue that data collection on the B2C side and see pockets of sales where people seem to be either talking about us more or more interested. Then when we're talking to stores in that area, we can say, 'Hey, we have 500 customers in a 50-mile radius that they have enough money to buy our products online, which are expensive."
We may never live in a world where D2C perishable food and beverage makes much financial sense on it’s own, which is why I personally find this to be a profound tactic.
At first glance, one couldn’t be faulted for believing that a D2C coffee brand would have few concerns about shipping and logistics. After all, depending upon the quantities we buy in, much of the coffee in our cupboards is consumed over quite a long time period, possibly months. So, coffee must be pretty shelf-stable, right?
But that’s where we’d be wrong, at least according to Michael Potters, co-founder and CEO of Parachute Coffee.
“The coffee that’s been sitting on the shelf at the grocery store has been there for months,” Michael told me. “There’s a reason why those big incumbent coffee brands don’t print the roast date on the bag. It’s because they don’t want consumers to know. The most important piece of information is missing.”
Parachute Coffee sources their own beans, and ships directly from the coffee roasters to their customer’s doors, cutting down on shelf-time, increasing freshness and flavor for the final cup. A no-mistakes-allowed supply chain, but their customers love it.
“Don’t be frustrated by some of the complications early on,” Michael told me. “There will be a lot of headaches sorting out all those logistical issues. But if you find the right partners, then you will all be aligned on the importance of delivering the promise to the customer. Make sure all the stakeholders are aligned with that specific North Star. You should get there. You will get there.”
Hydrant is the one F&B brand we’ve interviewed that doesn’t have a lot to worry about with logistics, but according to Hydrant’s CEO, John Sherwin, reducing logistical burden wasn’t an accident.
“There was a time where some people were encouraging me to approach the market with a ready-to-drink product,” John said. “And the problem with that is it's much more difficult to do that through ecommerce as you're effectively shipping water around the country. Shipping powder is cheaper and more environmentally friendly. And it was also the form factor that I was used to using when I was playing around with recipes.”
What all these examples show is that the logistical burden surrounding your product is something to consider at the outset. Whether you go for something as complicated as cold pressed juice or as simple as flavor-filled hydration salts, the decision is yours. Just be aware that there are ways around each logistical challenge, including avoiding the challenges altogether.
To me, these were the most obvious and consistent themes among our F&B entrepreneurs. Each conversation left me baffled by the work and dedication it took each founder to build a successful ecommerce F&B company. It’s not a challenge I’d embark on lightly.
But if you are up for it, know that it’s a growing trend. The opportunity generated by the niche foods culture is just beginning. From cricket protein bars to Impossible Burgers, the possibilities in this industry are endless.