E-commerce opportunities for fresh produce
COVID-19 has lead to significant supply chain disruptions in 2020, causing many in the produce industry to ask “How can I strengthen my company for the future?”
There are numerous supply chain predictions, but the one that stands out the most is the prediction that e-commerce and direct-to-consumer food sales will continue to skyrocket in 2021 and beyond.
According to Are Traasdahl, CEO and co-founder of Crisp, “Small food producers with a DTC (direct-to-consumer) sales model were already common, and large food manufacturers are now joining the movement too: PepsiCo, Kraft Heinz and Ben and Jerry’s are just a few of the big-name brands that created DTC programs in 2020.”
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In the produce world, distributors like Baldor and grower-shippers like Del Monte have led the way in the push toward a DTC marketplace.
What opportunities are available in the DTC marketplace for the produce industry? Perhaps the most immediate opportunity is the push for the produce supply chain to diversify its sales base.
When your supply chain is diversified across retail, foodservice and direct-to-the consumer, you have more levers to control your brand. In addition, you will be tapping into one of the fastest growing segments in online sales.
Overall, e-commerce and DTC food sales represent a tremendous growth opportunity for the future of the produce industry.
While previously many barriers to entry existed for DTC sales, COVID-19 has accelerated the consumer trends and technology for supply chains to enter the DTC market.
As Produce Marketing Association CEO Cathy Burns points out in her 2020 State of the Industry report, “The pandemic accelerated 10 years of e-commerce growth in just three short months ... In five years almost 60% of all U.S. households will be omni-channel households.”
Tom Karst, The Packer’s editor, recently surveyed industry leaders with the question “Can direct-to-consumer online marketing work for produce distributors and grower-shippers? What is necessary for success?” The results of the survey revealed that 72% of respondents agreed that DTC is bound to rapidly expand, perhaps with premium varieties.
Technology advancements have also removed the barriers to entry in this marketplace. Powerful online platforms are now more readily available, providing cost-effective storefront solutions. Additionally, advanced packaging solutions have been made more available for shipping fresh produce, coupled with evolving streamlined delivery solutions for the customer.
From a topline, technology is also more readily available to aid in management of the fulfillment and sales processes.
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How might one ultimately enter this marketplace? In order to minimize the potential of costly mistakes, consider enlisting the expertise of a retail produce consultant. The good news is that with the advancements in technology, a DTC platform can be built to scale quickly with minimal capital investment, ultimately providing a high contribution to overhead.
Overall, e-commerce and DTC food sales represent a tremendous growth opportunity for the future of the produce industry. As with anything, there exists risk but great rewards for those who have the right plan to execute in this marketplace.
Craig Carlson is CEO of Carlson Produce Consulting LLC. Contact him at carlsonproduceconsulting.com.
