Small Business Ecommerce: How to Sell Food Online

by Jennifer Schiff

Tips and advice for small business ecommerce site owners on how to successfully market, sell, package and ship food.

Hope Jones, the owner of This Chick Bakes, was burnt. What had started out as a dream (owning her own bakery) had turned into a nightmare (owning her own bakery). So she walked away -- for two years. But she missed baking, and her customers missed her. So she decided on a compromise and opened an online bakery.

[Related: How to Ship Baked Goods and Other Perishable Foods]

“Selling online -- I thought ‘this will be easy!” recalled Jones. After all, she knew how to bake (in fact, she was much savvier about it now). She was still in contact with many of her former customers, and not having a storefront would mean fewer hours, lower overhead and decreased labor costs.  How hard could running an online food business be?

As Jones and many other bakers and sellers of food products have found out, you have to be one tough cookie to be successful at selling food online. Not only do you need a good ecommerce site, you need good packaging and a good shipper. You also need to make sure you are in compliance with local health department regulations.  (For government information about selling food, go to the FDA’s Food Industry site.)

How to sell food online; small business ecommerce
Linzer heart cookie from This Chick Bakes bakery.

To help you determine if running on an online food business is right for you -- or to help you make your existing ecommerce food business more successful -- Small Business Computing spoke with three online food experts who shared their recipe for selling food online. Their ingredients for success include great images, quick checkout, product pricing, packaging and shipping, social media, and questions to ask before you begin.

Small Business Ecommerce: A Picture Is Worth a Thousand Orders

Unlike going into a physical store, a bakery for example, when you go online, you can’t smell or get a taste of the food that’s for sale. “That’s why good visuals are key, especially for food,” said Gina Frieze, the founder and cheese wiz at Peanut Butter & Co.,, an online and retail seller of artisanal cheese based in San Diego, who recently re-did her website to make it more visually appealing.

“With food, you really have to visually convey the deliciousness and the joy that it’s going to bring to someone,” added Lee Zalben, the founder and president of New York-based Peanut Butter & Co., which has been selling online since 1999. That means really great product shots. “If your products are not presented in a clear, in-focus, well-lit way, then everything else is for naught,” he added.

And while small business owners may fear that the cost of hiring a professional to photograph their food will be prohibitively expensive, Zalben said you can find people who can do great-looking product shots for $50 (or less) per image.  You can also try bartering with family members and friends who are into photography -- or invest in a good digital camera and photo editing software and take pictures yourself. “It might take more time, but it’s something that you can do on your own.”

Small Business Ecommerce: Two-click Ordering

Almost as important as having good images is having a good shopping cart when selling food online. “If someone can’t click on a product and buy it within two clicks? Forget it. They’re gone,” explained Jones. “I found that out the hard way.” The bottom line: make the checkout process simple, said the experts. Click to learn more about shopping carts.

Product Pricing: Finding the Sweet Spot

Pricing your products properly is also critical -- if you want to stay in business.

“I had a business coach for the first year or two, and we looked at other sites and figured out that for baked goods the initial get-them-in-there price is $25,” not including tax and shipping, said Jones. The key is to figure out the cost of your goods, and then add labor, overhead, packaging and shipping costs, as well as re-shipping costs for when things go wrong. Then you mark up the price enough so you can make a profit without scaring away customers.

“It’s tempting to give things away for free -- like free shipping,” said Frieze. “But there are costs involved [with running an online food business], and if you don’t cover those costs, you won’t be successful.” And you will go out of business.

Small Business Ecommerce: Packaging and Shipping Tips

A big part of pricing your goods -- and keeping returns to a minimum -- is using the right packaging and shipper. Unlike other items sold online, any kind of perishable food item (e.g., cheese, freshly baked goods, chocolate-covered strawberries) needs to be shipped overnight or two-day guaranteed, which can add to the cost. Even pre-packaged, shelf-stable items need to be packaged and shipped properly. And because so many online food items are purchased as gifts, the packaging needs to be attractive.

How to sell food online; small business ecommerce
A nutty gift basket from Peanut Butter & Co.

So how do you decide what packaging is right for your product?

When Frieze and her husband decided to add an online component to their business, Frieze ordered cheese from leading cheese purveyors all over the country, to see how they packaged and shipped their cheeses. She also ordered from a couple of non-cheese perishable food companies, including Shari’s Berries, which sells chocolate-covered strawberries -- and is considered quite successful.

Not only did Frieze want to know what their packaging looked like, she wanted to see how they shipped perishable items, especially in the warm summer months, and if they included any kind of educational literature or information about their products.

After evaluating all the different packaging and shipping methods, Venissimo went with guaranteed two-day shipping during the cooler months and overnight shipping during the summer months (both via FedEx). “Cheese is a hardy food. We know we’ve got a couple days with an ice pack and cheese is going to be fine,” she said. “But we learned that in the summer we absolutely have to go overnight, because ice packs just don’t hold up for two days in the summer months.” In addition, Venissimo makes sure to include storage information about the cheese in each package.

Jones used a similar method to come up with This Chick Bakes'packaging and shipping method, ultimately choosing packaging that was practical yet attractive. “You eat with your eyes,” she explained. And she wanted customers to feel as though they were unwrapping a present when they received a box of her goodies.

While both Jones and Frieze use FedEx, both women advised business owners to speak with several carriers (UPS, FedEx, DHL, and the U.S. Postal Service), to find the one that offers them the best pricing and service. They also stressed the importance of building in re-shipping costs for those orders that don’t arrive on time or arrive damaged or spoiled.

“I guarantee that if something arrives wrong, I’ll fix it and resend it,” said Jones. “It’s just good customer service.”

Small Business Ecommerce: Spreading the Word

Even if you have the best-tasting brownie or cheeses, if no one knows about you, you’ll soon go out of business. So get the word out. And one of the best, most cost-effective ways to do that is to use social media, i.e., Facebook and Twitter (and Foursquare, if you also have a physical storefront).

“I’ve gotten more sales from grade school, high school and college friends I’ve reconnected with on Facebook,” said Jones, who is constantly posting pictures of what she is baking that day on her personal and business Facebook pages.

Another good way to spread the word is sending customers email newsletters telling them about new products or specials (and including discount codes). Email services such as Constant Contact, Mad Mimi, and Campaigner make it simple -- and even provide sign-up widgets you can add to your website and/or Facebook page to collect email addresses.

Also consider reaching out to local nonprofits and offering to provide your goods for free at big fundraising functions, where hundreds of people can sample your treats. That worked for Jones, who also had success forming her own business networking group via BNI.

And don’t forget about Google AdWords which, said Frieze, has really helped drive traffic to Venissimo Cheese’s website.

Final Thought for Foods

When setting up shop online, “start small and stay simple,” said Frieze. “Pick maybe five products to start with. Then experiment with new products.” Take the time to get it right, she emphasized. And be patient, with yourself and your customers. Establishing a great food site takes time.

How to sell food online; small business ecommerce
These attractive images on the Venissimo Cheese website are anything but cheesy.

Ecommerce Side Dish: 5 Questions to Ask Before Selling Food Online

“The foods that sell best [online] are ones that you can’t get within driving distance of wherever you live, or they’re something you can’t make yourself,” explained Venissimo Cheese’s Frieze. “You have to offer something unique and different,” added Peanut Butter &Co.’s Zalben, who suggested prospective online food sellers ask themselves the following five questions before opening an online food store.

  • Is the product temperature sensitive? “If it is, that could be an obstacle,” he said.
  • Can the product be packaged in a way that’s easy and safe to ship? If it can’t be, you may want to think twice, as the cost could be prohibitive.
  • Is this something that people can easily buy someplace else (like their local grocery or specialty food store)? Before you sell something online, be sure to check out the competition and determine what extra value you add.
  • Is the presentation or the assortment or the product unique in some way? “If not, it’s a problem,” he said.
  • What kind of shelf life does the product have? “If it’s something fresh that has to be prepared every day and then shipped in one or two days, then that could be an obstacle,” said Zalben.

Selling Food on Amazon

In addition to selling food on their own website, many small businesses sell their products on online food marketplaces, such as Amazon.com (which has a rapidly growing Grocery & Gourmet Food department) and Direct Eats. To find out more about these online food markets, Small Business Computing spoke with Stephen Scheffler, the president and owner of KS Specialties, which helps small businesses promote and grow their brand on Amazon.

“Almost all food companies can benefit from being on Amazon,” said Scheffler. “Amazon allows you to reach a very large audience and gives you national distribution, instantaneously.” Also, as a part of Amazon, your business can take advantage of Amazon’s marketing (such as the Affiliates program) as well as promotional opportunities -- at a cost far less than traditional marketing and advertising. Amazon can even handle fulfillment and shipping.

"Selling on Amazon.com has really helped Great River Organic Milling reach those customers that want our products but don't have them available in their location,” said Rick Halverson, the president of Great River Organic Milling (who works with KS Specialties). Amazon “helped us expand our market presence at a cost that is affordable for most small businesses. And the growth of our brand in the market has been exponential thanks to [Amazon],” he added.

But what about risks? “There’s very little risk working with Amazon,” said Scheffler. “People worry that if they sell on Amazon, they’ll have to lower their prices, but we haven’t seen that at all,” he said. People also worry about having to maintain a certain inventory level on Amazon, but Scheffler said that’s also not an issue. Unlike a physical grocery store, Amazon doesn’t need to worry about filling holes on shelves. Moreover, “out of stocks and shortages are built into the system.”

Jennifer Lonoff Schiff is a regular contributor to Small Business Computing and runs a marketing communications firm focused on helping small and mid-sized businesses.

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This article was originally published on Wednesday Feb 16th 2011
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