Retailing's new spin

Makers of gourmet, regional and hard-to-find products are turning to the web to sell and market their products. The Internet has become the go-to place for purchasing books, music, clothing, home improvement and household items. Now many consumers are going online to order grocery items direct from the manufacturers, bypassing the supermarket altogether. While still a very small part of the business, direct online selling is growing at a phenomenal pace, especially for gourmet, regional and hard-to-find products, say industry observers. “Online is the best way to start a business like this,” says Justin Esch, co-founder of J&D’s Foods, the Seattle-based purveyor of bacon-flavored grocery products, including Bacon Salt and Baconnaise. “There’s low overhead, you can sell direct, control your own customer service and you don’t have to deal with grocery stores, which are a huge hurdle to get into at the beginning. We always tell everyone they should sell direct. Plus, you get a ton of margins.” “Our online business is our fastest growing segment and one that we invest a lot in,” says Jessica Kogan Hughes, co-founder/CMO of San Francisco-based Cameron Hughes Wine. It is part of a broader change in shopping trends, she says. “If you talk to someone now, 99% of the time you will meet a person who has purchased a product online. Ten years ago that was not the case. Consumers are enjoying the experience of receiving items by package at their door.” According to Srishti Gupta, general manager, new media solutions at SymphonyIRI Group, a Chicago-based market research firm, there is a definite increase in e-commerce. “The total amount of e-commerce compared to everything that is sold in CPG is still very nominal, 3% or 4%, but it is growing very fast,” she says. IRI maintains a National Consumer Panel of 300,000 households. “In terms of the CPG categories that consumers are purchasing online, beauty is the biggest one, with 20% of consumers who bought something online purchasing a beauty product, followed by non-perishable food and over-the-counter medications,” she says. “Other categories, like household cleaning and perishables, are very, very small. An overwhelming percentage said they turn to online shopping to purchase items that are hard to find in stores,” she says. But just as they do at the store, consumers expected something in the way of a bargain. “When the cost aspect came into play, some sort of promotion is almost always expected, whether it is in the form of free shipping or just a price point differential,” Gupta says. “We are not seeing that they are actually willing to pay more for the convenience that you are getting by just sitting and shopping in your house.” Online shortbread Walkers Shortbread is among the manufacturers that have made the jump into the online marketplace. The Hauppauge, N.Y.-based company sells its famous imported Scottish shortbread online through Amazon.com, Drugstore.com, Soap.com and Alice.com, as well as through its own website, www.walkersus.com. “E-commerce is growing, which is why we decided to go into it,” says Barbara Selvaggio, e-commerce manager at Walkers. “We saw that a lot of consumers are going online to get a better proportion of their food purchases. We are merely following them. It is still a small part of the business, but our sales are up 90% so far this year through all e-commerce sites.” Walkers online business is not cannibalizing sales of its products in retail stores, Selvaggio says. “Most consumers who come to the site are buying items that they can’t find locally. In most supermarkets consumers will find our top three items: fingers, rounds and triangles. When they come to our site they are buying more of the gift items. Oatcakes are huge on our site. Oatcakes are very hard to find in your local store,” she says. Tony Civitello, principal in Civitello & Associates, says the Hamden, Conn.-based manufacturer of biscotti mix sells its product online as well as in retail stores. “We are doing it through our own website, but we are also doing it with all-natural food companies that sell online. They really focus on that niche market and that helps tremendously,” he says. Like Walkers and Civitello, No Time 2 Cook!, an Oxford, Miss.-based frozen Southern specialty foods manufacturer, uses a third-party partner—www.cajungrocer.com. “Selling online has helped us build brand awareness and get into stores,” says Karen Kurr, president and CEO. “When people want to order from us online, they go to our website and it takes them to cajungrocer.com. They do all of our online shipping to individuals and homes. We have picked up some restaurants and grocery stores there. They’ve called us and said they want us to wholesale directly to them, and we pick up new accounts that way.” Social media is helping to build the online and bricks-and-mortar business of American Halal Co., the 18-month old Stamford, Conn.-based manufacturer of the Saffron Road line of frozen and shelf stable vegetarian and halal entrées, broths and simmer sauces that appeal to Muslims, vegetarians and gluten-free consumers. “Someone who can buy our product in a retail store will post about it online, but some of their friends can’t get it locally,” says Jack Acree, executive vice president of sales and marketing. “The viral word spreads much easier and I found that there is a greater pull demand of people asking where they can buy it than any other time I can remember, of people asking when will we be sold in Akron and that sort of thing.” Acree’s sales staff uses that to their advantage when calling on retail buyers. “We present them with our findings and we have prints that people can take into stores to request our product. The number one thing we tell potential customers is that the stores will listen more to you than they will listen to us. You are the people that they want to please,” he says. One downside of online selling is that while the shelf-stable broths and simmer sauces can be purchased individually, the frozen entrées must be purchased in eight-pack single SKU cases. “That is part of keeping the cost down,” Acree says. “We are working with a fulfillment center and those are the parameters that they operate in to make it cost effective.” Online olive oil Miami-based Lucini Italia Co. recently revamped its online store to make it more user-friendly. “It helps build our sales in areas of the country where the concentration of stores selling premium gourmet foods may not be prevalent,” says Meagan Parrado, communications manager. “Some people liked our gift tins of infused oils they bought online and then they went to Safeway and bought our other oils. I think the online presence really pushes people to the brand in general and then to the store.” Lucini’s website is listed on its packaging. “The purpose of it there is to drive people to the website for recipes and information about the products. Our newly redesigned website is also a store, but it is still very information heavy since the majority of our customers don’t buy online,” Parrado says. This winter Charlotte, N.C.-based Olisur, Inc. launched its consumer-oriented website and online store, www.o-liveandco.com, to sell its O-Live brand of Chilean olive oil. “We want to make it easier for people to get our olive oil,” says Jay Rosengarten, president. “One of the things we will be doing on our site is telling people where it is available in supermarkets. Our primary goal is to have the supermarkets sell the product, and not do it exclusively online.” However, the o-liveandco site will have a section explaining the fragility of olive oil. “There is value to consumers to buy fresh oil. So we will probably be doing a story about that and we will have the new harvest available on our website,” Rosengarten says. Beaverton Foods, a Hillsboro, Ore.-based manufacturer of mustards and sauces, has been using Facebook and Twitter to push people to its online store. CEO Domonic Biggi says that while the vast majority of Beaverton’s mustard will always be purchased in supermarkets, the online store does fill a niche. “We find that if people travel to a relative’s home in another part of the country and try one of our mustards that isn’t sold back home they will come online and order it from us,” he says. Biggi also uses online marketing to sell Charlie’s Salsa, a niche product Beaverton makes that is largely sold in the Pacific Northwest. “I do a pretty good chunk of business online,” he says. “Maybe 10% of my business is from people who come to Oregon and tried it and can’t find it back home in Montana. I’ve had two orders from Staten Island.” Kogan Hughes of Cameron Hughes Wine says an online retail store has always been an important part of her winery. “It is part of our overall strategy of being omni channel. We want to be everywhere a customer shops,” she says. “We want to be providing a really incredible experience for our customers that is informative, helps them make decisions about which wines they would like from us, and be able to compare. On our e-commerce platform is a massive database of information about every single wine we’ve ever released.” The average visit to the Cameron Hughes website is 25 minutes. “Our customers do spend quite a lot of time on our website,” Kogan Hughes says. “We provide a lot of rich information about our wines. We also do videos on every single wine and those videos are usually about 10 minutes long.”c Home shop til you drop Stocking the new line of Emeril’s Cajun Creations seafood entrées in your freezer case? If so, you can indirectly thank the folks at the Home Shopping Network. “We started out with Emeril selling shrimp on the Home Shopping Network and the response was so great that he called up and said let’s start developing some other products,” says Michael Ketchum, director of retail sales at New Orleans Fish House, the New Orleans-based manufacturer of the Emeril’s line. Ketchum says the venture began when Chef Emeril Lagasse was on St. Petersburg, Fla.-based HSN selling his pots and pans. “He was always cooking something, so we thought what better way to promote our product. If you are going to cook chicken breast, cook our shrimp instead. We started doing that. HSN didn’t have a timeslot for us, but they did what is called a ‘Still a Mention’ where as he is cooking he is still mentioning it. “The counter started clicking so fast we were generating $1,000 a minute in sales, which was mind-boggling,” Ketchum continues. “So we started developing other products and going on HSN with them. We launched this line in November [2011] and it sold out in nine minutes on HSN. We followed up with it in February and in a 58 minute segment we sold 4,000 units.” HSN’s archrival QVC is also a major purveyor of groceries. “QVC is a really good marketing vehicle to move your products,” says Justin Esch, co-founder of J&D’s Foods, the Seattle-based manufacturer of bacon-flavored products. “They really help you build your brand. It is kind of like a miniature infomercial for your product.” Esch has sold his Bacon Salt, Baconnaise and Bacon Popcorn on QVC alongside affable host David Venable during the In the Kitchen with David segments. The only downside for him is the time commitment of flying out from Seattle to QVC’s West Chester, Pa. studio, outside of Philadelphia, for a 7- to 10-minute segment. “You can be on the air twice a day. If you are the TSV [Today’s Special Value] you can do it like 20 times a day,” Esch says, noting that the TV network has the same audience retailers covet. “QVC’s core demographic lines up really well with the core grocery store demographic—women age 35 to 65,” Esch says. “They say a million people see it every 60 seconds. QVC is a good partner and a good way to promote your brand and your business.”