If you ask any entrepreneur, starting a business comes with its fair share of challenges.
Starting your own online food business requires a great deal of effort, dedication and most importantly passion.
If you're willing to put in the effort to build your own online food business, you're going to want to follow the critical steps to creating a successful brand.
We've created a guide that covers each step of the process - from making key financial decisions, to launching and marketing your business the right way, and tips/strategies on how to grow your online food business effectively.
💡 Introduction To Starting A Online Food Business
Is Starting A Online Food Business Right For You?
There are many factors to consider when starting a online food business.
We put together the main pros and cons for you here:
Pros of starting a online food business
You can put as much time into the business as you'd like. If you like the work and have some initial experience, you can start small and manage all aspects of the business on your own.
• Ability to start your business from home
It's not necessary to have a physical storefront or office space to get your business started. You can do everything from the comfort of your own home, at least in the beginning!
• Rewarding work
Starting a online food business can be really rewarding work. After all, you are solving an immediate issue for your customer and you're working on something you truly care about.
With businesses and processes changing daily, there will always be demand for new features, products and services within your online food business. Additionally, there are several different business models and pricing tiers you can implement that will allow you to reach all types of customers.
• Meaningful business connections
You never know who you will meet or get to work with for your online food business. This could be the start of an incredible business opportunity!
• Quick build time
The average time it takes to build your product is quick - typically around 12 months. This will allow you to bring your product to market faster.
• Easy to encourage "impulse buy"
In the online food business, you have a much higher chance of encouraging your customers to buy on impulse - you can easily alter the price, placement, packaging, and promotional value to influence the decision of your buyer.
Cons of starting a online food business
• Crowded Space
Competition is high when it comes to your online food business, so it's important that you spend a good amount of time analyzing the market and understanding where the demand lies.
• Finding The Right Supplier
Most businesses in this space go the supplier/manufacturer route, which isn't a bad thing! However, finding the right supplier can take a lot of time, energy and trial/error. If done properly, this process can save you months (if not years) of time and energy. More on this below in the "finding a supplier" section.
• Motivation of employees
If you plan to have a sales/content team on board, finding creative ways to motivate them can be a challenge. It's important that you're able to offer great incentives and a good work environment for your employees.
• Low margins
The gross margins for your online food business are typically around 30%, which can make it more challenging to incur new expenses and maintain profitability.
- Betterteam (6.53K Alexa Ranking)
- Imperfect Foods (15K Alexa Ranking)
- WFP (41.7K Alexa Ranking)
- Food Supplier & Distributor (57.9K Alexa Ranking)
- Mondelēz International, Inc. (66.6K Alexa Ranking)
- Rosa's Thai Cafe - Revenue $2M/month
- Just Panela LLC - Revenue $175K/month
- Lil Buff Protein - Revenue $80K/month
- Kyra's Bake Shop, LLC - Revenue $64K/month
- Dollop Gourmet - Revenue $30K/month
- Simple Green Smoothies - Revenue $30K/month
- Holmes Mouthwatering Applesauce - Revenue $10K/month
- Klondike Kettle Corn - Revenue $4.5K/month
Let's take a look at the search trends for food product over the last year:
How To Name Your Online Food Business
It's important to find a catchy name for your online food business so that you can stand out in your space.
Here are some general tips to consider when naming your online food business
- Avoid hard to spell names: you want something easy to remember and easy to spell for your customers
- Conduct a search to see if others in the space have the same name
- Try not to pick a name that limits growth opportunities for your business (ie. if you decide to expand into other product lines)
- As soon as you have an idea (or ideas) of a few names that you love, register the domain name(s) as soon as possible!
Why is naming your online food business so important?
The name of your business will forever play a role in:
- Your customers first impression
- Your businesses identity
- The power behind the type of customer your brand attracts
- If you're memorable or not
It's important to verify that the domain name is available for your online food business.
You can search domain availability here:
Find a domain starting at $0.88
powered by Namecheap
Although .com names are the most common and easiest to remember, there are other options if your .com domain name is not available. Depending on your audience, it may not matter as much as you think.
It's also important to thoroughly check if social media handles are available.
As soon as you resonate with a name (or names), secure the domain and SM handles as soon as possible to ensure they don't get taken.
Here's some inspiration for naming your online food business:
- PoorMeal check availability
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- The Liquid Nutrient Spot check availability
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- Less Meat check availability
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- HotCo check availability
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- Plain Gourmet check availability
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- Gourmet Collective check availability
- The Undigested Meals Trading Co check availability
- Fresh Gourmet check availability
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- Cheap Grocery Co check availability
- The Cold Meat Place check availability
- Fresh Grocery check availability
- Own Foodstuff check availability
- Ingested Gourmet Group check availability
- Necessary Meals check availability
- Necessary Meal & Company check availability
- Cooked Nutrition Trading Co check availability
- Plain Meat Spot check availability
- Better Meat check availability
- ExtraCollective check availability
- The Much Groceries Works check availability
- Meal Works check availability
- OwnNutrition check availability
- Cold Meat check availability
- The Cooked Meals Designs check availability
- The Fast Gourmet Trading Co check availability
- SoftDesigns check availability
- Italian Meals check availability
- Plain Groceries Chronicles check availability
- Improper Foodstuff Co check availability
- Decent Gourmet check availability
- Sweet Gourmet Co check availability
- Prepared Meals Place check availability
- Necessary Foodstuff Collective check availability
- Excellent Nutrient Designs check availability
- Cheap Foodstuff Trading Co check availability
- PureNutrition check availability
- SolidGroceries check availability
- Soft Groceries check availability
- The Less Groceries Pro check availability
- Italian Nutritious & Company check availability
- The Delicious Meal Group check availability
- Daily Foodstuffs Pro check availability
- Improper Nutrient check availability
- Chief Meal check availability
- CheapCollective check availability
- Plant Foodstuffs check availability
- The Green Meat Designs check availability
- The Fine Nutrition Group check availability
- GreenGroceries check availability
- OwnFoodstuff check availability
- The Nourishing Groceries Co check availability
- Nutrient Designs check availability
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- PureGrocery check availability
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- LittleCo check availability
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How To Create A Slogan For Your Online Food Business:
Slogans are a critical piece of your marketing and advertising strategy.
The role of your slogan is to help your customer understand the benefits of your product/service - so it's important to find a catchy and effective slogan name.
Often times, your slogan can even be more important than the name of your brand.
Here are 6 tips for creating a catchy slogan for your online food business:
1. Keep it short, simple and avoid difficult words
A great rule of thumb is that your slogan should be under 10 words. This will make it easy for your customer to understand and remember.
2. Tell what you do and focus on what makes you different
There are a few different ways you can incorporate what makes your business special in your slogan:
- Explain the target customer you are catering your services towards
- What problem do you solve?
- How do you make other people, clients, or your employer look good?
- Do you make people more successful? How?
3. Be consistent
Chances are, if you're coming up with a slogan, you may already have your business name, logo, mission, branding etc.
It's important to create a slogan that is consistent with all of the above.
4. Ensure the longevity of your slogan
Times are changing quickly, and so are businesses.
When coming up with your slogan, you may want to consider creating something that is timeless and won't just fade with new trends.
5. Consider your audience
When finding a catchy slogan name, you'll want to make sure that this resonates across your entire audience.
It's possible that your slogan could make complete sense to your audience in Europe, but may not resonate with your US audience.
6. Get feedback!
This is one of the easiest ways to know if your slogan will be perceived well, and a step that a lot of brands drop the ball on.
Ask friends, family, strangers, and most importantly, those that are considered to be in your target market.
🎬 How To Start A Online Food Business
Startup Costs For Your Online Food Business
If you are planning to start a online food business, the costs are relatively low. This, of course, depends on if you decide to start the business with lean expenses or bringing in a large team and spending more money.
We’ve outlined two common scenarios for “pre-opening” costs of a online food business and outline the costs you should expect for each:
- The estimated minimum starting cost = $3,642
- The estimated maximum starting cost = $79,619
|Startup Expenses: Average expenses incurred when starting a online food business.||Min Startup Costs: You plan to execute on your own. You’re able to work from home with minimal costs.||Max Startup Costs: You have started with 1+ other team members.|
|Employee & Freelancer Expenses|
|Payroll: This number depends on if you decide to pay yourself a salary upfront and how many employees you have on payroll. At first, many founders take on all responsibilities until the business is up and running. You can always hire down the road when you understand where you need help. Keep in mind, if you do plan to pay yourself, the average salary founders make is $50K.||$0||$4,000|
|IT Support: You may find yourself needing IT support when starting your business. It may not be possible (or necessary) for you to hire someone full-time, but hiring on a freelancer platform such as Upwork is a great way to save money and resources.||$0||$500|
|Other Employee Expenses: Aside from payroll and benefits, there are other costs associated with hiring employees. This includes the cost to advertise the job, the time it takes to interview candidates, and any potential turnover that may result from hiring the wrong candidate.||$0||$1,000|
|Employee Reward Ideas: It's important to recognize and reward employees - whether they hit their goals or are doing an exceptional job. This doesn't have to cost you a lot - simply taking them out to lunch, giving them a gift card or offering a pay-check bonus are all ways to recognize your employee! Here are 65 ways to reward your employees.||$0||$500|
|Total Employee & Freelancer Expenses||$0 (min)||$6,000 (max)|
|Website builder: The cost of your website will vary depending on which platform you choose. There are many website builders on the market, so it's important you choose the right one for your business and overall goals. To learn more about your options + how to build a great website, check out this article.||$15||$100|
|Web Designer: If you have the necessary skills to design your website, then it may not be necessary for you to hire someone. However, if you do decide to go that route, make sure you establish an understanding of upfront cost, design and what the ongoing costs will be to manage the site. Here is what to expect when hiring a web designer.||$0||$6,000|
|Email hosting: Email is a critical piece for running your business. Once you have your domain name, you will want to set up email accounts for each user on your team. The most common email hosts are GSuite (typically starting at $6+ per user, per month) or Microsoft Office (typically starting at $5+ per user, per month). The number of email accounts you set up will determine the monthly cost breakdown.||$5||$75|
|Register Your Domain: Once you decide the name of your business, you will need to make sure the URL is available and purchase the domain. You can check availability and register your domain here.||$12||$75|
|Server Hosting: To start a online food business, you will need to set up and manage a server. The cost for this is typically billed monthly and depends on the platform you choose (typically ranging anywhere from $0-$50/mo).||$0||$50|
|Website chat function: If customer service is a big piece of your business, you will want to consider implementing a chat bot on your website. Typically, there are different tiers of pricing and some businesses even offer freemium services. To find what chat software is best for your business, check out this guide.||$0||$75|
|Total Website Costs||$32 (min)||$6,375 (max)|
|Business Formation Fees|
|Small Business Insurance: Depending on which state you live in and the business you're operating, the costs and requirements for small business insurance vary. You can learn more here.||$500||$2,000|
|Trademarking: Filing trademark registration will protect your brand and prevent other businesses from copying your name or product. USPTO has several different types of trademarks, so the cost to apply can vary (typically anywhere from $400-$700).||$0||$700|
|Permit and License Fees: Depending on your industry, there are certain licenses and permits you may need in order to comply with state, local, and federal regulations. Here is an article that goes over all the permits and licenses you may need for your online food business.||$50||$700|
|Lawyer Fees: Although you may want to avoid attorney fees, it's important that your business (and you) are covered at all costs. This comes into play when creating founder agreements, setting up your business legal structure, and of course, any unforeseen circumstances that may happen when dealing with customers or other businesses.||$0||$1,500|
|Set up business: LLC & Corporations: The first step in setting up your business is deciding whether your business is an LLC, S Corp or C Corp. The cost for this depends on which state you form your business + which structure you decide on. We put together an article that goes over the 10 Steps To Setting Up A Business.||$50||$500|
|Obtain a patent: Securing a patent can be a very valuable tool, but it's important that you are 100% sure this will be a smart business move for you, or if you may not be ready quite yet. A basic utility patent typically costs anywhere between $5,000 and $10,000 to file. Here is a great resource to walk you through the entire process.||$0||$10,000|
|Total Business Formation Fees||$600 (min)||$15,400 (max)|
|Upfront Costs For Inventory: This includes all upfront inventory you will need in order to launch. Be sure to compare prices of wholesalers to ensure you're getting the best deal and margins remain high.||$300||$5,000|
|Labels & Packaging: A critical step in starting your online food business is getting the package and design right. This will be your customer's first impression of your brand, so it's important you spend time and money getting this right from the start.||$50||$500|
|Total Inventory Expenses||$350 (min)||$5,500 (max)|
|Food Business Expenses|
|Kitchen Appliances: This includes but is not limited to: pots, pans, containers, oven/stove, fridge, freezer. You may have the option to lease or purchase these items, in which case the cost can vary.||$2,000||$25,000|
|Food Licenses: To start your online food business, you will need to get the proper food licenses to operate. You can learn more about the requirements here||$100||$500|
|Kitchen Facility: Depending on the type of food business you are starting, you may not need to operate a separate kitchen facility from your own home. If you decide to do this, or if you are required to, the costs may vary depending on your location and the size of the space you need.||$0||$10,000|
|Total Food Business Expenses||$2,100 (min)||$35,500 (max)|
|Equipment & Supply Expenses|
|Cleaning Supplies: To get started, you may want to consider getting basic cleaning supplies. Note, that you may not need to buy all the cleaning tools and supplies at first. You can consider purchasing in bulk down the road.||$25||$500|
|Technology Office Equipment: This includes (but is not limited to) physical items such as: laptops, cameras, monitors, microphones, speakers, headsets. Technology needs grow as your company evolves, so to minimize costs, try and only purchase what is needed for you to run your business at the time.||$500||$5,000|
|Total Equipment & Supply Expenses||$525 (min)||$5,500 (max)|
|Training & Education Expenses|
|Online Learning Sites: With a online food business, you and your team may not know all the steps for starting and growing a business. There are plenty of resources out there to help you, such as online courses or learning platforms, but they aren't always free! Starter Story is a great resource for case studies, guides and courses for starting your business.||$0||$1,000|
|Total Training & Education Expenses||$0 (min)||$1,000 (max)|
|Advertising & Marketing Costs|
|Business Cards: A online food business involves quite a bit of customer interaction, whether that is attending tradeshows, sales calls or simply having face to face interaction with prospective clients. Business cards are a great way to stay front of mind with your clients.||$0||$50|
|Total Advertising & Marketing Costs||$0 (min)||$50 (max)|
|Design Programs & Software: These programs might include the Adobe family of design tools: Photoshop, Illustrator, InDesign and others. This is typically a monthly subscription ranging from $10-$50/mo.||$0||$50|
|CRM Software: CRM (customer relationship management) software is used to track your company’s interactions with clients and prospects. Although this is not a necessary tool to have for your online food business, implementing this in the beginning may set your business up for success and save you a lot of time later on. For a full list of best CRMs to use for your business, check out the full list here.||$0||$250|
|Project Management Software: You may want to consider using a project management and collaboration tool to organize your day-to-day. This can also be very beneficial if you have a larger team and want to keep track of everyones tasks and productivity. For a full list of project management tools, check out this full list here.||$0||$25|
|Internal Communication Tool: If you plan to have multiple members on your team, you may want to consider an instant message tool such as Slack or Telegram. The cost is usually billed per month (approx $5/user/month) or there are freemium versions available on many platforms.||$0||$20|
|Social Media Management Tools: If you plan to do social media marketing for your online food business, you should consider investing in a social media automation or publishing tool. This will save you time and allow you to track performance and engagement for your posts. Here is a list of 28 best social media tools for your small business.||$0||$50|
|Accounting & Invoicing Software: When starting your online food business, it's important to have an accounting system and process in place to manage financials, reporting, planning and tax preparation. Here are the 30 best accounting tools for small businesses.||$0||$50|
|Email marketing tool: If you plan to grow your email list and email marketing efforts, you may want to consider investing in an email marketing platform (ie. Klaviyo, MailChimp). We put together a detailed guide on all of the email marketing tools out there + the pricing models for each one here||$0||$100|
|Online data storage: It's important to make sure the information for your online food business is stored and protected should something happen to your computer or hard drive. The cost for this is affordable and depends on how much data you need to store. To learn more about the different options and pricing on the market, check out this article.||$0||$299|
|Payroll Software: The main purpose of payroll software is to help you pay your team and track each of those payments (so that you don't have to do it manually). If you do not have any employees or have a very small team, payroll software may not be necessary at this stage. Here are the 11 best payroll tools for small businesses!||$0||$200|
|Total Software Expenses||$0 (min)||$1,044 (max)|
|Office Space Expenses|
|Rent: This refers to the office space you rent out for your business. To minimize costs, you may want to consider starting your business from home or renting an office in a coworking space.||$0||$2,000|
|Utility Costs (office space): This refers to the first month's utility bill for your office space. If you are not responsible for this bill, this would not apply to starting your online food business.||$0||$150|
|Office Supplies: Although these may seem like minor costs, things like your desks, chairs, pens, paper, filing cabinets do add up. To avoid these adding up too much, try to be as lean as possible and go paperless!||$25||$1,000|
|WiFi: Whether you work from home or in an office space, WiFi is an expense that's tough to avoid. Although the cost is minimal in most cases, it should be appropriately budgeted for each month!||$10||$100|
|Total Office Space Expenses||$35 (min)||$3,250 (max)|
|Total Starting Costs||$3,642 (min)||$79,619 (max)|
Raising Money For Your Online Food Business
Here are the most common ways to raise money for your online food business:
What Skills Do I Need To Succeed For My Online Food Business?
With a online food business, there are several essential skills and characteristics that are important to identify prior to starting your business.
Let’s look at these skills in more detail so you can identify what you need to succeed in your day-to-day business operations:
Advice For Starting A Online Food Business
We've interviewed thousands of successful founders at Starter Story and asked what advice they would give to entrepreneurs who are just getting started.
Here's the best advice we discovered for starting a online food business:
Scott Unkefer, founder of Just Panela LLC ($175K/month):
“Don’t look for a void in the market and then go try and fill that void. Find something that when people experience it they say to themselves “Well this is what I wanted all along.”.
Read the full interview ➜
Christine Moore, founder of Lil Buff Protein ($80K/month):
There is no perfect timing. Strike while the iron is hot and figure the rest out later. We started selling our cakes before we even knew how much the cost to produce was. I’m not implying that this is a good business strategy, but there is something to be said for jumping in with both feet and taking risks.
Read the full interview ➜
Jen Hansard, founder of Simple Green Smoothies ($30K/month):
Being an entrepreneur was never my dream. I wanted to get married, raise a family, decorate a cute house, travel a lot as a family. I started my own business out of necessity— it was my way to help feed our family and pay our rent when things got real tough.
Read the full interview ➜
Katie Young, founder of Klondike Kettle Corn ($4.5K/month):
Be open to new ideas and always be searching for creative ways to keep your product interesting.
Read the full interview ➜
Heather Saffer, founder of Dollop Gourmet ($30K/month):
Over the next two weeks, my parents (who are divorced) and I spent 6-8 hours a day in the back of a dark warehouse packaging thousands of orders that had come in from Shark Tank.
Read the full interview ➜
Alex Moore, founder of Rosa's Thai Cafe ($2M/month):
We were nice to people, we included all the key staff in a very generous stock option when we sold and looked after the amazing people who have helped make Rosa’s what it is today.
Read the full interview ➜
Kyra Bussanich, founder of Kyra's Bake Shop, LLC ($64K/month):
If you want to grow beyond your own personal capabilities, you need to take a global view of your business, and focus where you are most effective, and hire people who are better than you to do the tasks where you don’t excel.
Read the full interview ➜
Write a Business Plan
Writing a business plan from the start is critical for the success of your online food business.
Because this allows you to roadmap exactly what you do, what your overall structure will look like, and where you want to be in the future.
For many entrepreneurs, writing out the business plan helps validate their idea and decide whether or not they should move forward with starting the business.
You may want to consider expanding upon these sections in your business plan:
- Executive Summary: Brief outline of your product, the market, and growth opportunities
- Overviews and Objectives: Overview of your business, target customers, and what you need to run your business
- Products and Services: Specifics on the products and services your business will provide
- Market Opportunities: Analysis of customer demographics, buyer habits and if your product is in demand
- Marketing: Outline of your marketing plan and how you plan to differentiate yourself from other customers
- Competitive analysis: Analysis of your competition and the strengths and weaknesses therein
- Operations: Hierarchal structure of the company and what it will take to run the business on the day-to-day
- Leadership Team: Detailing roles and responsibilities of each manager based on their specific skill-set
- Financial Analysis Understanding of all expenses, operating budgets, and projections for the future.
Learn more about how to write a business plan here
Determine Which Business Bank Account You Need
There are hundreds of banks out there, and it can be overwhelming to find one that's right for your business.
Here are some factors you may want to consider:
- Location - Is your bank close enough that you can easily make deposits or get cash?
- Low Fees - Make sure to understand any and all fees associated with setting up and maintaining your bank account. Ask for a list - banks usually try to keep this hidden and in the fine print.
- Online Banking Services - Make sure you can easily navigate through your online portal and you have easy access to everything you need.
- Line of Credit - What do your options look like (even if you don't need this now, you may need this down the road).
- Every bank has something that differentiates them from the rest, so make sure whatever that is applied to your needs and values.
Check out this list of the 13 Best Banks for Small Business in 2020 and what makes them so unique.
Setting Up Your Online Food Business (Formation and Legal)
When it comes to setting up your business, you may find yourself in a place where you have to make some financial and legal decisions.
The first thing you'll want to decide on is whether you want to be an LLC, S-Corp, or C-Corp.
These three options are found to be the most common when starting a small business, and all serve to protect your personal assets and also provide you with certain tax benefits.
- LLC: All income and expenses from the business are reported on the LLC personal income tax return.
- S corp: Owners pay themselves salaries + receive dividends from profits.
- C Corp: C Corps are separately taxable entities that file a corporate tax return (Form 1120). No income tax is paid at the corporate level and any tax due is paid at the owners individual expense.
Depending on where you're conducting business, you'll also want to consider securing the proper permits, licenses and liability insurance.
Need to start an LLC? Create an LLC in minutes with ZenBusiness.
How Do I Pay Myself As A Small Business Owner?
Most entrepreneurs start a business to do something they love- but at the end of the day, you still have bills to pay (maybe now more than ever).
But it's important to strike the right balance - if you pay yourself too much, you could be putting your business at risk.
There are two common ways to pay yourself as a business owner:
1. Owner's Draw
Many entrepreneurs pay themselves through an owner's draw. This means that you are technically sean as "self-employed" through the eyes of the IRS and are not paid through regular wages.
At the point that you collect money from the draw, taxes typically are not taken out - so make sure you are prepared to pay these taxes once you file your individual return.
As an owner who takes a draw, you can legally take out as much as you want from your equity.
This type of compensation is suited for Sole props, LLCs, and partnerships. If you’re an S corp, you can pay yourself through both a salary and draw if you choose.
If you decide to pay yourself a salary, you will receive a set and recurring amount. This will be taxed by the federal government and the state you reside in.
The reality is that it can be really complicated to set your own salary, so we have some tips for you to consider:
- Take out a reasonable amount that allows you to live comfortably but also sets your business up for success
- Consider the number of hours you are working weekly + the type of duties you are performing.
- Set your salary based on your industry-standard, location, and profits (or projected profits)
- Look at your P&L statement: Deduct your own pay from that amount. This is important so you can first tackle important business expenses, and then pay yourself from the amount leftover.
- Pick a payroll schedule (and stick to it)! In the US, it's most common to pay yourself and employees twice a month.
To learn more about how to pay yourself and what is a reasonable amount, check out this article.
How To Price Your Food Product
One of the most challenging and critical pieces to starting your online food business is determining how much to charge for your food product.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your food product, it's critical that you first identify all of your costs and consequently mark up your food product so you can factor in a profit.
The actual cost of your food product may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your food product, you'll want to create goals for revenue + how much profit you want your online food business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your food product is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your food product fits best in the marketplace.
All of these factors play an equal part in pricing your food product, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
Understanding Your Costs
Example from Ishan, founder of Ugly Duckling
First objective: profitability
Our profitability is OK at this point but definitely not where it should be yet. To this day I have not paid myself a regular salary yet...and it’s been 4 years!
The problem is not the cost of goods which are well under 20% of sales, which is good by any standard. The problem is fulfillment costs. In 2018 we transitioned from our first fulfillment company to a much bigger company. We did this because we wanted to provide faster shipment speeds and a better quality of packaging. In hindsight, we chose a company which would have been more suitable for a larger company with bigger volumes. We ended up being tied in with some pretty large minimum monthly payments. So currently fulfillment costs are currently around 45% of sales...way too high.
We are now looking to transit to another fulfillment center. Our target is to get our fulfillment costs down to around 30% of sales which I believe from what I have researched, is possible.
Just to be clear, when I say fulfillment that includes transportation costs also - FedEx, USPS, etc. Not just storage, picking, and packing. I am pretty sure that it is possible to get fulfillment costs down even lower, and I suspect that some large pro sellers on amazon.com work with around 20-25% of sales.
So our target P+L for 2020 looks something like this:
- Cost of goods, including inbound freight and clearance - around 22% of sales.
- Fulfillment - around 30% of sales.
- Digital Advertising & Promotion - around 15% of sales.
- Other marketing and office costs, including salary costs - around 10% of sales.
- That would leave us around 23% of sales - enough to pay me a liveable salary and for the company to make a profit and finance future growth.
That's the first objective for 2020: to right-size the P+L so that we are profitable at our current sales level
What Type Of Customers Will Buy Your Food Product
It's important to first establish who you will be selling to, whether it's to businesses or consumers.
Typically, in this industry, products are sold to B2C markets (business-to-consumer).
Let's take a look at what this means for your online food business:
B2C (or business to consumer) is a transaction where businesses sell their products or services to the consumer directly.
In this market, consumer behavior is the primary driver for your business decisions - so it's important that you truly identify who your customer is, and what their buyer habits are when building your product/service.
B2C is that you are able to cast a very wide net when targeting your customers. Your product may interest a large number of consumers or a specific niche.
B2C is that consumers hold all the power - so if your website is not the most user friendly, or does not rank in the top search results on Google, chances are, your customer is going to shop elsewhere.
When building your online food business, it's critical that you hone in on who your target audience is, and why they need your product over your competition.
Here are some items to consider when identifying your buyer persona:
Licenses and Permits
When starting a online food business, it's important to identify the type of space that you will be preparing your products.
Before launch, you may want to consider preparing products in your own kitchen (or a friend) to test different recipes and processes so that you can ensure everything is in place once you launch.
In this stage, as long as you are not selling products- the experimental phase can be done in the comfort of your own home without a heal department to approve the kitchen.
Health Department Approval
Once you're ready to launch the business, there are a few boxes to check in order to ensure you are health & safety approved.
The most common question is whether you can operate a online food business from home or if you need to rent a kitchen facility to prepare and make your product.
As long as you are FDA approved, you have the ability to operate out of your own kitchen. However, you may need the proper equipment in order to make that happen, and a commercial kitchen facility may be better suited for you.
For a full list of FDA requirements to get your food business set up, read more ➡️ here.
Michael Martinez, founder of Eat Clean LLC explains his experience renting a commercial facility:
The business was started with three of my long-time friends and just $3,000 (which was all that I had in my savings account at the time). That money was used for kitchen hours in a commercial kitchen, food and our original website.
By our third month, we were delivering to over 100 customers each week and we then had to lease a space and build our own kitchen. Initially, our customer base was family, friends, local gyms, and sports teams.
The space we leased was a pizza restaurant that we had to tear down and build it to our requirements. Later on, we then leased the two locations next to us for additional space to prepare our meals.
Design A Prototype
Turning your idea into a reality can feel like a daunting task - but it's critical that you have an idea of what your product will look like (even if it's just a sketch) prior to finding a manufacturer.
Here are some common ways you can design your prototype:
- Draw Your Initial Design on Paper
- Form pieces of fabric together
- Consider Taking A Generic Product And Putting Your Own Brand On It
- Try Making the Product Yourself
- Consider Building A Prototype With A 3D Printer
To learn more about how to design and prototype a product, check out our latest guide here.
Katie Young, founder of Klondike Kettle Corn dives deep into the process of designing and prototyping their product:
The first product I sold at our local grocery store was our original Sweet and Salty Kettle Corn. This is the same product I was making at the farmer’s market and I simply added a label to the packaging and started stocking shelves. It was a recognizable product to my customers and I think the familiarity of the product helped sell it outside of the market setting.
We have a shop on our property and I had the kettle up in there for production during our first year of supplying the grocery store. Kettle Corn is a product made to be sold at markets, and everything is done outside under your market tent in a large kettle heated with a propane burner. Having the kettle set up in the shop worked fine when the doors were open to allow venting. Buy as soon as it started to get cold (North of 60 cold!) and I couldn’t leave the shop door open, I realized this set up wasn’t going to work year round.
My husband and I brainstormed how we could solve this problem, and we eventually agreed that a lean-to could be built off the back of the shop. This could be a permanent market tent where I could back up and store the popcorn trailer and make kettle corn under shelter. My husband built an extra wide door into the shop so that I could roll my sorting bin in and out. I could still package popcorn in the warmth of the shop where my packaging equipment would work.
Today’s product development process
In the past couple years I started expanding my product line beyond the original Sweet and Salty kettle corn. We now supply 5 gourmet flavours throughout the year including our original, sweet and salty kettle corn, buffalo blue cheese, white cheddar, caramel cheddar and dark chocolate and sea salt. Our kettle corn is being sold at grocery stores, service stations, coffee shops and tasting rooms across the territory, in addition to our newly launched online store.
We developed 3 different products to sell online. We wanted to expand our market and start exporting our product outside of the territory, but we didn’t want to start an online store where we sold a couple bags of popcorn here and there. We decided to come up with 2 products that would cater to large events, where our customers would make larger orders and maybe only purchase one or two times per year. These two products are unique to our company and have helped increase our income without putting too much demand on our ability to produce. Afterall, I am still the only full time employee!
Our Really Big Box of popcorn was designed to help feed large groups of people at events with a low budget. It comes in a 18”x18”x24” box with 100 serving bags and a scoop.
Our promo bags were designed as an unforgettable giveaway at weddings, trade shows or customer appreciation days. The labels and flavours can be customized to uniquely represent our customer.
Our third product is a Popcorn Subscription Box that is sent out in the mail once a month and includes 5 gourmet flavours of popcorn and a surprise Yukon treat from one of our favourite Yukon businesses. Since I am the main operator of the business, having the boxes built and shipped out once a month made it more manageable to keep up to than adding too many new flavours to our year round selection of popcorn.
How To Find A Supplier For Your Online Food Business
Here are the steps to consider when finding a supplier/manufacturer:
Know your design
One very critical step to finding the right supplier is having an initial idea of what your design/product will look like.
Sketching is one of the most simple ways to get started in the design phase.
What's great about sketching is that you can practically do this anytime, anywhere - even on the back of a napkin.
To get started, all you need to do is pick up a pen and paper and start drawing - or if you are working on a virtual/software product this can be a diagram that outlines the user interface or experience.
Decide your supplier type
You'll want to identify the type of supplier you are looking for.
Here are some questions you may want to ask yourself prior to searching for a supplier
- Are you looking for a manufacturer to produce your product idea?
- Do you want to find a supplier that can simply purchase existing products for you?
- Do you want a drop-shipper to supply and fulfill orders?
- Do you want a domestic supplier or an overseas supplier? Read more about the pros and cons of each here
Where to start your search
Once you have an understanding of what type of manufacturer/supplier will be best to bring your idea to life, there are several areas you can start your search:
Manufacturing Your Product In House
It's also very common to manufacture your food product on your own - either from your home or in a commercial space.
In order to get the product right, you may want to consider experimenting with different designs and recipes until you find the perfect one.
Some founders choose to manufacture their product in-house so that they can control quality, manage costs, and easily handle production/logistics.
Down the road, you can always choose to outsource your food product.
Leslie Eisen, founder of AlmondClear discusses how to manufacture products in house
If you want to start a line of unique products, then you have two basic options: you can make them yourself, or you can find a manufacturer to work with that creates custom formulations for their clients.
I knew that I was trying to build a larger-scale business and that the home-made model wasn’t right for me, so I had to find the right manufacturing partner. It took a lot of research, phone calls, and emails before I found the laboratory that met my needs.
I wanted to create unique products (as opposed to private label), so I worked with the manufacturer’s chemist who specializes in skin care formulations. This process takes some time!
First, you have to tell the chemist what kind of product you’re looking for, the ingredients that you want to include or leave out, and what you want the final product to look like/feel like/smell like, etc.
Then, the manufacturer sends you the first sample, you try it out or give it to others to try, and then provide feedback for revisions. In my case, the first two products came together fairly easily because I only needed to make small changes to stock formulations.
There are many, many rules and regulations around cosmetics and skin care products. If you want to sell products that contain FDA regulated ingredients then you have to register and get a permit.
My products aren’t FDA regulated, so I didn’t have to go through this step, but I did have to be aware of the many guidelines and standards around labeling and safety warnings. Some people hire a lawyer to help them through this process, but my manufacturer was able to guide me through the regulatory process.
The entire process, from researching labs to work with to having the first finished products shipped out to me, took around six months.
Purchasing Inventory For Your Online Food Business
When first starting out, it's important to start small with your overhead to get a gauge for what people want.
Just remember - if you order a line of items that don't sell, it's nearly impossible to recoup the money lost.
Buying the right inventory takes research and planning in order to get it right.
- Identify your target audience: Identify the age, gender, annual income that you will be selling to. This is a defining factor in ordering the right inventory that will sell.
- Research your competition: Conduct market research and identify the different types of styles, price points, and materials being used. This will help you see what's trending and ways that you can improve/stay ahead of the competition.
- Create an inventory wishlist: Identify what you need for the launch of your business and create a budget that you will stay within. Remember, it's okay to start small.
- Find a supplier Make sure to first compare prices and analyze different options.
- Delivery timing: Schedule the inventory delivery to match with seasonality and trending buying seasons
Pro-tip: It's easy to become biased based on your own fashion preferences on what types of shoes/apparel to purchase. This is where a lot of fashion businesses go wrong. It's important to base purchase decisions on current buyer behavior, trends in the market, and specific to your niche.
Erin Hooley, founder of Bailey's Blossoms tells us how poor inventory projections led her to lose over $2M
When we first launched Peyton Bre we did so in a social or direct sales model.
Through poor inventory projections we were forced to change models but only after losing $2 million dollars.
It was a devastating time for us and one we were not sure we could survive.
I have since become very intentional about the way that we project our inventory needs and we continue to refine that quarterly and even monthly. We have created a KPI for the cost of goods sold to help us hold ourselves accountable.
Ultimately, the better we manage our inventory the less we have need to discount and the healthier our profit margin becomes.
This is, of course, a very high-level overview of the importance of inventory control.
To see the full breakdown on how to manage inventory, check out my guide over on my blog..
🚀 How To Launch Your Online Food Business
Build A Website
Building a website is imperative when launching your business, and with the right tools in place, this can be a simple task to check off the list (without having to hire someone).
- Pick a domain name that's easy to remember and easy to type
- Choose a Web Hosting Plan (ie. Shopify, Squarespace)
- Make sure you choose the right theme and design
- Implement the proper page structure (ie. about page, contact page, pricing etc)
To learn more about how to build a stellar website with little stress, we give you all the details on this step-by-step guide.
Once you have chosen the domain, web hosting, and platform, it's time to get started with the design phase.
Themes are a great way to produce the fundamental style and identity of your website - this includes everything from your font design to your blog post styles.
One of the best ways to get started is to simply explore the various themes (free or paid depending on what you're looking for) and test them on your site.
If web-design really isn't in the cards for you, you may want to consider outsourcing a web designer to help bring your vision and brand to life.
Get Press Coverage For Your Online Food Business:
The more buzz around your brand - the more the phones ring, the more traffic to your website, and the more customers as a result.
Here are a few ways you can get press for your business:
Press releases are a great way to share big announcements or news, but in order to get any traction, you'll need to find a way to make your press release stand out amongst others.
Try to convey a story that really matters, not just to you, but to the reporter and to their audience.
Here are some things to consider when submitting a press release:
- Craft a catchy subject (keep it short and sweet).
- Acknowledge the journalist's past work and interests - this is key!
- Include the main point of the story in the first paragraph, heck, even the first sentence. Reporters want to hear the juice first and foremost.
- Focus on the facts and try to limit the amount of jargon used.
- Pitch yourself! Help them put a face to the story.
- Make sure your topic is newsworthy. If it's not, find a way to!
- Try not to include any attachments of your release!
Email is one of the most effective and preferred way to send your press release, so as long as you keep your pitch brief, interesting and personalized (no cold emails), you should stand a chance!
Get Press Using HARO
HARO, otherwise known as "Help a Reporter Out" is an outlet for journalists to source upcoming stories and opportunities for media coverage.
The best part is, HARO is free to use! There are, of course, premium versions you can purchase, but the free version is still an accessible way to get press.
Once you set up an account, HARO essentially will email you based on stories (that are relevant to you) that need to be covered where you will then have a chance to essentially "bid on the story."
Here are some tips when crafting your pitch:
- Discuss your experience and expertise in the space. Make sure it's obvious why you're relevant to this story.
- Answer the question in 3-4 sentences. Try and be as direct as possible
- Offer to provide the reporter with more information and make sure to give them your contact info
Plan a Publicity Stunt
Planning a publicity stunt is an effective and quick way to raise awareness for your brand and gain some traction from the press.
If you're looking to plan a stunt, the objective should be to be bold and create something memorable
However, being bold has a fine line - it's important that you consider the timing of your stunt to ensure you don't come off insensitive or unethical. For example, timing may not be in your favor if you plan something during the general election, or in most recent cases, a global pandemic.
In order to measure the success of your stunt, it's important that you first determine your end goal, for example:
- Is the stunt aimed to raise money for your business or a particular organization?
- Is the stunt aimed to drive more traffic to your website?
- Is the stunt aimed to get more followers and engagement on Instagram?
Here are a few tips for creating a great publicity stunt:
- Research to ensure that there haven't been similar stunts done in the past by other businesses - this could easily turn off journalists and your audience.
- Make sure you can explain the stunt in one headline - this will help grab the media's attention. In other words, simplify!
- The stunt should be related to the product you are promoting. Even if the stunt is a success in terms of viewers, but it doesn't tie back to your original goal, then it's not useful.
- Keep the stunt visual with videos/images.
- Leverage the internet and social media platforms for your stunt by sharing your message across a variety of audiences. This will help with word of mouth and the overall success of your event.
To learn other strategies on how to get press, check out our full guide here.
Cameron Manesh, founder of Cameron's Seafood was able to land in the New York Times just by sending a cold email:
I started calling all the large newspapers pitching their food critics, their startup business writers and even pitched the angle of immigrant-run companies.
My first hit was with the New York Times. "I googled “New York Times Food" and learned Florence Fabricant was their critic. I then googled “Florence Fabricant email” and asked her to sample our food.”
I read she is a stern critic so we were worried but to our surprise she loved the food and when the article came out we did close to $40,000 in sales in three days and could barely handle the volume. That was an intense week but made it happen.
To read the exact email we sent to get in the NY Times, check out the full story ➡️ here
To contact the press, I recommend:
- Targeting macro press (i.e. USA Today).
- Google indirect competitors or vertical companies (ie. Hello Fresh) to see who wrote their articles
- Google the writers contact info and send an email introducing company
- Offer samples, be personal, discuss your food, follow up!
Launch Strategies For Your Online Food Business
There are various different ways you can launch your online food business successfully.
Here are a few different strategies to get customers excited about your online food business.
- Build hype with a landing page: you can effectively do this through waiting lists, discounts, countdown timer etc
- Create a teaser video: even just a 30 second video is a great way to exposure for your online food business, and possibly even go viral
- Reach out to influencers: The right influencer for your product has the ability to reach your audience with just one post, and because of their loyal following, this could lead to a big return for you.
- Get Press: Whether you plan a PR stunt or get exposure through a popular news outlet, this is a great way to attract initial customers
- Launch on popular sites: A great way to get buzz about your online food business is to submit your launch to popular startup sites.
Here are a few popular sites to launch on:
Learn more about how to launch your business successfully ➜ here
Alex Moore, founder of Rosa's Thai Cafe dives deep into the process of launching the business:
When we first opened our restaurant we had no money so there was no brand, to begin with. Rosa’s Cafe was an institution back in the day so we wanted to respect that, and the history of the building and the area. We left the name on the door and had no brand on purpose. No money was spent on marketing in the beginning but we used social media early on.
At this time Facebook was only just taking off. We had QR codes printed on the back of our t-shirts, which would lead to our website. It was perhaps ahead of its time as QR codes were in their infancy. At the time our digital marketing was complete and utter chaos!
We were nice to people, we included all the key staff in a very generous stock option when we sold and looked after the amazing people who have helped make Rosa’s what it is today.
What was effective, however, was word of mouth. It was fairly empty the first few nights, which lead to a couple of sleepless nights thinking ‘oh god what have we done’ however it became busy pretty quickly, gradually word got around and it just took off. The people who would visit our market stall began to visit us. Lots of people who lived in the area loved that we had kept the name as it part of the community. Kiera Knightly even became one of our regulars. This was a really trendy part of London at the time, and still is so we managed to build a reputation in the area. For us, the product was always the main draw.
The business could use some work, but the product was great because Saiphin is a fantastic chef. We had queues out the door, at this point, we were finally able to afford a dishwasher and a proper basement!
From this launch, I learned to do it on an absolute shoestring. This way Saiphin and I could retain more equity, then use cash to finish the fit-out. It was always about keeping control of the equity as much as we could early on.
It’s very hard to make a living from one restaurant if we could open another one with some money from the bank and other shareholders it would help make us stronger. In 2010 based off the success of the first one we decided to expand and we sold our house in Hong Kong to pay for it. If we hadn’t done this we would have only ended up owning a much smaller stake in Rosa’s and ultimately given up control. When we opened Rosa’s Soho it bombed.
We had tried to exactly copy our first site because we didn't realize it was a different market and a different vibe in a different part of London. You cannot imagine how stressful this was. We expanded our way out of trouble, we had the opportunity to open in Westfield, which was a great success.
We then went back to Soho and ripped it out and put it back together. We made it lighter and more in tune with the area. This is when we finally invested in a branding agency to create a fantastic brand for us. Sales doubled after this. We had 3 restaurants that were absolutely powering, and we were well on our way. That jump from 1 site to 2 was the most difficult we’ve ever made. It nearly killed us. If this wasn’t enough we also had a baby right in the middle of all this. Saiphin was working in the kitchen up until the night he was born and was back at work in 2 weeks later.
Make Sure You Get The Package Design Right
The way you package your online food business is often the first impression your customer has - so it's important to get it right.
You may want to ask yourself these questions:
If my product is on a shelf next to hundreds of other similar products:
- Will my online food business stand out?
- Will the branding/packaging create a connection with my customer, and hence, lead them to buy?
There are hundreds of tools you can use to help with packaging and design:
- Canva - Allows non-designers to create beautiful Instagram/Pinterest posts, flyers, business cards, etc.
- Stickermule - High quality custom stickers you can include on or in your packaging.
- Noissue - Custom tissue paper and compostable mailers
- Rollo Label Printer - A great tool to print all shipping labels at home
Sheets & Giggles explains the motive behind their "Premium Unboxing Experience"
I had a particular vision for our packaging centered around one goal: because we were a DTC company and wouldn’t do physical retail in year 1, we needed to focus entirely on an incredible unboxing experience that made the product feel as premium as possible.
Outside: a white box, nice wax coating, logo front and center with no other copy, easy to open, nice and sturdy.
Inside: make people smile from the get-go, have a social call-to-action, include free extra surprises (a knapsack that wraps the sheets and an eye mask), put funny copy all over the place, and add a donation bag that people could use to donate their now-defunct cotton sheets (sheets & blankets are the #2-most-requested item at shelters behind socks).
🌱 How To Grow Your Online Food Business
Social Media Advertising
Social Media Advertising is one of the leading ways to get the word out when it comes to online food business.
There are various different Social Media platforms available to you. Some may be more critical for your marketing efforts than others, however, it's important to have an understanding of what's out there and available to you.
Let's talk about a few of the main platforms and what makes them unique:
- Facebook Advertising - more than 2 billion monthly users. Facebook is the best for lead generation + capturing email addresses for e-commerce businesses.
- Instagram Advertising - approximately 500 million monthly users and has a higher audience engagement rate than any other platform. Instagram ads are best for linking to a product page or landing page and reaches the 18-29 age group most effectively.
- Twitter Advertising- Small businesses typically use twitter ads to drive brand awareness, but the platform is meant more for organic engagement (and is not as heavily used for paid advertising)
- Pinterest Advertising - 175 million monthly users and most effectively reaches the female audience. Pinterest is great for promoting products without "promoted". The promoted pins have a way of blending right in.
- LinkedIn Advertising - 227 million monthly users and is geared towards the B2B market and generates the highest quality leads. Great platform for recruiters, high-end products and services that will help businesses
It's important to first define your goal/objective so that you don't waste time and money into the wrong platform:
Here are some different questions to ask yourself as it relates to your goals:
- Do I want to simply drive brand awareness?
- Do I want to drive users to my website to gather information?
- Do I want to increase sales and get my customer to take action?
From there, choose the platform that targets your audience best and start experimenting!
Learn more about social media advertising ➜ here.
Founder Andy Hayes talks about mastering FB ads and the pixel:
The biggest bang for your buck will likely be mastering Facebook and it’s platform - which we all know is pay for play, so you’ll have to come up with a small amount of budget to start for marketing.
We’ve spent countless hours (and paid numerous coaches) before we cracked the code that works for us on Facebook, but it is working really well for us now.
Some of the most important things to know when it comes to FB Ads:
- Start with retargeting (that’s showing ads to people who already know you but did not purchase). Master this - and start building information on your Facebook Pixel - before you do anything else
- Once you have that down, try working with the 1% “Lookalike” audience to prospect for new customers. This may take awhile because your pixel audience is small, so try layering on interests - 1% Lookalike and your largest competitor, for example. Don’t use interest-only targeting until you master this.
- Great photography and videography is key, as is smart copy. Research what’s out there in your industry and constantly test - what works for one company may not work for other people.
- Make sure you have good offers. For example, we have a $5 trial for our subscription, which converts affordably - if we promoted our subscription with the standard $30 front charge, it wouldn’t be as cost-effective.
Grow Your Email List
The more engaged list of emails, the more engaged customers, which ultimately leads to more sales.
One of the best ways to start growing your list is by providing your customer with something free (or discounted) in return.
This could also be anything from:
- Fascinating case study
- Video series
- Free week of the product
- Discount on the product
Learn more about how to grow your email list and improve email marketing ➜ here.
Dylan Jacob, founder of Brumate states their email collection tactic that is proven to work:
We use Spin-a-Sale for this (you spin a wheel for a discount code in exchange for subscribing to our email list). This has been the best email-collecting tool we have found because the customer truly feels like they won a prize rather than just a coupon code.
Even if a customer doesn’t convert right away, if we have their email we have a 19% chance of converting them into a future customer whether that is through future promotions, new releases, or simply just sending an email at the right time for a purchase to finally make sense for them.
We also have a return customer rate of over 14%, so one out of every 6 people we convert will end up buying from us again with an average order value of over $60.00.
Add an exit-intent popup to your online store
A great way to double, or even triple, your email opt-in rate and to grow your list is to add an exit-intent popup to your site, and offering a discount or content upgrade for subscribers.
Here's an example of what that might look like:
One thing that I spent years NOT doing, that I now kick myself about, is adding an "exit intent pop-up" to our site, which lets people enter a sweepstakes to win a Xero Shoes gift certificate.
That one idea has added over 100,000 subscribers to our email list, which is one of our most effective marketing channels.
Improve Your Email Marketing
Different types of emails
Here are the most common types of email campaigns you can send to your customers and their benefits:
- Welcome emails - the perfect way to provide information from the start with a clear CTA. Make sure to tell your customer everything they need to know about your product or service.
- Newsletters - a great way to give customers updates or send out your latest content
- Product launch emails - the quickest (and easiest) way to increase sales is by selling to current customers. Make sure they're the first on the list to know about your new product
- Promotional emails - promote discounts, deals coupons etc. Try and make this feel exclusive and for a limited time only
- Abandoned cart emails - give your customers a reason to complete their purchase!
Here's a great resource for finding curated email designs, for all types of email campaigns!
Newsletter Example - Food Industry Tips and Tricks
We have a lot of content to share and it is very well received. Most clients need to see your brand a few times before they purchase, and email is great for that. Email is also an effective reminder for past clients to order again.
We have close to 5000 subscribers and we aim for 2 emails per month. Most of our subscriptions came through the website.
So far we have been focusing on practical life hacks and tips on how to stay focused and disciplined. Many of our subscribers are past clients that took a break.
Our open rates are good, we’re averaging 24% - 53%, much higher than the 10% industry average. We need to work on our click rates which are at around 1.2%.
Abandonded Cart Flow
The abandoned cart workflow is one of the most effective strategies for turning your lead into a customer, and a powerful tool to have if you're an e-commerce business.
Think about all the times that you went on a shopping frenzy only to add items to your cart and then either forget or realize nows not the right time to pull the trigger.
Then, minutes later you receive an email saying "Hurry up! Your cart is waiting - and we want to provide you with 20% off your order."
Maybe that's the special touch (and discount) you needed to pull that trigger.
Implementing this workflow can automatically trigger this for your business every time a customer abandons their cart.
Here's a great example of an abandoned cart email from Brooklinen:
Things they do well:
- Showcase 5-star reviews from other customers
- Offer a small discount + free shipping
- Great design + clear call to actions!
Improve your SEO
SEO is not just about driving traffic to your site, it's about driving the RIGHT traffic to your site, and ultimately, converting leads into customers.
One of the most important aspects of SEO is understanding what your customers are searching for, otherwise known as "keyword research."
Here are some tools that can help you choose the right keywords for your online food business.
- Google Ads Keyword Planner invaluable for discovering search trends.
- Google Search Console is very helpful once your website is up as it shows you what words/phrases are generating traffic.
- Ahrefs and SEMRush are paid tools that allow you to look at results of your competitor's website.
Publish Great Content
Finding keywords is an important piece of the puzzle, but Google also ranks your site based on the actual content you produce, as this is what your customers are reading and engaging with.
There are various different "forms" of content that you may want to consider diversifying on your sites, such as blog posts, articles, studies, and videos.
So let's discuss what google considers "good content:"
- Length - This will vary depending on the page, however, generally having a sufficient amount of content helps search engines recognize that your site is a good source for a specific topic
- Engagement - The longer people stay on your website to read your content, the higher Google will rank your website. It's important to have informative and "thick" content that keeps people reading
- Avoid Duplicating Content - Google will recognize this and may consider your content to have low value
- Ensure pages load quickly - This will also help with engagement and time spent on your website
- Shareability - Create content that people want to share, and is easy for them to share, especially to their social media accounts (ie. "click to tweet" is a great example of this).
Another element of creating good content is creating consistent content.
If (and hopefully you are) publishing content frequently, it's important to stick to a schedule - this helps build brand trust and easy user experience with your customers.
Planning out your content with a content calendar is key to staying consistent.
Here are a few great content calendar tools that can help you:
Backlinks are an important piece to SEO, as they allow for other websites to link to your content.
Search engines recognize that other sites are essentially "verifying" your content and essentially rank you higher because of this.
Of course, some links are more valuable than others and can affect your site in different ways.
For example, if a highly valuable and credible site like the New York Times links to a page on your website, this could be remarkable from an SEO perspective.
Aside from organically getting mentioned from other sites, there are other ways that you can increase and earn backlinks:
- Create infographics with relevant data that people want to share
- Promote your content on different sites/look into "guest blogging"
- Contact influencers/journalists/bloggers and ask them to mention you!
- Write testimonials for other sites in exchange for a backlink
- Leverage existing business relationships
Monika with Hipcooks discusses how solid Yelp and Google reviews lead to the business ranking #1 on Google search:
Top Google Placement
We deliver a great quality product each time we teach a class. I call it “pennies in the piggy bank:” one by one, each customer contributes to a solid, dedicated customer base.
Number one Google ranking (or at least the top 5 Google ranking) is important, so we keep our Google business pages full of updated content. Our Google and Yelp Reviews are solid.
Build A Blog
One of the most effective ways to build brand awareness and grow your business is through consistently blogging.
We've outlined some useful tips for you to consider when creating content:
Consistency and Quantity
Quality is important, but it should be the standard for any content you publish.
What’s more important is consistency and quantity.
Consistency is as simple as committing to publishing and sharing a certain number of posts per week. For me, that’s three per week right now.
This kind of commitment is key, because one day, a random post will blow up, and you will have never expected it.
The easiest mind trap is to think "I’m posting too much", and “I need to give my readers/audience/this platform a break”.
This is nonsense.
There is no such thing as oversaturation. Well, there is, but it is just someone else’s opinion.
For every person that tells you you are posting too much, there is another person that wants even more of your content.
You should ignore people’s opinions on how much you post.
Patience & Persistence
Keep posting, keep trying, and keep putting out good content on the regular. Your time will come, and when it does, it will change everything.
The only thing you have control over is your content.
You can’t control how people will react to it. You can’t control pageviews, likes, or shares.
So the only metric you should focus on is how much content you can put out in a week, month, etc.
Where to share your blog content
I know it sounds obvious, but the best places to share your content is on your mailing list. It is guaranteed traffic and it is a great way to get rapid feedback from your most loyal readers.
Send newsletters often. I have done once a week since starting, and I’m moving to twice a week soon.
Work on increasing your mailing list as well. Look into ways to increase your conversion rate to your mailing list. I added a flyout popup thing to my site and now I’m collecting ~30 emails per day.
An email newsletter is one of the most powerful assets you can have and it is worth its weight in gold.
Reddit is one of my favorite places to promote content.
It is a very scary place because you will often get banned or heckled, but it can really pay off.
Create social media accounts for your blog, the main ones I use:
Twitter Facebook Instagram LinkedIn
Set up Buffer and share all of your blog posts to all of your accounts. All of these little shares really do add up.
Automate this as much as possible. I automated all of my social media for Starter Story.
When I started out, I put together a spreadsheet of relevant Facebook groups for my niche, and I would post to these groups whenever I had a big story I wanted to share.
Build A Facebook Community
Building a community is a great way to grow your network and your business.
There are several different ways of building a community, one of the most effective (and simplest) ways is to build a Facebook group
Setting up the group page takes less than 10 minutes, and we've outlined ways the top 5 ways to create an engaging and successful group:
- Make the group exclusive. This may sound counter-intuitive, however, this ensures privacy and that the group will feel comfortable posting and engaging with members.
- Try to be warm and welcoming. A great way to do this is by having a "Member Monday" where you welcome new members and ask them to introduce themselves in the group
- Use polls/surveys. This is a great way to know your audience and see what people want more of in the group (more business tips, networking opportunities, etc).
- Include influential people & conduct AMA's (ask me anything). This is a great way to get members engaged
- Host an in-person (or virtual) event with members in the group. This will create stronger relationships and build a strong community.
Mike Doehla, founder of Stronger U, an online nutrition company noticed that his customers needed a little motivation and sense of community:
Most diets are lonely so we wanted to give support and a community.
I think many people fail diets because there is no one to talk to and no accountability.
You can by a book, or google a meal plan but who’s going to keep you on track? We will. The entire SU community.
We give our members access for life to our Facebook community filled with people around the world who are looking out for everyone’s success.
Most diets make up arbitrary rules and we thought they just didn’t make sense. Meal timing, Cutting carbs, butter in coffee, sugar being the devil? Ehh no need to overthink that stuff.
We’ll give you the science behind of what we do and show you what actually matters based on real research.
Luckily we have a PhD at our disposal to educate our staff and members so everyone is getting the most up to date information out there.
How To Market & Sell Your Product To Grocery Stores
The goal for most online food businesses is to be able to sell their product in grocery stores and other marketplaces.
With a bit of time, research and energy, you can make this a reality for your online food business!
Here are the steps you should consider taking when you are ready to market your online food business to grocery stores:
1. Permits: Make sure you have the right permit by contacting city and state officials
2. Creative label and packaging design: Your packaging should be functional, creative and also meet all U.S. Food and Drug Administration labeling guidelines
3. Price your product appropriately: Make sure your product pricing is fair but also allows for you to make a profit. Check out what other online food business's are selling for at grocery stores in the area.
4. Create a target list: Conduct research in the area and decide which grocery stores you would like to sell your product to.
5. Contact stores and present your product: Introduce yourself and request a meeting with the grocery stores on your list - bring a presentation with the market research you've conducted and samples of your product.
Consider Selling On Amazon
In addition to selling your products directly on your site, you may want to consider selling on Amazon to reach a wider audience and attract new customers.
Here are some pros and cons of selling on amazon:
- Easy and seamless process to get your product listed on Amazon
- There are roughly 100 million thoroughly committed prime customers, so you're bound to tap into new business
- Can help grow your business exponentially and reach new audiences
- You may encounter some "copycats" and counterfeit products
- Amazon owns the relationship with the customer (you lose control over product reviews + customer service)
- If you already have a low-markup, amazon may not wrth your while and you could end up losing money
- Commissions and listing fees are high - it's easy to lose control of your offering
Follow these instructions to get your product listed on Amazon or check out the video below on how to get started:
Cory Stout, founder of Woodies ($250K/mo) provides us with specifics on how to rank better on amazon:
Our main product is walnut wood sunglasses that I sell for $25 on Amazon and Woodies.com.
I dedicated myself to becoming an Amazon expert. I listened to all the podcasts and read all the blog posts I could find. Shoutout EcomCrew I took the basic fundamentals that are out there and I added a couple of my own twists.
Amazon brings me, 100 brand new customers, every day for very little acquisition cost. If I tried that on my own, it would take a TON of work and it wouldn’t be nearly as effective as Amazon, so I took the easy road on this one.
Here's an article I wrote on how to rank better on amazon (30+ Tips):
- Beautiful images (minimum 5 images) especially lifestyle images I use UpgradedImages.com for product photography (hey Ken!)
- Keywords in your title (but it still needs to sound human)
- Competitive price (contributes to high conversion rate)
- NOT having 1-star reviews
- DON'T STOCKOUT: it's such a killer and if you DO stockout, definitely DON'T raise your price right before you do, if anything LOWER your price for the last 10-20 units before you stockout, each ASIN has a 'memory' for when you do get back in stock so that will help you regain ranking quickly
- DON'T VIOLATE AMAZON TOS: just don't
- Perform QC on your stock before you send it in (I sent in a wrong box once and I had to 'remove' over 3,000 pieces so I could sift through them and remove the 150 contaminated pieces 0/7 would not recommend
4/5: Pretty Friggin Important
- Minimum 10 5-star reviews (do this before you do anything below this)
- Well optimized PPC campaigns (could do a whole post on this, keep ACOS under 40%) here's a screenshot of some of my campaigns I use a combination of manual campaigns with exact phrases and high bids...and auto campaigns with a broad range of products and very low bids
- Turning on FeedbackGenius for auto review requests (it's not as good as it used to be, but it's still worth it)
- Get a trademark and get Brand Registry, this protects you from hijackers and other unscrupulous sellers
- Quick response to customer messages (under 12 hours) here are my stats my mom does all my customer service "Employee of the Year" status
- Drive outside traffic (amazon loves outside traffic because they don't have to spend so much to acquire customers) Facebook, Instagram, and Google Adwords are the usual suspects
- Use ocean shipping to save mucho $$$ on unit costs (use flexport)
Read more about amazon tips here.
🏃🏼♀️ How To Run Your Online Food Business
How To Retain Customers For Your Online Food Business
Retaining customers is one of the most effective ways to grow your online food business.
Oftentimes, it's easy to find yourself focusing on generating new customers, vs retaining your current ones.
Look at it this way - you are 60-70% more likely to sell a new product to an existing customer than you are a new customer.
That's not to say that finding new customers and revenue streams is not important, however, the easiest (and most inexpensive) source of new revenue is right there in front of you.
Here are some ways you can retain customers for your online food business:
- Responding to comments on social media
- Send discounts (or freebies) to loyal customers
- Provide valuable content, for free
- Write a hand written thank you note
- Provide awesome customer service and build relationships with customers
To find out more tips and tricks on retaining customers, check out this article ➜ here
Jen Hansard, founder of Simple Green Smoothies dives deep into the process of attracting and retaining customers:
Our free challenges are the best way to attract new customers. Inviting someone into a challenge is such a fun way to introduce them to your company. I've shared this with Amy Porterfield, the better you make your free challenge experience for them, the more likely they are going to buy one of your products down the road. Our challenge also happens to be our best FB ad that we run. I think Facebook likes when you aren’t just selling products through the ads, but creating value and incredible content through your offer. That’s just my hunch... I'm no expert in that area yet :)
When it comes to retaining customers, I think as long as you always stay true to yourself and speak candidly to your community, they become loyal friends. We try our best to respond to every email, comment, and message that comes in. We see our community as our friends and fellow wellness warriors— and will always cheer one another on. When you listen to their concerns and needs, it also gives you ideas for future products that you could create to help them.
We are always thinking “what would help them more? The truth is, we can’t keep selling them the same product over and over, which means we have to always be thinking “what’s next” and have the energy and bandwidth to create it for them. That’s why we have 4 seasonal cleanses, an app, 2 published recipe books, live retreats, and physical smoothie supplies. These are all requests we’ve received over and over again… and we love creating new things for our community. As great as it is to get new customers, it’s easier and more rewarding to help your current customers get to the next level with more amazing products.
Probably the best advice I have when starting a business is to make sure you truly believe in the product and are passionate about.
You will literally spend almost every waking moment (and a sleeping moment too!) thinking about it! Also, your customers know when it’s business versus a passion— they can sniff it out. Share your passion with them, keep your messaging real, authentic and personable. For example, in our copywriting, we use a TON of contractions (ex: they’re, won’t, can’t) because that’s how I talk in real life. It’s more casual and personal— and I want my fellow rawkstars to get to know and trust me. Subtle, small things like that can make a difference in getting paying customers that believe in you and your product!
I also believe we’ve had such a huge success because of our team. I truly have the most incredible team working with me— they have the biggest hearts, willingness to learn new things and boldness to speak up when something isn’t working. I’ve worked hard to cultivate a work environment that I personally enjoy being around, I only hire people I respect and trust with a company credit card, babysitting my kids and telling me the hard truths when I need to hear them.
In the early years of Simple Green Smoothies, we had some serious momentum going through our free Green Smoothie Challenge and then our 21-Day Cleanse. Yet over time, products lose their shine and can be harder to sell. We’ve had to get creative over the years, survey our audience to understand their needs over time, rebrand our products to reach a new audience and even hire marketing experts to help us see more opportunities. Running a company takes a lot of grit, creativity, and endurance to continue on when times get hard (because they will!). Yet I take every hardship as an opportunity to grow stronger as a person and learn some tough lessons along the way.
Diversify Your Product Line
Adding new products to your business is a great way to expand into new markets and grow your business.
It's important to note that adding new products and diversifying may not be in the cards for you right this moment, and that's okay. You can always consider it down the road.
Here are some reasons you may want to considering adding/diversifying your product
- Meeting the needs of your customers
- Establish yourself as a top provider in your industry and stay ahead of the game with competition
- Resistance to downturns/trends fading
- Create new revenue streams
Preparing To Scale Up
Example from Hipcooks Cooking Classes
With 7 profitable owner-operated locations and 15 years in the business, I’m (finally) ready to scale up!
What we're looking to do:
- Open a Hipcooks in every big city in the US (and even internationally)
- Streamline and get ready to franchise
- Finish our second and third cookbook
Word of Mouth
The most tried and true way to grow a online food business is through word of mouth - some entrepreneurs would say it's more important than all social media.
Why you should focus on word of mouth:
- Consumers trust word of mouth above all other forms of marketing
- 92% of consumers believe recommendations from friends and family over all forms of advertising
- 64% of marketing executives indicated that they believe it is the most effective form of marketing
Learn more about word of mouth in our guide: 30 Ways Founders Grow Their Business ➜
As a brand, you want to deliver an experience that authentic, honest and transparent.
Don't make the mistake of giving your audience less credit than they deserve.
If you go around chasing every trend and only focused on yourself and money, you’re going to lose very quickly.
There have been many times where we have been tempted to do this but stayed true.
Sure we sacrificed sales, but we kept our integrity, played the long game and people saw and appreciated that, and really began emotionally investing in the brand.
If you can afford to hire someone to help support your online food business, outsourcing is a great way to save you time and energy.
Most importantly, outsourcing can help you focus on the core growth of your business, versus spending your time on day to day tasks that other people can do just as well!
If you do plan to outsource your work, it's important to be hyper-familiar with the actual work involved.
Why is it important to be hyper-familiar with the work?
- So you can understand how long it takes
- So you understand the full process, edge cases, things that can go wrong.
- So you can explain it in detail to your employee.
- So you can make sure it actually works (for example - how do you know cold email works for your business if you’re not on the ground floor trying it out?)
- Understanding the tasks at a deep level will save you a lot of time and money.
Build a Referral Program
Word of mouth is one of the best ways to get the word out about your business and acquire new customers. Especially when you are starting out, it’s important to build a solid referral program to encourage existing customers to help you find new ones.
A great way to do that is by offering a reward (ie. credit on your service or cash) to customers that refer you to their friends and family.
A fantastic referral program will help with clout, credibility, and establishing yourself in the space.
Provide Great Customer Service
Providing exceptional care and creating relationships with clients is a great way to build your reputation and retain customers.
Whether you are an online business or a physical business, it's highly important to communicate with customers and make them feel like they are the priority.
Just remember: customer service represents your brand, values, vision and YOU as a person.
Lousia with Funky Fat Foods states just how important their customer service is:
We’re consumer-focused and take care of our customers as quickly and correctly as possible.
I believe what is also working for us, is our customer service and the relationships we have created with them.
Even today we see huge support from Instagram, as you can talk directly to your (potential) customers all over the world. Basically, just ask them what kind of content they’re interested in, and always reply to their questions.
We’ve recently started sharing our struggles and learnings via IG stories and see a growth in our engagement. We try to stay in as much contact with our followers as possible and strive to create good and engaging content through social media. As a result, we have been steadily growing our follower base organically.
We also run contests on Instagram in collaboration with other brands and send our bars to micro-influencers, which really help to increase awareness of the brand but there is still a lot of room to grow in this area.
We put together the best resources on the internet to help you start your online food business.
- Social media tools such as Facebook, Instagram, Twitter, Pinterest, LinkedIn or Snapchat
- Advertising tools such as Facebook Ads or Instagram Ads
- Productivity tools such as Dropbox, Slack, Google Suite, Asana, Evernote or WorkFlowy
- Platform tools such as Amazon, WooCommerce or Shopify
- Payments tools such as Shopify Payments, Square, Stripe, Paypal or Apple Pay
- Analytics tools such as Google Analytics
- Shipping tools such as USPS
- Accounting tools such as Quickbooks or Google Sheets
- Email tools such as Whatsapp or MailChimp
- Design tools such as Canva
- Blog tools such as WordPress
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