The COVID-19 pandemic forever changed how consumers discover new products and make purchases. It also disrupted how businesses sell their goods and tell their stories to stand out in a crowded marketplace.
Food and beverage businesses were uniquely impacted by this seismic shift. Curbside pickup and online ordering are now nearly universal practices as businesses were forced to find new ways to generate revenue to stay afloat. As a result, an effective digital presence and online commerce platform is essential for businesses of any size.
According to Hartman Group, consumers spent 29% of their weekly grocery budget online in June and July 2020 compared to 10.5% for year 2019. Industry research concludes that e-commerce grew by 300 percent from 2013 to 2017, and in 2021 nearly 18 percent of global retail sales will occur online. Further research from McKinsey & Company found that 92 percent of people who tried online shopping in 2019 became “converts” to the practice.
To stay relevant and profitable, companies large and small shifted their business plans and distribution systems. For many, this new way of doing business presents questions about where to invest time and resources and the best tools to utilize to increase sales and customer loyalty.
To address these issues, AURI partnered with Clutch Performance, to develop an e-commerce and digital marketing guide for food entrepreneurs. The research was published as an online module as part of the organization’s food business toolkit. The project was funded, in part, by the Minnesota Department of Agriculture.
“The timeliness of this project was obviously something we couldn’t predict, but the information contained in the guide is absolutely critical for businesses. Having a coherent e-commerce and digital strategy and an understanding of some of the data points and tools available is the first step to telling the story of your business and showing the value of your product,” said Shannon Schlecht, AURI’s Executive Director. “This project also addresses a gap in the marketplace. A lot of AURI’s work on the food side is in product development and process development.
One of the things we have noticed, however, is that there is work to be done to help businesses market good ideas and spread market awareness.”
An effective digital marketing and e-commerce strategy is custom designed to fit the needs and goals of an emerging company. The first goal of the guide is to describe the different tools available to entrepreneurs to help make informed decisions on topics like websites, social media and online storefronts to sell goods. The guide has content and visual examples for each section, examples of existing Minnesota food businesses that are effectively using the various platforms and links to additional resources.
“We were both seeing and hearing that many small food businesses didn’t know how to get started when it came to generating online sales,” said Jason Robinson, AURI’s Business Development Director-Food. “At the same time, we saw a massive rise in e-commerce as a regular shopping approach for consumers. To close this gap, we built this online module to help business owners ‘get smarter’ and create a baseline of knowledge that would accelerate their learning curve to make better decisions and grow their revenue faster.”
To match the subject matter, the guide’s format was designed as an online experience. It is available as an online microsite through AURI’s website. It is easy to navigate and to skip ahead to specific sections.
It answers three key questions: How do businesses best connect with customers in a digital space? How do businesses then convert that connection into sales? Finally, once a sale is complete, how do businesses deal with the logistics of shipping their products? There are key takeaways in each category.
Building a digital presence to connect with customers can be an easier process than many business owners envision. There are many existing platforms, like WordPress, that don’t require a web design background for a user to create an effective and engaging website. An online shopping cart allows consumers to purchase goods direct from businesses rather than at a grocery store or retail outlet. There are more options available than just Amazon. Clutch identified several third-party platforms businesses can use to support e-commerce efforts.
“As you think about bringing a product to market, this resource will be veryhelpful to educate yourself on the options available and the pros and cons of each. When it comes to digital marketing, it is very easy to spend your money and your energy as a business owner on things that won’t necessarily help you reach customers,” said Jen Wagner-Lahr, AURI’s Senior Director of Commercialization. “The guide does a really good job of laying out the options and then the pros and cons of each. Ideally, entrepreneurs would review this guide as they are starting out in real time to get those questions answered so they don’t start down the wrong path and have to adjust their focus later in the process.”
“There are many options businesses can use to expedite growth that don’t require a ground-up solution. For example, there is even one that allows farmers to sell their produce directly to consumers,” said Robinson. “I hope food business owners take away that you don’t need to spend as much money as you might think on an e-commerce platform. I also hope this guide helps those business owners understand that effective online marketing requires consistent and targeted consumer engagement. It is not a one-size-fits-all approach.”
Once businesses have found their customers and made a sale, they can’t overlook the importance of shipping their products. The guide identifies tools and strategy considerations of delivery.
“You don’t want to spend more money in shipping than you can sell your product for. Where the rubber really hits the road is understanding the right approach to logistics and building an efficient process. That is a vital component to the underlying business model,” Robinson said.
The audience for the guide is an entrepreneur with an idea for a product ready to scale up, or an existing small to medium-sized business ready to catch up in these fields.
Ag Innovation Partnership
AURI partnered with Clutch, a Minneapolis-based marketing company that specializes in working with food businesses. Dave Miller, the Vice President of Clutch’s Food Business, said that for many businesses the guide will be helpful to focus their efforts. Most small businesses don’t have dedicated marketers. Busy entrepreneurs must use their time effectively to get the most return on e-commerce and digital marketing, Miller noted.
“When businesses start thinking about how to use social media, or video or an online shopping cart, the key is to be realistic. Ask yourself what your business needs and what tools do you need to meet those goals? Focus in on one or two things and don’t try to do too much,” he said. “If you have an hour or two a week to devote to marketing, how can you best use that time?”
Miller said another helpful resource devotes itself to explaining the purpose and the audience of the different social media channels.
“Social media is great for small and emerging businesses. It’s free and you can connect directly with customers. But you need a coherent strategy to get the most out of it,” he said. “A YouTube channel is not the same as your Facebook page. They have different audiences and different purposes. Understanding those uses is a key to optimizing your content on social media.”
Like the Aquaculture Report, AURI’s staff identified the e-commerce and digital marketing guide as an important component of the 2020 Ag Innovation Partnership. Each year AURI puts out a call for submissions from businesses, researchers, entrepreneurs and producers, encouraging them to submit a proposal. AURI reviews and selects projects based on the submissions most closely aligned with AURI’s mission of supporting innovation and creating long-term economic impact. Project selection is based on how the proposal meets an agriculture sector need.
The selected projects receive AURI’s resources, funding and support to help businesses turn their ideas into reality and catalyze innovation in the state’s agriculture industry. Also, there is a requirement of all applicants to share in the project cost by contributing at least 25 percent of the dollars, hours or value of the project. Each project selected aligns with one of AURI’s core focus areas: biobased products, renewable energy, coproducts and food. The information generated from each project is available to the public in order to help producers, entrepreneurs, businesses and agriculture processors.
AURI will announce areas of interest and solicit proposals for the fifth year of the AIP program this fall.
“We have been talking about e-commerce for a while. The shift to a digital focus has been gathering steam and it was significantly amplified with COVID-19. There is a lot of interest in new and different ways to reach customers with our food clients,” said Wagner-Lahr. “This guide is a timely and informative resource for those discussions that are happening in real-time right now.”