Wholesale Food Business Online and The Long Tail Marketing Approach

The food producer’s ultimate guide to doing business online – Chapter 2:
Wholesale Food Business Online and The Long Tail Marketing Approach

As I previously mentioned in the last article, it is estimated that nearly 90% of wholesale food buyers conduct purchasing research online. This means that wholesale food buyers DO go online to find new products, see what is “hot”, and ultimately find out what will sell in their store. Statistics aside, think of the buyers (that you are pitching at retail stores) on a human, non-business level; each of them - like all of us - spend more and more time online each year. And just like us, they read articles, get newsletters, see advertisements, and even use sites like Facebook and Twitter.  That said, your web presence is just as important - if not more so - for reaching wholesale buyers than consumers, online.

Positioning yourself online to reach wholesale buyers is much the same as you would in reaching consumers. Wholesale buyers, after all, are consumers too. In fact, wholesale food buyers are most likely more in-tune with your target consumers, so it’s really just about speaking the right language and capturing the lead - then converting it to business.

Now, naturally, many will think, “Yeah right, the buyers from big retailers don’t do research for products online” - and to a certain degree, that is correct.  Many of the large retail buyers don’t have to do research online to find new products simply because they are constantly bombarded with new product presentations at their store level - from distributors, brokers, etc. When they have a product that is not selling on the store shelves, they have 5 new SKUs waiting in line to take its place. Furthermore, the buyers from large retailers typically attend several trade shows per year, and make purchasing decisions based on the show trends.

Introducing the “long tail”…..

On a bar graph showing the types of retailers and their corresponding volume levels, the big retailers at the beginning of the draft would represent very large bars (lots of volume). Think of stores like Wal-Mart and Target, then trailing down to medium grocery chains, and then large specialty stores like Whole Foods. Keep going down on the graph to the smaller independent stores (gourmet shops, gift stores, cheese shops, wine stores, etc), and the bars get very small - BUT - there are thousands of them, on the graph going on for a very long time, creating a “long tail”. While each of these bars/stores individually may not represent a lot of volume, the “long tail” collectively can represent a very significant amount of volume.

Here’s where it gets good…

Characteristics of the “long tail”

#1: Margins are better, terms are more favorable

First, selling to the “Long Tail” of small retailers collectively can actually make up more volume and will usually be more profitable than selling to the “big boys” at the top of the graph. Believe it or not, you will most likely get more business and greater margins from selling to 100 small targeted accounts at full wholesale price (i.e. gourmet food stores, cheese/wine shops, gift basket companies) than you will from selling to your one local chain of grocery stores or distributor at cut-throat discounted prices. And don’t forget the slotting fees. Smaller stores won’t have slotting fees, and/or ridiculous requirements for ad allowances, etc.

#2: Researching and Purchasing decision processes

Here is a fun exercise. Pick up the phone, call your local large retailer (or distributor) and ask to speak to the appropriate department manager or buyer. Most likely, you will get a “gatekeeper” who will pre-screen you before you have a chance to waste the manager/buyer’s precious time. Go ahead, leave a message. It’s probably the only time you’ll get to pitch your products. If you are persistent, you might get lucky and finally get Mr./Mrs. Manager/Buyer on the phone - but be prepared to write down the number to the corporate office, another set of gatekeepers and voicemails. This is not meant to discourage, but the point I am trying to make here is this: it is extremely hard to get decision makers of large chains/stores/distributors to answer your calls or meet with you for a sales call.

Now, pick up the phone and call, or walk into your nearby gourmet store/cheese and wine shop (etc). Most likely, you will get an owner or a buyer (in most cases, it’s the same person!) on the first call/visit! Does this mean you will get the sale? Not always, of course, but at least you didn’t spend weeks or months just to get shot down.

The other interesting thing that many food producers fail to realize is the different luxuries (or lack thereof) that larger retailers enjoy. Large retailers/chains/distributors know what products are out there, what the trends are, and have more than enough product selection to choose from. Why? Because larger retailers are bombarded with product samples on a daily basis, and have the budgets to afford traveling to the big food shows to find new exciting products for their stores.

Small retailers/buyers - in the same way you don’t have the budget to exhibit at all the big food shows - don’t have the budget to attend all the big food shows to find new products. They also don’t have the luxury of getting new exciting product samples sent to them on a daily basis, and don’t have brokers and distributors servicing their store on a daily basis with new products, promotions, etc. Instead, smaller retailers have to be creative in how they find new products for their stores, which usually means hopping online and searching for products, or at least paying more attention to the new products they see being promoted online. Send an email to a small independent specialty store and there is a good chance they will read it and actually click through to your website.

#3: The Sales Cycle

This is basically an extension of the previous section (Buyers). With large chains/retailers/distributors, the sales cycle is generally quite long (and frustrating). Some retailers make buying decisions for different categories only once per year! Since most small retailers only have one decision maker for purchasing, you have a great chance of getting a sale much quicker (and easier) so long as you have a great product, a great pitch, and favorable margins for the retailer. If a buyer from a small retail store finds your company online and is compelled, you can even have wholesale orders placed on your website without ever talking to them. Our clients experience this on a daily basis!

Using your website to capture “long tail” business

I’ve explained what the “long tail” is and some of the characteristics of those buyers - now here are a few ways to capture their business:

1. Make it obvious that you are selling wholesale, not just directly to consumers online. Create a visible link to a page that is strictly for wholesale information, and locating regional brokers or distributors (if applicable). On this page, make it clear how committed you are to helping retailers sell your products, including sampling, promos, incentives, coupons, etc.
2. Create a password protected, wholesale-only section that allows retailers to create an account with you, view their pricing level, download PDF sell sheets and order forms, and place online POs.
3. Offer web-only specials, such as 10% off first time orders on the website, or free store demo samples with (x) number of cases ordered online.
4. Create a rewards point program for online wholesale orders.

Need help with implementing these strategies? Let me know! Next chapter, we’ll be discussing search engine marketing - both SEO (search engine optimization) and PPC (pay-per-click), and how this form of marketing can help you grow both your direct-to-consumer business and wholesale orders.

‘Till next time,

Ryan Montague
Founder and CEO
Gourmet Business Solutions, LLC