1 Way The Internet Can Help You Grow Your Wholesale Business – Part 1
When I ran my own small business one of the hardest things I faced was growing the wholesale side of the business. How could I cost-effectively get my product and message in front of retailers without going broke in the process? No matter what stage your business is in, if selling to retailers is part of your sales strategy then you undoubtably know what I’m talking about. It’s such a big problem for small businesses that when I was introduced to Buyers Best Friend the only thing I could think was “this is brilliant – why hasn’t someone thought of this before now?!?”
In a very simplified explanation of what Buyers Best Friend* does, it essentially acts as a way for artisan food companies to connect with buyers from independently owned stores and larger well-respected grocery chains as well. When I add in that the team behind this brilliant idea is a combination of a tech guru who has years of experience behind him and a food producer turned food broker, well then you can say they know something about creating an online system that fits the needs of food producers and food retailers.
I had the opportunity to talk with Joyce Guan, the co-founder and VP of sales for Buyers Best Friend, to learn more about the company and what they offer. Since Joyce provided me with so much great information I’ve broken it into two parts so look for the end of our interview tomorrow.
1. In your words, explain the background of the company and how it started.
I’ve been selling wholesale food for the last 8 years, first as Director of Sales for Charles Chocolates (artisan handmade chocolates) and then as the owner of California Girl Foods, a specialty food broker firm. Over the last few years, I noticed a few trends that are changing this industry:
- Right now there are many more artisan players in the market, meaning every company in a product category gets fewer dollars, and companies are making a smaller number of SKUs. This means that companies with only a few products have small annual sales as they get going. Unlike medium and large companies who can afford to pay a dedicated salesperson a full time salary, small companies with a small number of SKUs can’t do that to start, and they need to be way more resourceful and efficient as they build up their businesses. If you’re taking a $1000-$2000 order, go ahead and spend $5/gallon on gas, and two hours round trip visiting one lead, but if you are taking a $100-$200 order, the true cost of sales and marketing may make you unprofitable.
- Buyers are overwhelmed – I’ve seen buyers have huge stacks of samples that haven’t been tasted yet, and brochures in their offices that wouldn’t be read for months – including my own office – Buyer’s Best Friend opened our first 2 retail boutique locations in San Francisco this year – you can read about our first store here. This meant that a lot of the product samples, sales calls, emails, phones calls were largely just noise — buyers needed a more manageable way to absorb and access product info. Up until now, product sales have largely been push – ie sellers pitch buyers on products – I realized that with all the products on the market, only a small percentage of the products that a buyer sees actually matches what they want. If buyers could actively request and search for products, and have a system that recommended products to them based on their selection criteria, and what they have bought in the past, it would be a smarter way to buy.
- Companies going out of business because it’s too expensive to get products onto store shelves: without 300 SKUs to support large sales and marketing budgets, I saw too many small companies either go out of business, or basically be unprofitable because they were spending 2 hours driving to meet one account, and then getting a $500 order. As a broker, I experienced this myself as well – I would drive around and visit tiny accounts and barely make any money, and to maintain those accounts, I’d also need to call them 10 times to remind them to reorder! In the aggregate these accounts make up significant dollars, but there needed to be a way to get them to start proactively ordering.
My co-founder (and fiancé) Adam and I were the dream team to make this vision a reality: he’s an ex-Google engineer, who’s also been in the tech industry for the last 20 years, and I’m the domain expert (enough food industry experience to understand how it works, but impatient enough to seek efficiency). Buyer’s Best Friend started out as a tool that I offered to my buyers through my broker business, but then we showed it to some people at a tradeshow in the summer of 2010, and over 3 days signed up our first hundred sellers. It was clear that there was nothing else like this out there, and that both buyers and sellers wanted it – now. Over the last 2 years, we have grown to over 116,000 products from over 1800 sellers.
2. How does Buyer’s Best Friend work for food producers? What are the benefits to food producers?
We enable producers to have a free 24/7 online wholesale ordering system. Our producers link from the wholesale section of their website to their BBF seller pages, and that enables buyers to order when THEY have time – which is oftentimes evenings, weekends, or 5 am in the morning. We enable producers to quickly get outside of their home territory, and get access to new wholesale accounts nationwide – and we currently have 4700+ independent wholesale buyers nationwide.
On a larger scale, with my background in working with every region of Whole Foods, national and regional distributors, managing brokers, and working with other major national chains, we also present our Premium sellers (those who pay an annual marketing fee) to larger accounts, and we’ve gotten many of our sellers into their first regions of Whole Foods, first distributors, into the micro kitchens at the Google corporate campus, and into all 110 stores of The Fresh Market. This program is aligned with our philosophy that for most companies, to grow you need to start working with larger stores and that’s how you can double or triple your sales year over year, and actually pay the bills. These larger buyers sometimes struggle to return multitudes of phone calls and emails from unknown vendors, but love working with BBF because we provide them with a dedicated account manager who knows their requirements for new products. We streamline the presentation process, yet can also get our major accounts access to the newest, hottest products – many brands which they may not otherwise see.
In summary, instead of hitting a brick wall and spending way too much time opening new accounts, we bolster and accelerate the sales efforts of our producers – by automating management of small accounts so that their orders just roll into the inboxes of our sellers, and by providing small and medium sized businesses access to larger accounts that they otherwise would never get access to – in their first or second year of growth, not their 5th or 10th. We also believe, just like any other technology company, in offering extreme value at a fraction of the cost, so a seller that we get into a national chain only pays the $1500 annual Premium Plan fee, even if that represents a very large amount of sales for them throughout the year. No commissions or extra fees.
3. Can any food producer be on Buyer’s Best Friend? Are there any restrictions? What are the associated costs to the food producers?
We require that sellers be US companies with US health certificates and insurance policies (but their products can of course be imported). We offer both a free basic listing (100% free, no fees or commissions on orders at all) that has no active promotion/online ads for a seller’s products, a Premium Plan where we actively promote a seller’s products to buyers for $1500/year, as well as a program which is currently $699, where we send samples of a seller’s products out to 75 of our buyers – this is a huge cost savings from sellers sending samples out themselves. The cost of working with BBF is a flat fee, and can be thought of as a marketing fee, so that a seller can still have commissioned sales reps, brokers, and distributors, which we strongly recommend, because BBF doesn’t have hundreds of feet on the street to handle merchandising, upselling, doing demos, and many other services. When we send an order to a seller, they get the full contact info for a buyer, so if they want to have a direct relationship with them, or visit them in person, or help them merchandise their store or set up a demo, they absolutely can. We also help sellers exhibit at the Fancy Food Shows and Natural Products Expo West, and handle most of the logistics for them.
For more information about Buyers Best Friend you can go to www.bbfdirect.com or click here if you’re interested in becoming a seller on the site.
* This is not a paid review and I’m receiving no compensation for this article. Just another interesting company that I think might help you grow your business.