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Launching and Boosting Your Wholesale Program: Part 1

For many coffee roasters, a vibrant wholesale program drives a significant amount of revenue for their business. There are some coffee roasting companies that are strictly business to business (b2b) wholesale roasters, Counter Culture Coffee in the United States and Dark Woods Coffee in the UK being good examples. The primary reason for building a wholesale business is sales volume. Though the margins are lower than selling direct to consumer (35% is a typical wholesale margin), it’s the high-volume sales that more than make up for this. Rather than devoting time, resources, and marketing to selling single retail bags of coffee (e.g. 12 oz in N. America, 250g in Europe) or even retail subscriptions with a markup of 100% or more, wholesale coffee roasters instead devote significant resources towards selling their coffee to resellers. The payoff? Volume! A busy cafe or bakery (typical wholesale clients) can serve between 25-100 kg (55-200 lb) each week!

 

Landing significant wholesale accounts takes sales skill, unique resources, and the ability to operate in a highly competitive environment. Coffee is a highly personal beverage, and when a consumer is loyal to one cafe, the coffee served there is a part of that loyalty. Convincing a cafe operator to bring your coffee into their shop represents a certain amount of risk for a retailer. Growing your wholesale business is a game of patience and also some amount of being in the right place at the right time to secure new customers as they are in the planning stages of their business. Having the right tools in place to manage your production floor and order fulfillment while providing a seamless ordering experience for your wholesale customers is one key to success. Read on to learn best practices for b2b sales, discover Cropster tools that address the needs of wholesale roasters and their clients, and learn about some of the customer service expectations wholesale accounts may expect of their coffee provider (which could be you!).

Wholesale Basics

Volume and Margin

Let’s consider some sales volumes that different wholesale accounts represent. These are approximate ranges for a variety of roasters and retailers, and represent some basic expectations of sales volumes for a single location for a variety of business types.

Cafe / Bakery: 50 - 200 lbs (~ 23 - 91 kg) per week

Restaurant: 20 lbs (~ 9 kg) per week

Boutique Hotel: 20 - 100 lbs (~ 9 - 45 kg)

Specific Grocery: 20+ lbs (~ 9+ kg) per week

Wholesale customers tend to be loyal, though it takes time to land an account. The payoff, though, is this very loyalty! Let’s assume a fairly typical wholesale profit of $4.00 USD per pound of coffee (approximately €8.00 per KG). For a customer ordering 100 lbs per week (45 kg), that’s $400.00 (360.00€) weekly profit. Over a year that represents $20,000 profit (18,195€)! With revenue like that, the effort to build out your wholesale capabilities is justified!

Opportunities and Challenges of Wholesale

Roasters who focus on wholesale have a lot of opportunities, but also face challenges. When your customers’ businesses rely on your roasted coffee, consistency is more important than ever. Having a reliable view of your green inventory and forecasting based on real-time reporting is key so that you don’t run out of coffee or run long on coffee. It’s also important for a green buyer and production manager to understand what’s in the sales pipeline. You’ll want to be ready if, for example, a huge new customer is coming on board!

Your buyer and production team need to be prepared. Additionally, having an idea of where you stand with your current customers is also essential. What if you lose a major account? How will you recover without having too much inventory? Cropster’s Green Coffee reporting tools show your current inventory levels across multiple storage locations - your warehouse, a 3rd party coffee warehouse, contracted and forward booked, and more. This is a powerful tool to help manage your business to meet the needs of your wholesale customers.

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Green Inventory Report

It is essential to have tools that empower you to maintain enough stock to keep business running and fulfill orders. It is also important not to stock more than what you need and inventory calculations, like lead time and reorder levels, need to be considered (especially in a 2021 / 2022 coffee market with long lead times, unpredictable prices and volumes). Your business should look to forward booking, booking forward spreads, and perhaps even implementing a price/risk management strategy with your importers.

While all roasters are concerned about consistency, wholesale accounts can be the most demanding of a consistent product. Read our article Production Consistency to learn more about the importance of consistency in roasting and some techniques to achieve it.

Competitive Environment

A roastery mostly focused on wholesale distribution faces several decisions to keep customer bases happy and engaged. Are you offering shipping or coffee delivery to local clients? What are your recall procedures when things go wrong (e.g. mislabeled bags - your dark roast coffee is mislabeled as decaf, and you need to recall all the decaf you sold from that production date)? It’s equally important to maintain relationships with key individuals at your wholesale accounts, perhaps necessitating a team of account managers, salespeople, delivery drivers, trainers, equipment technicians, and more. 

Understanding your local competition and the services they provide is essential. Are you competing on quality, consistency, price, or service and support? The answer is likely a combination of all the above. Knowing where to focus your energies and strategies will help you make wise investments in your team and infrastructure to meet your business goals. With tools like Cropster eCommerce and our wholesale ordering portal, you can set yourself up for success and make it easy for your wholesale customers to do business with you.

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Wholesale Portal

One way Cropster eCommerce simplifies ordering for your wholesale customers is through a sophisticated ordering platform. They will only see the products you want them to order. You can set custom pricing for each customer or even limit the product variations available to certain customers (e.g. you might want a specialty grocery store to only order small retail bags of coffee and require them order case by case rather than individual bags). Cropster eCommerce makes this easy. We also keep your production team organized. Cropster provides seamless integrations between our wholesale portal (and other WooCommerce and Shopify online stores). Your customers’ orders sync into your Cropster account with one click. This simplifies building a roast schedule and production plan, and that plan is based on actual orders. Your roast profiles expect weight loss, account for single origin and blends, and automatically update your green inventory. All of this is without the time, effort, and room for error that manual order entry brings. 

Ultimately, the goal is happy customers. Many reports show that it can cost five times more to gain a new customer than to keep an existing one. To keep customers, it’s important to have a vested interest in their success. Be professional, courteous, and attentive. Also seek ways to improve your customers’ experience - be that with an easy-to-use wholesale website with tools like Cropster eCommerce, or through providing exceptional training and personal delivery, or other services your company offers. One of the easiest ways to increase sales is by offering new and exciting products and offers to your customers. These could include limited-time coffees, promotions to encourage additional purchases, seasonal or holiday products, and/or providing access to merchandise and equipment.

These techniques, along with dedicated account managers and focused wholesale training programs, can help your existing customers grow their business, thus they end up ordering more coffee each week. Investing in the relationship with your customers is a worthwhile expense.

Sales Best Practices

Every business is unique, with different goals, a unique value proposition, and a distinct competitive environment. That said, many successful salespeople share habits that set them apart from others.

Know your unique value proposition

A unique value proposition is understanding your company and products in the context of your consumers and competition. Understanding what you are good at, what your customers desire, and what the competition does well.

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In the above Venn Diagram, the intersection of what customers want, what you do well, and what your competitors do well is the most competitive landscape. This is worth pursuing, but will be the most challenging. 

Understanding what you do well, what customers want, but what your competitors don’t do particularly well, is an area of opportunity. For example, perhaps you have established relationships in the healthcare industry. If you leverage these relationships, you may be uniquely qualified to offer coffee and service to hospitals and medical facilities, in a way your competitors are not. 

Taking some time to understand what customers want, what you do well, and where your competitors' strengths lie is a great way to create quality leads, identify talking points about your company and products, and map out the competitive landscape early in your planning.

Understand Your Target and Qualify Leads

As you identify target clients, it’s important to get to know the companies, understand the potential volume, and learn about the decision makers. This process often starts with desk research. Social media accounts, LinkedIn profiles for the company and key employees, and a media review of any awards or articles is a good place to start. Desk research builds confidence before making initial contact and prepares you with questions to ask once you find yourself in a meeting with decision makers. 

As you start to know the company, you can visit the cafe, order a coffee, and watch the flow behind the bar, witness their strengths and weaknesses, and identify leaders in the company. You can even calculate approximately how much volume they’re doing. Is it a slow cafe with the owner clearly working behind the bar, or is there a line out the door with a staff of six making drinks and serving customers? Right there you can distinguish a lower volume cafe from a higher volume cafe. 

Ultimately, you want to identify decision makers, find a time of the day when they aren’t too busy, and introduce yourself and your product - basically start your sales pitch. These meetings are most successful when you bring a genuine curiosity to the conversation. Start by asking questions, really listen to their answers, and keep them talking. It’s amazing how much a prospective customer will reveal about their current business situation, their current coffee vendor, and what’s successful and where there are challenges. They also feel that you’re invested in their success. Your goal is to get all the information you need to prepare a proposal, select samples, and other elements required to close the sale.

Communicate often and clearly

Rarely will you meet a business owner or decision maker right away, and have the time to pitch your product. Be mindful of their busy times and slow times, and seek opportunities to follow up, set a meeting, and share your products at a time that’s respectful of their business flow. This makes it essential that you follow up often and clearly state the goals of each call or meeting. This can often be a long process. It can take weeks or months to build a relationship to a point where a customer is ready to say “yes” to your proposal. It’s worth it though! Remember our discussion of volumes. If this customer will ultimately earn you $20,000 USD (€18,195) over a year, it’s a worthy investment.

Some ways to stay ahead of the followup is through implementing a customer relationship management (CRM) database to track your business relationships. These programs can log calls and emails, trigger follow-up reminders, and help keep you organized day to day. Many of the more advanced options will even allow you to trigger automated email follow up. Ultimately, you want to respond to their needs, be mindful of their objections, and be thorough in your follow up. Following up from time to time is critical. Find any opportunity to follow up. Did they receive a “best of the town” award? Great, congratulate them. Did their barista win a local throw-down? That’s a perfect chance to call or email. The point is to become memorable, and to show that you authentically invested in the success of their business.

For many, one of the most challenging elements of sales is the cold call. Visiting a prospect or calling on the phone unannounced is difficult, even for the most confident extrovert. Manage this anxiety by identifying specific goals for each call or meeting. This could be an initial introduction, setting up a time to get to know one another, following up on samples, or seeking to close the deal. Having a plan in mind ahead of time is essential.

Provide product demonstrations

Many roasters will leave samples with prospective clients, and sometimes clients will even request them. It is essential that they taste your product before making a purchase. The risk about samples is that they might go stale in a back room, baristas might brew them without knowing your recipes, and you won't have a chance to demonstrate your expertise and knowledge of your product.

Rather than leaving samples, instead find a time to provide a product demonstration. Use that meeting to prepare coffee together, talk about the unique aspects of your roasting company and coffees, and show your mastery of brewing and extraction. Under your skillful hands, the coffee should taste great. Chatting over coffee is also the perfect opportunity to discuss the other benefits you will bring to the relationship - be that training, equipment service, advising on retail operations, or ease of ordering.

In part 2, we will explore ways to set yourself up for success, keys to closing, and the importance of retaining customers in a competitive market.

Learn more about wholesale sales in our webinar, Wholesale Success for Coffee Roasters. Watch Now! You can also read part 2 of this series here.

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