E-commerce has become the biggest opportunity for food and drink brands in the wake of the coronavirus. Like many people in lockdown you have probably spent a lot of time online, and the same can be said for your favorite food brands. The latest spike in companies developing their own direct-to-consumer sales channels has become one of the main topics of discussion in the food-tech world during Covid. Beyond Meat became the latest D2C entrant last week when it announced its new e-commerce site where consumers can now buy their plant-based beef and sausage products.
Beyond’s D2C move came just a few months after its market rival, Impossible Foods launched its own online channel. But it isnt just these popular plant-based meat startups that are shifting online, companies across the food tech space are starting to realize just how important having an online presence is, especially in the last few months. Back in June online sales in the UK were set to surge to 5.3 billion pounds due to lockdown with online retail sales in general estimated to reach $6.5 trillion by 2023. While there is a huge need for business solutions that accommodate social distancing rules, startups needed to learn how to target consumers directly. Solution? Turn to direct-to-consumer.
- Barn2Door, an online platform that allows farms to sell directly to consumers, raised $6 million in Series A funding.
- Restaurant food suppliers Cheetah, DineMarket, Pepper, and Choco all went online to sell directly to consumers.
- Chipotle launched a D2C service connecting its consumers with its farm suppliers.
- Vertical farm creators Fifth Season announced the launch of its direct-to-consumer e-commerce platform back in June as well as a new partnership to assist the company with its impending expansion. The sustainable startup uses hydroponics, AI and robotics to grow what the company hopes to be 500,000 pounds of leafy greens and herbs annually.
- And more recently, plant-based burger leader Impossible Foods made their vegan offering available everywhere as they launched an online store.
This list doesn´t even begin to cover the other small and medium sized startups pivoting online. An effect of the pandemic that has benefited the change to D2C is consumers’ willingness to try new things without leaving their homes lessening the need for companies to invest heavily in marketing and education.
While the pandemic didn´t start this trend, it definitely helped drive it. With restaurants closing their doors and people hesitant to leave their homes to go shopping, there was a record number of online deliveries made. Now, with people used to the idea and convenience of having things ordered right to their doorstep the trend isnt showing any signs of slowing down and there is now a huge new market for online food brands.
What is direct-to-consumer?
What are the perks to going online for brands?
Ability to collect new consumer data which opens up new opportunities to personalize customer experiences, including targeting, tailoring and communicating.
Create your own brand-customer relationship without relying on retail and have more control over your company while ensuring greater margins.
Develop a new revenue channel and customer base and reach potential clients you would not have before: more freedom to innovate.
Promote more brand awareness and open up new opportunities for leads and sales.
Dont expect just plain sailing from here on out though…shelter-in-place and social distancing restrictions have altered consumers buying and eating habits with many of these changes looking to remain permanent and along with other companies that just offer one type of product online they now face the issue of consumers preferring to buy such products along with other items in-store. On top if this, as consumers develop new online habits, startups will have to compete with larger and more established retailers like Amazon. So the question is: will smaller companies be able to keep up with more well-known delivery giants?
Want to get involved?
Do you want to transform the direct-to-consumer industry? Our partners Eatable Adventures have just launched a call for startups with one of the biggest corporations in Europe; Calidad Pascual, through its innovation vehicle Pascual Innoventures. They are looking for digitally native brands developing a product or technology to track consumer preferences and deliver important data to improve overall user experience and interaction, and companies with products that promote on-demand delivery including smart-vending, delivery, meal kits and subscriptions. Pascual Innoventures is a Calidad Pascual open innovation vehicle to immerse yourself in the entrepreneurial ecosystem and create alliances with startups that share the same philosophy; anticipating global food needs.
Perks of applying?
Not only will you receive investment from Pascual to help navigate your business where impact is greatest, but you will gain inside knowledge of the industry from a company with more than 40 years experience (and more perks!)