Direct selling channels can include co-operatives, farmers' markets, community supported agriculture (CSA), agritourism, pick-your-own enterprises, roadside stalls, direct sales to restaurants, internet sales or delivery services.
Direct selling strategies can vary immensely. The right channel(s) will depend on the wants, needs and characteristics of your market. It is useful to research your market and try a number of different channels to determine the most suitable approach.
Using multiple selling channels can reduce risk and may increase earnings.
Purchasing locally produced food continues to increase ensuring that direct selling remains a relevant strategy.
Farmers' Markets
A farmers' market is a gathering of several producers on a regular basis to sell a variety of locally produced fruits, vegetables and other value-added farm products directly to consumers.
Farmers' markets are commonly held on weekends throughout the metropolitan area and in many regional towns, which may require travel.
Markets provide a suitable environment for farmers and food producers to sell direct to customers products of farm-origin and associated value-added or processed artisan food.
Be it organic, bio-dynamic or conventional production systems, the fresh produce available at farmers’ markets can attract a loyal and enthusiastic following.
A regular stall at a farmers' market requires very little capital investment. You will require a table, shelter, packaging and signage to identify your business name, products and their price.
Costs may include stall fees, equipment, packaging, public liability insurance, sales labour, transportation and storage.
Advertising costs are commonly low as it is often done en-masse by the farmers' market management team where you are participating and is usually included in your stall fees.
Successful markets:
- are located in busy or central areas
- are supported by genuine integrity (e.g. sell only locally produced food)
- have an effective market manager to promote the market and reinforce the rules
- have a good number of stalls and a good mix of products.
Co-operatives
Co-operatives are organisations owned and operated by a group of people with similar needs.
In Western Australia, a co-operative must be created by a minimum of five individuals, incorporated associations or companies.
A co-operative may be established by a group of people producing the same products as a way to market their products together at an overall lower price. It may also mean that with increased volume, co-operatives can enter markets that they were unable to penetrate on their own.
A co-operative may also pack, store and ship a product.
A co-operative can give producers more power to:
- promote and sell the product
- negotiate the price they receive and better market terms
- reduce the costs of marketing and obtaining inputs
- ensure continuity of supply
- secure a market.
Co-operatives are more likely to succeed when all members have shared expectations.
Community supported agriculture
Community supported agriculture (CSA) offers consumers ‘shares’ in a farm. By becoming a ‘shareholder’, the consumer takes on the risk of farming along with the farmer and in exchange receives produce on a regular basis throughout the growing season.
For instance ‘shareholders’ pay for their ‘shares’ at the beginning of the season. If the season goes well then the ‘shareholder’ will receive their produce at each designated time period (e.g. each week).
If there is an event during the season that compromises production the shareholder will receive a reduced amount of produce or if the crop is wiped out, no produce at all. Hence the risk of farming is shared throughout the season by both the farmer and the shareholder.
This can be similar to a 'rent a row' or 'tree' operation where a customer buys a row or tree at the beginning of the season.
The farmer then provides all the necessary labour and inputs and the customer harvests the product at the end of the season and takes the produce home.
A CSA can be easier to plan for and is an important risk management strategy as your product is sold before the growing season commences.
CSA’s can be made up of a number of farms, each producing a few different crops, to provide shareholders with more variety and spread the workload involved across a larger number of farms.
Farmers will need to consider the amount of time needed to be spent with members, delivery time, the need for detailed production records and the variety of crops required when deciding whether to undertake such an enterprise.
A written contract should be drawn-up that states that the quality and quantity risks are assumed by the shareholder.
Most shareholders like to visit the farm throughout the year, so offering events during the growing season can give shareholders the opportunity to come out to the property.
Always consider whether allowing public access will cause any concerns, such as biosecurity issues.
CSA’s work best when located close to urban areas. This gives the farm access to a greater consumer base, allows consumers to visit or attend meetings and results in lower delivery costs.
The shared agricultural risk advantages from CSA's may sometimes be offset when products destined for members are unable to be offered through other sales channels where greated financial returns may have been achieved.
Agritourism
As more and more people seek agricultural related experiences, small producers have the opportunity to cater for this demand.
Agritourism is considered any activity or event held on a farm for the entertainment or education of visitors.
This can include farm stands, pick-your-own enterprises, farm stays, tours, weddings, on-farm classes, festivals and more.
Pick-your-own enterprises
Pick-your-own enterprises invite customers to your farm to harvest a quantity of your product for themselves.
Pick-your-own operations can reduce the labour costs of harvesting your produce, while providing an opportunity for customers to visit a working farm and select the product they want to take home. Product is usually sold in $/kg.
This type of set-up requires low capital investment needing only containers, scales, a checkout stand, promotional signs and parking.
Be sure to check with your local government authority (LGA) on any regulations.
The enterprise will require liability insurance and a good supervisor to help customers identify which produce is ready to be picked and prevent them from damaging the crop.
You will also need to work evening and weekend hours as this is when most clients will visit your farm.
It is best to have produce that is easy to identify when ripe (e.g. strawberries or blueberries).
For labour intensive produce, pick-your-own operations are valuable as they eliminate the post-harvest costs of washing, sorting, packaging, storage and transportation.
Limited demand for the product, seasonal conditions and the weather during harvest can influence the success of your pick-your-own enterprise.
A wet or cloudy day during your peak picking period can be enough to stop customers coming, yet a beautiful sunny day may result in a high number of customers, presenting logistical challenges that are best considered in advance.
Roadside stalls
Roadside stalls vary from seasonal, transportable stalls to year-round rural attractions.
They rely on passing trade to sell their product. Location is crucial.
High traffic areas are essential, however, first check with your LGA regarding the area’s zoning and regulations.
To set up a roadside stall you will need a building or stand, parking, containers or packaging and coolers for product that needs to remain refrigerated.
Other costs will include:
- transportation to the site (unless located on your property)
- sales labour
- advertising
- storage.
Owners of roadside stalls will also be liable for accidents that occur on the site, so liability insurance is a must.
Roadside stalls, as with any food business, must register with their LGA and comply with the Australia New Zealand Food Standards Code and the Food Act 2008.
It is essential that food is kept clean, at the appropriate temperature and there is minimal handling of food by the public.
Online sales
The internet is increasingly used for not only advertising businesses but for making sales.
While the internet can potentially increase your sales to customers outside your area, you will require a website that is well developed and maintained.
Customer engagement via social media is commonly used to support your online profile and awareness.
You will also need to consider payment methods, packaging and shipping options.
There are a range of website platforms available and a range of payment gateways to assist you to transact with your customers so that they may purchase your products online.
The best website is of limited value however if potential customers are unaware of it.
Direct sales to restaurants
Direct sales to restaurants can be a great strategy for unique products that are hard for chefs to find.
With the current trend towards local food, restaurants are also trying to source more of their produce from within the area.
Talk to chefs and find out what they prefer, when planning your marketing strategy.
Some may be looking for semi-prepared food (washed, sliced, etc.) while others might be looking for produce they can’t source easily from their usual markets.
The limited quantities required by restaurants may not justify the frequent deliveries required to supply fresh, top quality produce.
Having a number of restaurants in the same area or additional market channels may help offset the time and cost of delivery.
Delivery service
A delivery service has the potential to achieve a premium price for your product.
Try to target high end buyers – exotic restaurants, upscale grocery stores or high socio-economic urban areas.
Strategically, it may be beneficial to have another market or offer the product at reduced costs so that your production that is unsuitable for the delivery service market has a path to customers.
Be mindful of delivery volumes and consider the time it will take to deliver your products and the vehicle cost involved.
A delivery service requires you to:
- develop relationships with your buyers
- provide a year round service
- keep delivery costs reasonable.
It is essential to conduct research on your market and potential buyers before you make the decision to deliver.
Direct selling of products can be a great marketing strategy for small producers, however it is vital that before you embark on any one of these strategies, you research your target market to ensure the best approach for your business.