Friends & Farmers Co-op Developing Online Market

From the September 8 Friends & Farmers Co-op E-Newsletter:

At the Sept. 3 Friends & Farmers board meeting, the directors reviewed the results of the recent survey and the information gathered by the online market task group, and unanimously voted to launch Friends & Farmers Online as a stepping stone to a brick and mortar store. The task group will determine the operating details and report on progress to the Board monthly, and is authorized to spend up to $6,000 to establish and operate the market for one year. In October 2015 the board will then evaluate the project and determine next steps.

The Friends & Farmers Online task group is open to board members, co-op members, and producers; if you’re interested in joining the group to help launch the market, please contact Jim Eisenstein.

Key Survey Results:

“Interest in strengthening the local food economy” was cited by 42% of Friends & Farmers Co-op owner-members as one of the key reasons they decided to join. Another 39% cited “increased access to local food.” 68% of the respondents either supported or strongly supported the idea of a Friends & Farmers online market as a step toward a physical grocery store, with another 24% “neutral or unsure.”

Here are a few of the questions we’ve been hearing, and our responses.

How would starting Friends & Farmers Online affect the goal of opening a physical store?

We believe the online market is a good intermediate goal for the cooperative, with the potential to engage members; offer pre-ordering of locally produced food products in a meal planning and food shopping format more convenient for working adults and Penn State students; build co-op momentum and grow membership; engage producers; help co-op members better understand how cooperatives grow and thrive; and provide a tangible benefit to the community. We aren’t the first cooperative to use an online market—there are online markets all over the country (read more below).

What products will be available through Friends & Farmers Online?

Members of the Friends & Farmers online market task force have talked to about 14 vendors who are interested in participating. These vendors offer a broad range of products:  dairy, fruit, baked goods, meat, eggs, and vegetables – although we haven’t yet located local vendors for dry beans and grains. The task group will continue to recruit participating producers as the market gets more established and our market management skills improve.

Why not just go to the farmers market or join a CSA?

We don’t anticipate drawing customers away from strong, existing local customer-farmer networks like farmers markets and CSAs. For shoppers who enjoy and have the scheduling flexibility to browse farmers markets, and for producers who are selling all their available goods at farmers markets and CSAs, those business models are working well.

But with busy schedules and work/school demands, many people are unable to get to a farmers market or conveniently use CSA shares. Friends & Farmers Online is primarily intended to expand the local food customer base beyond its current borders, serving shoppers who would prefer to plan ahead and pre-order a week’s worth of local food for a single pick-up trip on the weekends, and providing another retail marketplace for farmers with additional production capacity.

Would you need to be a co-op member to shop?

No. The online market will be open to everyone, but co-op members will pay less (or not pay an initial fee to shop), and we will have incentives for non-members to join the co-op.

Would there be support or someone to contact with questions?

Yes. In addition to the online market task group, there will be a market manager or two co-managers who will act as points of contact to help customers learn how to use the online ordering system, help vendors learn how to post their available products at the site, supervise at the weekly food distribution site, and handle emerging issues as they arise.

Would there be an incentive to volunteering?

This is very likely, but at this stage the operational details are still being worked out. We encourage interested co-op members to join the task group to help make these decisions.

Will Friends & Farmers be the first food cooperative using an online market as a stepping stone to a brick and mortar store?  

No. There are online markets all over the country, some of which have been in operation for more than 10 years. Like Friends & Farmers, these cooperatives are dedicated to strengthening the local food economy in their communities and supporting local farmers by sourcing food from local farms. And like Friends & Farmers, they believe that online markets offer an excellent way to establish vendor relationships, build the local customer base, and deepen co-op leaders’ business skills.

In developing the Friends & Farmers Online proposal, the task group identified and consulted with managers at four “clicks-to-bricks” co-ops, including Purple Porch Cooperative (South Bend IN); Macomb Food Cooperative (Macomb IL); Prairie Roots Cooperative (Fargo ND), and Local Roots Cooperative (Buffalo MN). Other online markets we contacted include Hershey Farmers Market (Hershey PA); Gomarket Durham (Durham NC), Iowa Valley Food Cooperative (Cedar Rapids IA); Red Hill Food Cooperative (Tallahassee FL); Lake to River Cooperative (Youngstown OH), and the Oklahoma Food Cooperative based in Oklahoma City.

Jean Davenport, Market Manager for the Macomb Food Cooperative online market, explained the value of the clicks-to-bricks development model:

“People are only interested in something for so long if they do not see anything happening. I had been doing outreach for two years to sign up owners so we could move towards opening a brick and mortar store, and it was getting harder to sell the idea because people did not see anything for their money…

Having the online market gave us more credibility with our owners and with the community. We now have a local-foods business…we have made many partnerships with producers as well as with customers. We have learned a lot about marketing, packaging, and pricing. We have worked with the Health Department and know the regulations we need to operate a food business. We feel this makes it much easier for us to transition to a store…While we are not making a ton of money from the market, it has been a great learning experience and a valuable one.”

Can Friends & Farmers Online be simultaneously profitable for the co-op and affordable for customers?

Most of the online market managers we’ve consulted have reported that their online markets either break even or make a small profit within about a year. Our goal will be to set up the market and then manage it so that it breaks even or makes a small profit. But we also highly value the online market opportunity as a lower overhead, lower risk way to expand the local food customer base, develop vendor relationships and help co-op leaders gain key business management skills – all of which are essential as we prepare to open a successful, full-service, brick-and-mortar grocery store.

Here’s what Tony Ricci, farmer at Green Heron Farm, and a founding member of Tuscarora Organic Growers Cooperative, Pennsylvania Certified Organic, and the Pennsylvania Association for Sustainable Agriculture has to say about the co-op’s initiative:

“…Increasing cost arbitrarily will only narrow that field of potential customers to a small demographic range. The real goal is to increase our customer base. I think of this every time I drive up to State College and see the thousands of people driving, walking, shopping, and I wonder how I can sell my produce to them. As a farmer and businessman I know I will make more money with more sales (higher volume) rather than higher prices…

Friends & Farmers can compete with the big guys because you are filling a niche that is not being served on both ends of the spectrum – local production and consumption…As long as you follow basic business principles and make that connection between farmers and consumers your main goal, I think you’re going to succeed. No one is really doing that on a grand scale in Central PA. Just don’t try to reinvent the wheel or get distracted by the minutia of pricing before you figure out how you’re going to get produce delivered to your dock on a consistent basis. Pricing will become a mundane task once you’re established.”

Please contact Jim Eisenstein, Online Market Task Group Coordinator, for more info or if you are interested in joining the task group.

 

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