Coffee roasters and those in the dropshipping coffee business, have important decisions to make. One of which is how they want to sell their coffee. Is it with wholesale coffee and wholesale distribution or retail coffee?
You may be interested in selling white label coffee (what is white label) through a monthly coffee subscription as one of the best coffee roasters in town-and offering flat rate shipping. This may be done by selling the best coffee subscription box. However, as you learn how to start a coffee company and business, you’ll have to choose the right sales channel. You'll also have to get familiar with the inventory definition to work on your sales. You may even want to look into the inventory carrying cost to learn about storing coffee beans and supplies.
An important thing to consider is your coffee sales channel. Do you want to sell directly to those owning or just opening a coffee shop or through eCommerce marketplaces? Whichever route you choose must be ideal for your business and your customers.
This article explores the two broad categories that you have to consider. These include wholesale food distribution and retail sales channels. Both options are effective, but it all comes down to finding the right one based on your goals for success.
Wholesale Coffee: What Is Wholesale Coffee?
Wholesale coffee refers to the distribution of coffee in bulk quantities from the roaster to the retailer. Retailers act as the middlemen as their role is to sell the coffee to consumers at a higher price. The retailers often include coffee shops and grocery stores.
Selling ground coffee and coffee beans wholesale is beneficial for roasters, especially for those that are new to the game. It creates a wide range of access to customers by accessing the retailer’s market and providing high-volume sales.
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Retail Coffee: What Is Retail Coffee?
Retail coffee is the sale of coffee products directly to consumers. Such transactions may occur in brick and mortar shops and eCommerce stores. The largest benefit of selling through a retail sales channel is having direct interaction between consumers and roasters.
Selling retail coffee doesn’t always have as much financial stability as wholesale coffee does. This is due to the number of items being sold. Retail customers don’t always purchase large quantities which means that every month’s revenue may look different than the next.
Learn more about direct to consumer sales, DTC brands, DTC marketing, and DTC trends to better understand this concept. Be sure also to understand the direct to consumer business model.
Coffee Sales Channel: Indirect vs Direct
Sales channels refer to the method you choose to use to sell your products. For instance, a coffee retailer will use a brick and mortar shop to sell its products such as coffee beans. The café or coffee shop is considered the sales channel. Wholesalers use company distributors as their sales channels for their products.
Most sales go into one of two categories and these are either retail or wholesale. Through retail sales channels, profit is made by selling directly to consumers. With wholesale sales channels, large quantities of products are sold to retailers at low prices.
Finding the right sales channel for your business depends on your business goals and long-term sales strategies. The ideal channel should align with your business objectives and also be included when you write a business plan.
It’s common for roasters that expect quick business growth to opt for a wholesale coffee sales channel. However, it’s crucial to consider resource availability. Financial capacity is essential to complete high-volume order fulfillment processes. This is where minimum order quantities (MOQ) and economic order quantities (EOQ) may come into play.
A business owner may choose to opt for both retail coffee and wholesale coffee sales channels. To balance the two, the business must have excellent time management processes and proper distribution of resources.
Direct Sales Channel
A direct sales channel involves a direct sale between the manufacturer, or coffee roaster, and the consumer. An example of this sales channel would be a café selling its products directly to customers. There are no middlemen involved.
With this kind of sales channel, the café gets to keep all the profits from the coffee sales. However, they are still obligated to pay their employees such as the wait staff.
Coffee distribution businesses that operate through a retail coffee sales channel have the option to use upselling techniques to sell additional products. Familiarize yourself with the upselling definition to better understand this process. This is possible through brick and mortar shops and an online marketplace.
Another example of a direct sales channel includes personal sellers and resellers. These customers will purchase products and resell them to targeted buyers, often for a higher price.
Indirect Sales Channel
Wholesalers use indirect sales channels to sell products. Most times, companies don’t keep all of the profit from the sales as they have to pay the middlemen their commissions. However, the overhead expenses are low due to the lack of need for employees to sell their products directly.
It’s also common for businesses using indirect sales channels to not have to pay incremental costs. These costs include salaries and benefits.
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Which Coffee Sales Channel Is Ideal?
Determining the right coffee sales channel might seem obvious when opening a business. Online businesses use the internet to sell their products. This means that they’re likely to have an eCommerce website where customers may browse through the digital catalog and complete transactions. Look into eCommerce website examples to better understand.
Websites aren’t the only option for selling online. It’s also possible to use an online marketplace to sell products or a marketplace app. These include eBay and Amazon.
Selling through these marketplaces allows businesses to capitalize on their large volume of users. However, the marketplaces will require you to follow the website’s rules and regulations, and they will take part in your sales.
It’s also possible to sell through affiliate marketing. Learn about affiliate marketing vs dropshipping to understand the difference. Affiliate marketers are paid a percentage of the profits instead of paying sales agents.
eCommerce businesses have the option to sell directly to customers through their websites or sell indirectly to affiliate marketers or marketplaces. Choosing the right sales channel is essential, especially when it comes time to promote your products to the right audience or niche market. Explore the best dropshipping niches.
Frequently Asked Questions About Wholesale Coffee and Retail Coffee
What Is Wholesale Coffee vs Retail Coffee?
Wholesale coffee refers to the sale of large quantities of coffee to retailers at a lower price. Retail coffee refers to the sale of coffee products directly to consumers. A wholesale coffee sales channel involves retailers as the middlemen. Retail coffee sales channels don’t have middlemen and retailers sell their products to customers for more than what they paid.
It’s possible to sell retail coffee through physical locations and online stores. The main benefit of choosing a retail coffee sales channel is the direct interaction between the roasters and customers.
What Is a Sales Channel?
A sales channel refers to the way a business-to-business (B2B) company markets its product. Products are sold to customers through direct or indirect routes. Learn about the B2B meaning, what is a B2B company and the benefits of B2B eCommerce. Finding the right sales channel is similar to finding the best eCommerce platform for SEO.
Common sales channels include:
- Wholesale
- Retail
- Business to business (B2B)
- Direct to consumer (D2C)
How Do I Find a Wholesale Coffee Supplier?
In order to find a wholesale coffee supplier, you need to do the following:
- Interview several coffee suppliers
- Ask for testimonials and references
- Obtain product samples
- Visit the manufacturing or warehousing location if possible
- Learn about their product offerings and manufacturing process
- Negotiate the offerings