2Bits: Tips for Farmers Selling Wholesale—Why you need a…
“If you can’t describe what you are doing as a process, you don’t know what you’re doing.”
W. Edwards Deming
As you explore wholesale market opportunities, we suggest you keep an eye on how the Amazon/Whole Foods merger is impacting wholesale pricing.
Whole Foods gave major price discounts on Thanksgiving Day food
Levo Daily News writer, Meredith Lepore, states that Amazon Prime members got major discounts on Thanksgiving Day food items. Not only did Whole Foods turkey price drop from $3.49/lb to $2.49/lb, but Prime members also received an additional $0.50/lb discount.
This kind of pricing will definitely impact overall wholesale pricing. We urge each farmer to carefully consider if wholesale pricing fits into their revenue model.
Does wholesale pricing fit your farm’s revenue model?
The best way to manage and measure success is to have a written sales and marketing plan. Creating this written plan allows you to allocate resources, measure outcome, and manage next steps. One method to help you do this is the PDCA Cycle.
The PDCA or Deming cycle, was named after W. Edwards Demining, considered by some to be the father of modern quality control. It is straightforward and very doable—entire books are written on this subject.
Today’s we will condense it down to a 2-minute read! This is how you can use PDCA to better plan your sales and marketing:
P stands for Plan:
Start by choosing your target markets and how you will reach and serve them. Your target markets might be 25% farmers’ market customers, 35% wholesale customers, and 30% direct to customer through an online market.
D stands for Do:
Who and how will this plan be implemented? Will you hire staff to work farmers’ markets so you can focus on developing and maintaining wholesale customer relationships?
When will you engage with online customers to answer their questions, negotiate price, arrange for delivery, and pack and deliver orders? What physical items and digital tools must you have to meet these varied customers’ needs? These are items such as brochures to hand out at the market and a smart phone that allows you to text and respond to emails.
C stands for Check:
This step involves looking at key performance indicators, or KPI’s. Are you reaching the production quantities and quality you need to sell to your target markets? If so, are you getting the prices you need to reach your sales goals?
Do you have the number of contacts in your target markets to help you reach these sales goals?
A stands for Act:
A could also stand for Adjust. Be honest, what is and isn’t working?
Are you allocating enough time to develop your customer relationships? Do you need to hire additional labor to help you reach production goals? What steps need to be put in place to give you more consistent harvest quantities?
Do you need to adjust your target market sales goals because of non-reachable price points? Farming is a business, and smart business people know that the PDCA is a continuous cycle that never stops.
What wholesale buyers and large producers think is important
2BuyAg CEO, Kim Harrison, recently attended a “Big Buyers sit down with Big Producers” in Kansas City, MO. When improving wholesale relationships was discussed, several topics that were consistently brought up were quantity and quality of produce and products, reasonable pricing, GAP certification or having a food safety plan in place, and having access to dependable cold chain delivery options. Liability insurance needed is increasing to between $2 and $5 million.
As a farmer, you have a lot to think about as you decide if you can or want to sell wholesale. So far in our wholesale readiness series we’ve discussed production capacity, scalability, post harvest handling, and sales and marketing. Next in our series is distribution and food safety.