10 steps to create a profitable online food business

Posted by Damian Roberti on

I'm going to give you the 10 steps to create a profitable online food business. And in these 10 steps are going to get you a great direction to succeed. And we're going to jump into that right now,

Damien for marketing food online. And as I mentioned in the introduction, I'm excited to bring you guys 10 steps to bring a profitable food business online in 2021. Now 2020 is almost of course up. And if you haven't noticed e-commerce in general is skyrocketing. So the idea of having an online business specifically, even with food, food is a category that is still untapped, that has a lot of potential, and a lot of big companies are diving into it.


So you might want to think about getting into selling food online over the next year or so. And I'm going to dive into 10 ways that you can actually create it and do it profitably because there are some ways you could do this and lose a lot of money. So as always, this is marketing put online, and if you are new check out that subscribe button down below, we have over 900 videos to help you get your food business up and running.

I have actually been on e-commerce now for over a dozen years now. And my wife and I have created a fantastically successful food business that we started from nothing. And it has taken a lot of time to do it, but we definitely have a very successful business. We have platforms on Amazon. We have on eBay on Etsy and we have our own website and a couple of other websites as well. So we have six businesses online and it has been very fruitful for us over the past decade. And now I want to give you some tips on how and what I've learned over that 10 years to get you get up and running as well. So let's jump right into it as always. Let's do this really quick and get to the point and number one, start with your own product. Now you might be thinking well, Damien, I don't have a product just yet.

10 Steps to launch your business.

Let me tell you why. When it comes to food and in the food world, if you are buying a product to flip online, it is very saturated as with a lot of other products. But I have noticed over the past 10 years that there's a lot of people who simply buy products in bulk and sell them online. That is very, very competitive. One of the things I've noticed that also has helped us succeed and grow our food business is that we make everything that we sell. We do not flip items. We do not buy them and resell them. We actually have amount of candies. We do baked goods. We do cookies, pretzels and Oreos, a whole bunch of different things. But the idea is that we do it our own it's our own brand it's made to order it's handmade. And that is something that has separated us from other people who sell similar products.

When you start with your own product, you actually have an advantage. I don't care if it's even salsa, hot sauce, you may think, well, it's so saturated with that. No, it's not. Here's why the uniqueness of having your own labeled product, your own brand. Even if you go to a co-packer or private label company, or you have someone put your own label on it, when it comes to food, people are very curious. And when they see something that looks new, okay, visually, it just looks new. It could be a salsa. Salsa has been around forever and a day. I know that, but if it's something even like salsa, it is something that they've never tried before. Maybe you have your own spin on it. That is something that where the creativity on your side is going to really be an asset for you and having your own product is going to be much more profitable than if you went out and bought salsa.

That's already existing and try to flip it and sell it in six pack or 12 pack. That's not going to be as profitable in the long run because it's so competitive. So number one, start with your own product. Next up, always sell on as many platforms as you can. When I first started out, actually eBay was our first store. We had a few orders trickle in once in a while, and it was kind of slow at first, but E-bay was our first platform. And I saw at that time that I had no e-commerce experience, I saw that eBay had a lot of potential. So then Etsy before it actually was a public company, publicly traded company. This was back in 2011. I started on a NetSuite. We've done over a hundred plus thousand dollars on that platform over the years. That is something that I went to from eBay over to Etsy before I even had my own website.

So we started on eBay, went to Etsy. Then I made my own website and about four years into it. That's what I took the big jump on to Amazon. We've been on Amazon now for 2021 will be seven years. That is something that has been a huge learning curve. There's a lot of things that we've learned from that and is a very, very challenging platform. Let's say to stay on, especially stay on that long, but it's something that we've been able to do. Okay? And we've had a very high buy box. We average around 98 to 99% of the time, our buy box, we offer great customer service with over 96% positive feedback on Amazon. And that, that actually transcends over to eBay and Etsy and our, even our own website. So what, our reason why I say this is that you want to be on as many websites as possible.

And the reason being is that there's a lot of people who enjoy eBay, that don't go over to Etsy. There's a lot of people who enjoy Amazon, who may not shop on Etsy. So if you can capture sales of your unique product on multiple platforms every single day as we do now, when we wake up, I've got orders on all the platforms that we sell on. That is something where I don't rely on one singular source of income. I rely on a multitude of places that I want to be in as many as I can. Okay. So next one up. No, the fees on each of the platforms, this is something that's really crucial. If you want to make it profitable. As I mentioned in the introduction, the title of this video, if you want to create a profitable food business online, you've got to know those fees.

Every platform is different. Some of them charge monthly fees. Some of them charge for even the shipping that you charge your customers. If you don't give them free shipping. So knowing the fees on each of the platforms, that again, all of this information I'm giving you, I know that C might seem a little bit overwhelming. It takes time to build these businesses. These are not get rich quick schemes. This is not some drop shipping concept. This is building an actual business that you can then grow and you can build over years, but it will be around for a long, long time, as long as you build on it. And you know that it's a big picture idea. This doesn't happen overnight or another two months from now, I'm going to promise you you'll be a millionaire. So no the fees on these platforms, because when you create your price point, which I'm going to jump into just shortly, when you create a price point for your product, you need to incorporate those fees because that's where the profitability and your margins.

If you don't know, the fees can get eaten up and they won't be as profitable as it could be. Now, the next one is kind of a challenge. And I'm going to explain why, but you want to keep number four is you want to keep a sweet spot of your price point. You want to keep it between 25 to about $35. This is what I've learned. Our average actual transaction is $27. That is what it has been since we started over 12 years on all of the platforms. That's what it averages out to be. Now, do I sell some products that are five, six, $7? Yes. Do I sell some products that are 150 $200 or more? Of course I do. Yes. Now those are different price points. But if you are getting into this and maybe you have one, maybe just two items, two products, that's fine, but you want to keep that sweet spot between 25 and 30.

The reason why is that we offer free shipping on all of our products. Okay. We've actually tacked into the price point that shipping for that particular size product, some of the five or $6 items, $7 items are actually first first-class shipping. So they only cost a couple dollars to sin. I'm still making margins on those products, but then there's some higher ones. So what I've noticed is is that if you are going to take the time to box up a product, you're going to ship it. And if you potentially charge a customer, that's fine, but you factor in the fees, you factor in shipping and the time of your own to actually ship the product and put the label on it and get it out. You want to make sure that it's actually profitable. It's actually worth your time. So factoring all of that. You want to make sure that you're going to be bringing in anywhere from 10 to $12 of profit, per actual transaction for us, that sweet spot of that price point around 27 bucks.

That's about what we put in our pocket after every transaction for that actual average price point. Hopefully that makes sense to you, but you want to make sure that it's around the 25 to 35 now, Damien, how do I do that? Let's say I'm selling hot sauce. I can't sell a hot sauce. That's like six, $7 retail for that much. Yes you can. That actually brings us to the next point. You have to consider your shipping costs. One thing you need to make sure you keep in mind is how much it costs you to ship the product. Now, many items that fall below a one pound price, a one pound in weight can actually go first class. So that is very, very minimal amount anywhere from like three to maybe $4 at the most, but normally around $3, you can ship a product that's below that one pound shipping weight.

Now a lot of these platforms are going to give you an actual discount. For instance, on Amazon, we buy all of our shipping through Amazon shipping services. That gives us a huge advantage because we utilize, they leverage their size and their volume of shipping with all of the carriers. And that allows us to save by utilizing their shipping services. And then we buy it through them. E-Bay Etsy, all of them have it. Etsy now has a fantastic ability to also reduce your shipping costs when you ship a product and by shipping through Etsy. So know your shipping costs because at the end of the day, those fees on those platforms, in addition to shipping, you want to make sure that price point again is that 25 to about $35 price point or higher. That's up to you. So considered your shipping shipping costs. Now, number six, bundling.

This is where the price point comes in. Now, when you bundle a product, if you've got a hot sauce or even a salsa or a marinade or something, that's really inexpensive, you want to bundle it. You want to put in a six pack, maybe a 10 pack, maybe a variety of packs. What this is going to do is that you're going to bundle it and create a higher price point again, pushing yourself up to that sweet spot between 25 and about $35. That's where you want to be. If you're selling a hot sauce and you're not charging for shipping, but you're giving enough customer free shipping and you're selling it for six or $7 after shipping and after fees. I don't think it's going to be a very profitable business at that price point. So creating bundles, which is where I told you in the beginning of this video, some of our products are over a hundred, some dollars because we have a principal pack.

That's a hundred pretzel rods, and we charge nearly a hundred dollars for that. So it's over a dollar per unit. So what that does for us is that gives us a huge margin on that one singular transaction, but that's something that we bundle where you add more than just one singular product to it. Number seven, use social media. You have to use social media. Now I don't recommend using every single social media every single day, and trying to maintain all that pick out just two. You want to go over with about two of them and you want to double down on two of them. And that's where you want to be very engaging. You'd be very active on those. If you have a page on Instagram, Facebook, Twitter, and LinkedIn, and even a Pinterest, that's great. You could have a presence on them, but don't try to, by yourself attempt to maintain all those social media, because you'll actually end up getting exhausted and burnt out by the end of the week.

If you try to do that, plus run a business. So something I've learned over the, over the years when I first started, I was trying to do just that. I was trying to make sure that I was active on every single one of them. It was not paying off for me. So now I focus on two it's actually Twitter and Facebook that has worked out considerably well for us. And that's the areas that I really put my focus on because I do all of the social media for our business as well. I don't have an ad agency. I don't have that budget for that, and I'm not going to pay a group of people to do it for me. I just doubled down on those two. And that is something that works really well. Number eight, make sure if you want to have a profitable food business, that you follow all guidelines for licensing and permits and including making sure that you're incorporated and you have food business insurance, one of the most crucial things that a lot of food startups when they started home, and maybe they're doing a cottage food thing and they're selling locally, or they're just trying to resell food products or people who do this as a quote unquote hobby, you're taking a huge risk.

And if you're not insured, make sure that you are because if you're not, you could personally be sued. If somebody gets sick and that's something you definitely don't want. Plus, to be honest with you, the amount of insurance that it costs for us to run our business is about a five to 0 a year for the basic food insurance policy. That per month only breaks down to like 40 to $45. So that's not a lot of money. And trust me, if you had some issues that pop up and somebody got sick paying for legal, legal counsel, they're having to go through. So to have a lawsuit would cost way more than 40 some dollars a month. So consider costs are always going to be higher when you start number nine, this is actually something that is new to a lot of food entrepreneurs that just start I learned this way, way, way, way back 12 years ago is that all of my ingredients, all of my packaging, everything was so expensive.

Why was that? Because basically you're not big enough yet to leverage the size of your company to get better margins or better, better pricing on packaging to get better pricing on ingredients. Anything that you need to create your product has a tendency to be more expensive up front, because you're just starting now as your business grows, that's actually a big, that's a big, positive thing because you can begin to lower the cost of per unit of your item if you're making it. So don't get discouraged. When you look and you see that is actually costing you so much money to start a food business. That's okay. As time goes on and money comes and cashflow begins to increase. That's going to give you a chance to actually buy at a much cheaper and lower costs. So keep that in mind. Number 10, this is probably the most pivotal part of any online business.

And I don't care if you're selling food or you're selling cars. If you're Carvana or you're the guy selling hot sauce, customer service. The thing about being online is, is that if it's not a great interaction with your customer, they can basically interact with a, some type of feedback process or even leave a Google feedback. If you're registered with Google and that kind of feedback instantaneously has a big ripple effect and could cause a lot of negative problems as far as your reputation's concerned. So make sure you take care of the customer all the way through the transaction. If there's a problem, just make it right. Either give them a refund, send them the product again, whatever it may need, that the Cape make the customer happy and keep them coming back. Make sure that you stay on top of your customer service online e-commerce businesses is not a set it and forget it type of business.

You really need to engage with your customers and make sure that their experience and the product they're enjoying are fantastic. So those are the top 10 things that if you are looking to make it profitable, e-commerce food business. You definitely want to look into these 10, understand how they work and make them work for you. So I'll see you guys on the next video and as always, if this video is helpful, do give me a big thumbs up. You have questions, comments, let me know down below, and I'll see you guys on the next video. Thanks for watching marketing food online. And if you are looking to create your own food truck, start a home-based food business under the cottage food law franchise, a food operation start a packaged food business, private label, your own food product, sell on Amazon. Get your own online store or sell food online. Remember to subscribe and check out these videos for more resources, take care.


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