will my sales outlet break me? - cornell blogs

Bob WeybrightCornell Cooperative Extension

Eastern New York Commercial Horticulture TeamOctober 28, 2014

Bob Weybright, ENY Commercial Horticulture Team 1

Define the word:

NO


Brian Norder & Bob Weybright, Northeast Center for Food Entrepreneurship

No

“not just today thank you, ask again later”

This probably not what your grower really wants to be doing

There is no single right answer, its about “customization”

It’s a variable process guided by a strategy

Experience and open minded thought builds the playbook by which you play the game

Intelligent informed intuition and a spreadsheet go hand in hand


1whole·sale

noun \ˈhōl-ˌsāl\ : the business of selling things in large amounts to other businesses rather than to individual customers

2wholesale

adjective : relating to the business of selling things in large amounts to other businesses rather than to individual customers

: affecting large numbers of people or things


Wholesaling, jobbing, or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional, or other professional business users; or to other wholesalers and related subordinated services.[1] In general, it is the sale of goodsto anyone other than a standard consumer.

According to the United Nations Statistics Division, "wholesale" is the resale (sale without transformation) of new and used goods to retailers, to industrial, commercial, institutional or professional users, or to other wholesalers, or involves acting as an agent or broker in buying merchandise for, or selling merchandise to, such persons or companies. Wholesalers frequently physically assemble, sort and grade goods in large lots, break bulk, repack and redistribute in smaller lots.[2] While wholesalers of most products usually operate from independent premises, wholesale marketing for foodstuffs can take place at specific wholesale markets where all traders are congregated.


http://en.wikipedia.org/wiki/Merchandise

http://en.wikipedia.org/wiki/Retailer

http://en.wikipedia.org/wiki/Industry

http://en.wikipedia.org/wiki/Commerce

http://en.wikipedia.org/wiki/Institutional

http://en.wikipedia.org/wiki/Professional

http://en.wikipedia.org/wiki/Business

http://en.wikipedia.org/wiki/Wholesale#cite_note-1

http://en.wikipedia.org/wiki/Good_(economics)

http://en.wikipedia.org/wiki/Consumer

http://en.wikipedia.org/wiki/United_Nations_Statistics_Division

http://en.wiktionary.org/wiki/transformation

http://en.wikipedia.org/wiki/Law_of_agency

http://en.wikipedia.org/wiki/Broker

http://en.wikipedia.org/wiki/Companies

http://en.wikipedia.org/wiki/Break_bulk_cargo

http://en.wikipedia.org/wiki/Wholesale#cite_note-2

http://en.wikipedia.org/wiki/Wholesale_marketing

1. Cost of production◦ Far too often only what growers see as “wholesale”

2. Cost of wholesaler/intermediary(s)◦ Making the phone calls

◦ Making the connection with the next buyer in line

◦ Managing the buyer relationship

3. Cost of transportation◦ Getting it from the farm to the next buyer in line

◦ Far too often not really valued accurately



Copyright (c) Lars Perner 1999-2008.USC Marshall


Copyright Forbes Magazine

Develop knowledge

Develop understanding

Develop insight


Me

Them

My comfort level

My biases

Their comfort level

Their aspirations and plans

The dynamics between “us”


Is the interest in wholesale real or aspirational?

Is the interest in wholesale forced or a chosen path?

What part of the “wholesale” quagmire?


Retailer

Distributor

Institutional

Markets

Restaurant

Contract

National chain (Safeway, Whole Foods Market)

Regional chain (Wegmans, Price Chopper)

Wolf in sheep's clothing (Hannaford)

Independent

◦ Bodega/corner store

◦ Branded (Foodtown)

Cash & Carry (Sams Club, Costco, BJ's)

◦ Full service (Sams Club, Costco, BJ's)

◦ Bargain oriented (Jetro)

Co-Op (Honest Weight)

Broad liner - Everything including the kitchen sink◦ Large (Sysco)

◦ Regional (Ginsberg, Maines)

Regional - Primarily food only◦ Regional Access

◦ Independent - Red Barn Produce

Buying Club (Wholeshare)

Food Hubs

K-12

University◦ Private◦ Public

Hospital◦ Independent◦ Buying Groups

Business & Industry

Entertainment

Terminal Market (Hunts Point)

Co-Op (Menands)

Produce Auctions

Diner

◦ Buying Groups

◦ Independent

◦ Chain

Independent

Chain

◦ Regional

◦ National

Manufacturer

◦ Pillsbury or Reckitt Benckiser

National Brand

◦ Fresh Express, Earthbound Farm


Activities Performed vs. Share of Revenues by Marketing Channel Type Activities Performed

Channel 1 Channel 2 Channel 3a Channel 3b Channel 4 Channel 5 Channel 6

Harvesting ✔ ✔ ✔ ✔ ✔ ✔ ✔

Conditioning* ✔ ✔ ✔ ✔ ✔ ✔

Grading ✔ ✔ ✔ ✔ ✔

Packing ✔

Bagging ✔ ✔ ✔

Shipping ✔ ✔ ✔ ✔ ✔ ✔ ✔

Advertising & Promotion ✔

Share of Channel Revenues

(% Retail Price) 80% 18% 49% 63% 47% 69% 36%

Source: Case Studies on Local Food Supply Chains

-

Apple Case Studies in the Syracuse, New York MSA.

Miguel I. Gómez, Edward W. McLaughlin, Kristen S. Park

Available at: http://foodindustrycenter.umn.edu/Local_Food_Case_Studies.htm

Channel 1: Farmer to Consumer Farmer’s

Channel 2: In-State Farmer to Packer/Shipper

Channel 3a: In-State Farmer to EDLP Retail Store (Bulk apples)

Channel 3b: In-State Farmer to EDLP Retail Store (Bagged apples)

Channel 4: Out-of-State Farmer to EDLP Retail Store (Bulk apples

Channel 5: Local Farmer to EDLP Retail Store (Bagged apples

Channel 6: In-State Farmer to School District through Wholesaler

Are they ?

Or ? ?

Or ?


Know who your competitor truly is

Know who you want your competitor to be

Know what your competitor does really, really, well

Know what your competitor does really well

Know what your competitor does well

Know what they don’t do well…..and that you do or want to do well


Know what you do really, really, well

Know what you do really well

Know what you almost do well

Most important – Know what you don’t do well and why!!!

Know your limitations and plan around them

Know your strengths and plan to them


USDA Agricultural Marketing Service: www.ams.usda.gov

Custom Average Tool: http://www.marketnews.usda.gov/portal/fv/fvmnnewfeatures

www.nass.usda.gov/Statistics_by_State/New_York/

USDA Agriculture Refrigerated Truck Quarterly

Watch the weather channel

Go “stealth”….just avoid getting caught (it can be embarrassing…….just saying)


http://www.ams.usda.gov/

CCE

Leopold Institute

ATTRA

University of Minnesota Ag Risk & Farm Management Library

PMA (Produce Marketing Association)

United Fresh

eExtension

USDA

NYS Ag & Markets

Your colleagues

A key question is what the client is at, toe in the water or jumping in?


Risks

Opportunities

Objectives


Commitment: i.e. will they dump the wholesale commitment for a good day at a farmers market

Crystal ball risk: will the crop price be crazy higher than a contracted price

Post harvest commitment/understanding/capability

Business savvy - fundamental financial knowledge and realistic perspective to not enter a bad deal


“Toe in the Water”

Tompkins County Guide

Grading/Packing

expectations

GAPS

FSMA

Insurance requirements

Volume requirements

Time commitment

“Jumping in” Third Party Audits PLU – Produce Look Up

codes Bar codes Contracts Electronic data interchange Understanding legalized

extortion◦ Slotting fees

◦ Marketing allowances

◦ Return allowances


Safety◦ GAPS◦ HACCP◦ Third Party Audit

Quality◦ USDA grades◦ Packing standards

And some still to come◦ FSMA

Regardless: Post harvest handling is critical, essential, non-negotiable, must be there, makes or breaks a deal, etc.


Work to Understand and Speak Your Customer’s Language

Enhance your communication with customers by identifying communication styles

and applying effective communication, listening and rapport building skills

Learn how to build relationships by reading people, understanding yourself and

adjusting your approach to gain commitments and improve communication

Practice consultative selling – Identify needs

Enhance customer service and relationship building skills with customers to

provide service beyond expectations

Develop win-win negotiation plans for that will produce higher margins and

customer satisfaction.

Increase market share by growing current and prospective customer bases. Position

yourself within your accounts by developing relationships with multiple influencers



Formal:◦ Sandler selling system◦ Dale Carnegie◦ On line such as WorldWideLearn.com◦ And the list goes on, just Google™ it◦ *Grower targeted (stay tuned) TBD……..

Informal:◦ Keep your ear to the ground◦ Seminars◦ Chamber of Commerce◦ Other small businesses◦ Your customers


“Find the pain”

“The problem solver”

“Your personal consultant”

Give it your own spin


Use a contact manager◦ ACT™◦ Outlook™◦ Contactplus™

Use a financial management system or service◦ Quicken™◦ Peachtree™◦ Redwing™◦ Farmbiz™◦ Farmfact™◦ Farm Credit◦ Private firms

Read trade and other relevant publications


A “dashboard” or other quick view

A calendar with scheduler

A contact list management system

Reports that are easily modified/customized

Other items you/they personally might need to “one minute manage”

Brian Norder & Bob Weybright, Northeast Center for Food

Entrepreneurship

The sales or opportunity pipeline


Activity report

Market Decision tool:

www.extension.iastate.edu/agdm/decisionaidswd.html

Comparison of Transaction Costs by Market OutletAg Decision Maker -- Iowa State University Extension

Product

Tomatoes

Revenue Units Price/Unit Units Price/Unit Units Price/Unit

Expected Sales 50 2.00$ 100.00$ 100 1.50$ 150.00$ 1,200 1.70$ 2,040.00$

Expected Sales - - -

Expected Sales - - -

Total Sales 50 100.00$ 100 150.00$ 1,200 2,040.00$

Transaction Costs Per Unit Extended Per Unit Extended Per Unit Extended

Number Cost Cost Number Cost Cost Number Cost Cost

Supplies

Bags, boxes, etc. 15 0.05$ 0.75$ 10 1.14$ 11.40$ 10 1.00$ 10.00$

Marketing materials (signage, etc.) 1 5.00$ 5.00 1 -$ - 1 1.00$ 1.00

Misc consumable supplies 1 2.00$ 2.00 1 0.75$ 0.75 1 1.00$ 1.00

Total supplies 7.75$ 12.15$ 12.00$

Transportation

Miles to and from all delivery points 190 0.50$ 95.00$ 130 0.50$ 65.00$ 100 0.50$ 50.00$

Labor

Arrange Sales 1.0 12.00$ 12.00$ 1.0 12.00$ 12.00$ 1.0 12.00$ 12.00$

Prepare Product 15.5 12.00$ 186.00 2.0 12.00$ 24.00 2.0 12.00$ 24.00

Deliver Product 40.0 12.00$ 480.00 - -$ - - -$ -

Total labor costs 678.00$ 36.00$ 36.00$

Total market costs 780.75$ 113.15$ 98.00$

Percent allocation 20% 20% 20%

Allocated market costs 156.15$ 22.63$ 19.60$

Allocated market costs per sales unit 3.12$ 0.23$ 0.02$

Production cost per sales unit 0.30 0.28 0.28

Total cost per sales unit 3.42$ 0.51$ 0.30$

Net returns per unit (1.42)$ 0.99$ 1.40$

Extended net returns (71.15)$ 99.37$ 1,684.40$

Contact the author for questions, comments or suggestions regarding this spreadsheet.

Author: Craig Chase

Version 1.0

Date Printed:

. . . and justice for all

Enter your input values in shaded cells.

10/24/2014

The U.S. Department of Agriculture (USDA) prohibits discriminat ion in all its programs and act ivit ies on the basis of race, color, nat ional origin, gender, religion, age, disability, polit ical beliefs, sexual orientat ion, and marital or family status. (Not all prohibited bases apply to all programs.)

M any materials can be made available in alternat ive formats for ADA clients. To f ile a complaint of discriminat ion, write USDA, Off ice of Civil Rights, Room 326-W, Whit ten Building, 14th and Independence Avenue, SW, Washington, DC 20250-9410 or call 202-720-5964.

Click here to calculate CSA

appropriation

Place the cursor over cells with red triangles to read comments.

More for information on transaction costs and pricing products, see AgDM File C1-55 Pricing for Profit.

Outlet #2

Issued in furtherance of Cooperat ive Extension work, Acts of M ay 8 and June 30, 1914, in cooperat ion with the U.S. Department of Agriculture. Jack M . Payne, director, Cooperat ive Extension Service, Iowa State University of Science and Technology, Ames, Iowa.

Outlet #3

CSA SalesFarmers' Market

Outlet #1

Institutional Sales


CSA Amount Contributed and Revenue Per Unit WorksheetAg Decision Maker -- Iowa State University Extension

Use this spreadsheet to calculate the amount of revenue for a specific product in a CSA operation.

Revenues

CSA Sales Shares Price Revenue

Full Shares 25 350 8,750

Half Shares 3 175 525

Other Revenue 0 75 0

Total Revenue $9,275

Percent Portion of Amount Revenue

Major Products Contribution Revenue Contributed Per unit

Cucumbers 6% 557 900 0.62

Eggplant 8% 742 650 1.14

Green beans 7% 649 440 1.48

Lettuce 7% 649 400 1.62

Peppers 9% 835 1,400 0.60

Potatoes 7% 649 700 0.93

Summer squash (inc zucchini) 8% 742 700 1.06

Tomatoes 22% 2,041 1,200 1.70

Winter squash 7% 649 750 0.87

81% 7,513

Product to be used in the comparison:

Tomatoes 22% 1,200 1.70

http://www.extension.iastate.edu/agdm/decisionaidswd.html

Costco.com Return Policy ◦ We guarantee your satisfaction on

every product we sell with a full refund. Exceptions: Televisions, projectors, computers, cameras, camcorders, iPOD / MP3 players and cellular phones must be returned within 90 days of purchase for a refund.

What is the Sam's Club return/refund policy?◦ We want you to be 100% satisfied,

so we offer a 100% guarantee on merchandise and Membership.


Bob Weybright

Eastern NY Commercial Horticulture Team

[email protected]

845-797-8878


mailto:[email protected]

will my sales outlet break me? - cornell blogs

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