Don’t lose money shipping your food product
A food company can lose a lot of money in hidden shipping costs. Learn what you need to know at the Cook, Share & Prosper Summit.
Have you seen a lot of packages at your front door? Or, have you personally spent more time this year buying things online? It’s not just you. E-commerce has exploded this year and much of this growth is here to stay. To take part, food businesses need to understand their shipping logistics.
Online Food Shopping Trends
E-commerce experienced 10 years of growth in the three months of January to March 2020, according to McKinsey & Company. We’re living in what would have been, had earlier trends held, the online shopping future of 2030. Of course, this was an exceptional spring. There was a pandemic lockdown and grocery stores were understocked. Does this quarterly data represent a long-term trend or a blip?
According to Food Navigator, the answer is mixed. Nationwide grocery delivery and pickup sales in August ($5.7 billion) are significantly lower than the peak in June ($7.2 billion). However, other metrics point to online food shopping trends catching on. Twenty-nine percent of all U.S. households, representing 37.5 million Americans, are active monthly users of online food ordering and delivery. This is more than double the amount who did so last year. The average online order size is up 32% from last year. Additionally, a much higher proportion of users in August noted an intent to repurchase online.
The takeaway is that there’s a large, stable cohort of consumers who are now purchasing food online.
How to Ship Product
How can a food company take advantage of these trends? Investing in an online presence is a good place to start. To thrive in this space, a company really needs to know its shipping logistics. Orders need to be shipped safely and efficiently or the company will lose money. Here are some starting considerations:
- Shipping costs – Shipping costs money. A business needs to know this fee and build it into the cost of the product, or charge for shipping separately. Other hidden costs can include your online payment platform or your sales platform hosting fee. Amazon, for example, is going to charge you something for selling your product on their platform.
- Packaging costs – Your package might be dropped in shipping. How do you make sure your product inside doesn’t break? The answer is protective packaging, i.e. how you package your product within the shipping box. Protective packaging and the shipping box are new costs that need to be taken into account.
- Product quality – Shipping will look different for different food products. What does your product specifically need to ship appropriately? Is it delicate? Does it need to be kept hot or cold? How soon must it have reached its destination before quality deteriorates? These are questions you’ll have to answer as you decide on shipping logistics and additional packaging.
Cook, Share & Prosper Summit
Learn more of what you need directly from an MSU School of Packaging professor. Patrick McDavid spent 14 years with UPS as a packaging engineer/supervisor with its package design and test lab. McDavid later worked on disassembled nuclear weapons components as containers and special packaging manager at Consolidated Nuclear Securities. Now, as an MSU School of Packaging professor, McDavid teaches distribution packaging dynamics and the senior capstone course.
McDavid will discuss food shipping logistics at the Cook, Share & Prosper Summit on Nov. 12. Attendees will also hear the entrepreneurial perspective. Byron Center Meats will share its experience in pivoting to shipping its food remotely to customers. Sign up today to access this and other broad expertise that you need to pivot and prosper in 2021. The CSP Summit will include industry leaders in food trends research, retailing, distribution, and online engagement. Click here to learn more and register.
Michigan State University Product Center
The Michigan State University Product Center helps Michigan entrepreneurs and businesses to develop products and service ideas for food, agriculture, and natural resource markets. Its team of experts consults with clients on a one-on-one basis, helping new entrepreneurs navigate from concept development to launch. The Product Center also offers specialized services such as labeling, packaging, or nutritional analysis. If you are interested in business counseling from the MSU Product Center, please complete this online form or call (517) 432-8750.