By: Diana Winter
Finding an Idea
When Bob McClure was ready to expand his family business, McClure’s Pickles, he found a shared commercial space in a tofu factory. The healthy bacteria in the air – resulting from the fermentation process of soy – spoiled the entire batch of the first bacteria.
Every Industry Has Its Unique Complexities
Every industry comes with its unique complexities. However, the food industry? It’s in a league of its own. There is an increase in risks of legal consequences, a very sensitive dance with inventory and expiration dates, and a volatile supply chain that can be affected by anything from weather to healthy bacteria in the air.
But for some people, there’s nothing better than creating great food and nourishing the masses. If you’re ready to face the challenge and pursue your dream of starting a food business, you’ve come to the right place.
This step-by-step guide will teach you how to sell food online, with expert tips on navigating food laws, maximizing your marketing dollars, and building a delicious brand.
How to Sell Food Online in 13 Steps:
1. Research Food Laws
Knowing how to sell food online starts with understanding the law and best practices for food safety. Typically, the first step in starting a business is coming up with a great idea. However, it’s important to understand the complexities of food laws before diving in.
When making and selling food online, safety is always a concern. Government organizations closely regulate the food industry to ensure public safety, but the responsibility lies with the business owner to adhere to the rules and be obsessed with quality.
As long as you do your homework, obtain the proper licenses, and keep thorough records, the likelihood of running into trouble with health departments is low. But if it does happen, the consequences can be severe, says food lawyer Glenford Jamison. “The government can throw you in jail, take all your products and destroy them, shut down your business, or fine you heavily.”
Food inspectors offer you some wise and free advice on how to ensure you’re producing a good and reasonable product. Glenford Jamison, food lawyer
If your product is complicated or requires additional licenses (like meat, fish, or some agricultural products, for instance), you may want to consult a lawyer experienced in the food industry. While the upfront cost might be steep for a new business owner, it could save you from more costly consequences down the line.
However, Glenford says, “With the understanding that there’s a wide and important regulatory framework,” there are some good practices if you choose to navigate the legal aspects on your own:
- Handle and store food properly. Learn how to properly handle and store food. Carefully track food preparation practices. Make sure you’re doing what’s necessary to prevent people from getting sick from your food.
- Keep track of the supply chain. Ask questions of your suppliers and get recommendations.
- Work with a lab to test your products. Labs can help you identify and track elements that might cause allergic reactions.
- Maintain accurate records. Keep track of everything that comes in and out of your facility.
- Make friends with your food inspector. They are there to identify issues and help you succeed. “Food inspectors offer you some wise and free advice on how to ensure you’re producing a good and reasonable product,” says Glenford.
- Get liability insurance. Make sure you’re covered in case someone gets sick.
Note: Food laws and licensing requirements vary from country to country, and some industries, like dairy and alcohol, may be subject to additional rules. Be sure to consult a lawyer and your local government for specific information pertinent to your business and locality. For the purposes of this article, the information and advice will be general and should not be considered legal advice.
2.
Finding Your Own Idea
In many cases, the best online business ideas are born from a passion or hobby. This is also true for selling food. For example, if you make jam for your friends and family from strawberries grown in your own garden, that’s a good place to start. You already know the process and have experience in perfecting and testing recipes.
Bob McClure and his brother Joe grew up making pickles with their grandmother Lala, and it was their family recipe that ultimately inspired their business, McClure’s Pickles. Bob was an actor and Joe specialized in psychology, and they had no idea about business or manufacturing, but the tried-and-true family recipe was their foundation. Food Trends
If you don’t have a product idea yet, check out current food trends. Food Network listed plant-based fish, creative spices, and coffee alternatives as trending foods for 2022. You can also monitor food trends through Google Trends, food publications, and social media platforms like TikTok.
Joining a trend usually means you’ll find a lot of competition from the start. Ask yourself how your product can stand out in a crowded market.
When the McClure brothers decided to introduce a premium pickle product, they had very little competition. However, over a decade later, the fermentation process has gained popularity alongside the slow food movement. Bob sees competition as a good thing. “It’s the right competition if it raises consumer awareness of high-quality artisanal products,” he says. “It helps elevate our entire category.”
Another way to discover a great idea is to find a gap in the market. Many winning food business ideas start by solving a problem or meeting specific market needs.
? Explore:
- Customized or new unconventional products
- Luxury, artisanal, and small-batch foods
- Dietary restrictions: allergen-free, gluten-free, or nut-free
- Organic, natural, certified, and fair-trade ingredients
- Ethical and religious: vegan, vegetarian, kosher, or halal
- Diet trends: paleo, keto, or low-carb
- Others: food videos, recipes, meal kits, and cookbooks
Judy Pager’s company, Green Zero, was designed to help her manage ulcerative colitis, and her audience consists of people who also live with ulcerative colitis and other forms of bowel disease. They produce healthy snack options without the ingredients that typically trigger her condition. “We also cater to the growing paleo community,” Judy says, “and we’re targeting a wider audience than ever.”
If you’re new to the food field, check out easy small business ideas that require low investment and less equipment with fewer shipping challenges and legal restrictions.
? Try:
- Candy
- Packaged snacks
- Canned and pickled goods
- Dried herbs
- Cooking ingredients (flour, etc.)
- Selective resale (products made by other vendors)
- Coffee and tea
Thirteen-year-old Charlie Capdish makes and sells caramelized hazelnuts from his family’s home. It’s a business he can still run from a home kitchen – between school work and basketball practice – almost five years after launching.
3. Decide Your Business Model: Production vs. Product Selection
There are many ways to start a food business, from supplying raw ingredients to manufacturers to opening your own restaurant, but if you want to sell food online, there are two main business models. Producing food products for sale
This model refers to producing food either in a home or commercial facility and selling it directly to consumers (DTC). You might choose to handle the entire supply chain and be personally involved in production or work with a third-party manufacturer that produces and packages according to your special recipe. In this model, you might also expand your sales channels and consider wholesaling to other stores.
Note
Legal: Many areas have cottage food laws that allow you to produce certain food products in a home kitchen without adhering to the same requirements as commercial kitchens. In the United States, be sure to check the cottage food laws in each state, as they can vary from area to area.
Product Selection and Resale
This model involves reselling products by selecting other brands’ products under your own name. The unique reason for your sale might be that your store brings together the best product of one kind (such as mustard sauces from all over the world) in one shopping experience. Additionally, you might attempt drop shipping to bring another brand’s products to a new market.
Note: Much of this article applies to food production businesses. If you are looking to select existing food products, proceed to step 6 to start building your brand.
4. Securing Ingredients
Glenford emphasizes the importance of doing your homework when it comes to securing your ingredients. “Track the supply chain,” he says, so that your packaging demands match what’s inside as you work with trustworthy companies.
If you plan to produce an organic-labeled product, for example, make sure your raw ingredient supplier has the appropriate certification before making claims on your packaging. Developing a relationship with your supplier builds trust and makes them feel invested in your business. “Sometimes our suppliers make suggestions based on something new coming to market,” says Judy. “It’s a collaborative partnership.”
? Tips:
- When just starting and producing small batches, it may be beneficial to shop for ingredients at consumer wholesale stores like Costco or Sam’s Club.
- Make connections. In some industries, finding suppliers may rely on word of mouth and personal acquaintance. The founders of Soul Chocolate built networks in the industry to establish relationships with local cocoa farmers. Additionally, for goods like cocoa and coffee beans, look for a distributor or broker who works directly with farmers.
- Collaborate with other small batch producers to buy ingredients in bulk.
?️ Helpful Resources:
- Food Ingredients and Packaging Guide from the Food and Drug Administration, including information on allergens and food additives (United States)
- Food Composition Database (Australia)
- Licensed Natural Health Product Database (Canada)
5. Determine Your Food Production Model
A professional kitchen might be out of reach initially, but many cooperatives offer shared space options. Shared Kitchen
McClure’s Pickles started in their family kitchen, continually improving their production. “When we first started, we rented a kitchen with a bigger stove,” Bob says, “and we would call up our friends and say, ‘Hey, I’ll buy you pizza and beer if you come make pickles with me on the weekend.’”
The company eventually moved to a 20,000 square foot manufacturing space where they operate today. McClure’s Pickles is a great example of how to scale production as you grow. Starting a business from a home-based facility is a low-risk way to test your business model. Selling Food from Home
Some food products can be legally produced and sold directly from your home kitchen, but check the regulations surrounding the product you choose. In the United States, the Food and Drug Administration requires you to register your home-based business as a facility. You may need to make upgrades to your home setup, such as improving ventilation. Be sure to obtain the required license to sell food from home in your area.
Renting Shared Commercial Kitchens
Many facilities provide shared kitchen space that you can rent by the hour or month, depending on your production needs. Its benefits:
- Costs
- Low cost. You don’t need to buy equipment from the start, and the shared model means you’re not paying the rent alone.
- Less paperwork. These facilities are already registered as commercial space and have suitable insurance.
- Shared knowledge. You’re exposed to other small business owners to learn from them and build community.
Setting up your own business facility
You have complete freedom and start from scratch with this model, building a facility that meets your needs from the ground up. This is the most expensive option that requires diligence – you are responsible for ensuring your facility meets the requirements and is properly licensed.
This may not be the best option for new entrepreneurs, but it’s a future goal. “We started small in our home kitchen and grew from there,” says Judy. “We didn’t move until we were full and knew we had enough business to support the move.”
Working with an already established factory
This option is great for entrepreneurs who prefer not to get personally involved in production. It’s a safe choice for newcomers to the industry as manufacturers must be well-versed in food safety and regulations. While the idea, recipe, and brand are all yours, the execution is left to the professionals. This allows you more time to invest in other aspects of the business.
“We partnered with someone who has a FDA-certified facility so we could ship our products across the United States earlier, without any food safety issues. It’s really amazing how much diligence goes into running an FDA-certified facility,” says Daniel Patricio, founder of Bull & Cleaver.
6. Building your brand
Building your brand starts with a great story and a strong vision. These elements inspire everything from your website to packaging design. Out House
Selling food online is particularly challenging because the most important decision-making sense – taste – is not accessible. Since customers can’t sample your product, branding is especially important. Packaging design, photography, the website, product page, and copy must all work together to tell your story and help customers imagine what your product might taste like.
? Tip: Given the importance of packaging in this industry, you may want to hire a designer to assist with your needs.
Building a brand starts with answering some questions about how you want customers and the world to see you. “We chose our name and identity – everything from the naming, look, feel, and copy – to be something that indicates craftsmanship and
Source: https://www.shopify.com/blog/213396233-how-to-start-a-food-business
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