The rise of ecommerce in the coffee industry
Between 2014 and 2021, global ecommerce sales grew by over 269%. According to Statista, by 2027, the global ecommerce market will be worth almost US $7.4 billion.
This figure has more than likely increased because of the Covid-19 pandemic, too. A recent study from the Pew Research Centre found that 90% of US citizens said the internet was “essential” for them during the pandemic.
As a result, the coffee industry has also shifted online. It’s becoming increasingly important for producers, traders, and roasters to develop an online presence to effectively market and sell their coffees through ecommerce platforms.
To learn more about the rise of ecommerce in coffee, I spoke with Jolene Zehnder, Director of Sales and Operations at Mercon Specialty, Craig Russell, Managing Director and President of Mercon Specialty, and CEO of Bean Box, Matthew Berk. Read on to learn about how ecommerce has become more prominent across the sector.
You may also like our article on how digital marketing has evolved in the coffee industry.
What is ecommerce?
Ecommerce can be broadly defined as the buying and selling of goods over the internet.
Today, almost anything can be purchased online, from cars to groceries to roasted coffee. In general, ecommerce markets can be:
- Business-to-business (B2B)
- Business-to-consumer (B2C)
- Consumer-to consumer (C2C)
- Consumer-to-business (C2B)
As automation has become more prevalent in everyday life for most people, consumers are increasingly more able to make purchases without the need to speak to another person.
However, while it may seem like online marketplaces offer a more straightforward way to sell products, there are still challenges which businesses must contend with as far as ecommerce is concerned.
Company websites must be user-friendly, otherwise customers may look elsewhere to purchase their goods.
This means providing a quick and easy-to-use interface for buying products, as well as enough information on the product itself so that consumers can feel informed.
Jolene explains why ecommerce has become so popular in the coffee industry.
“Ecommerce suits the coffee industry in general,” she says. “Being able to order coffee online and arrange your delivery options means you can do everything you need to.
“You don’t need to have that face-to-face connection. Now, you can buy a car online and have it delivered to you,” she adds. “It’s the same with coffee, so I think we’re going to continue to see ecommerce evolve in the industry.”
Ecommerce in coffee
There’s no doubt that the coffee industry has grown exponentially over the past couple of decades. This includes the market for ecommerce.
According to sales figures from Amazon, coffee was the most popular food and beverage category in 2018. In that year, Amazon’s coffee sales alone totalled around US $140 million.
Considering this data was pre-pandemic, too, it’s more than likely that growth has skyrocketed since then.
Altogether, this means that now, more than ever, coffee brands must be competitive when selling online.
Matthew Berk, along with his business partner, launched Bean Box around eight years ago in Seattle. Bean Box is a multi-roaster subscription service in the US.
“My co-founder and I had come from a software engineering background, and neither of us were coffee lovers.”
Although Matthew didn’t have much coffee knowledge at the outset, he tells me the data he received from Bean Box’s initial stages provided insights into how the demand for high-quality coffee was growing.
“The business didn’t grow in the way we wanted to, but we received a lot of data on which kinds of consumers purchase which kinds of coffees,” he tells me.
However, Matthew points out that entering the specialty coffee market can be daunting for new roasters and coffee producers.
“There are a lot of third wave coffee shops in Seattle, but I don’t have the same level of expertise as the people working in them,” he says. “I don’t know what all the trends are.
“I still go into cafés where, unfortunately, I’m sometimes made to feel bad for knowing less about coffee,” he adds.
For roasters, selling coffee (as well as brewers and coffee equipment) online can help to educate less-informed consumers in a constructive way. Ecommerce platforms can provide all the necessary information about coffees – including tasting notes and roast profile – while still offering an efficient, streamlined user experience.
Traders & producers
Navigating ecommerce can be more difficult for those who are making commitments to purchase or sell larger amounts of coffee, such as traders or producers. These B2B marketplaces are often not as well-developed or prominent as B2C ecommerce platforms, with fewer options available in many cases.
However, Jolene says that green coffee buyers often feel more secure when sourcing through a dedicated platform, especially when it offers a high-quality service.
To this end, she explains how Mercon provides samples to customers from its green coffee ecommerce platform.
“We send samples to them, so they get to taste the coffee before they purchase it,” she says. “This is so it’s not a blind guess of which coffees they’re purchasing.
“We follow the same protocols when we send out green or roasted samples to customers,” she adds. “We can just remove the sales aspect if customers don’t want to talk with a salesperson.”
Jolene explains how automation is advantageous for both producers and traders.
“Ecommerce allows us to trade with smaller roasters,” she says. “If a roaster wants to buy one bag or one container, it equals the same amount of transaction time. If we can automate the process, we can actually sell coffee to more customers across the board.”
Why has ecommerce become so popular?
Coffee consumers are increasingly demanding convenience, and ecommerce is a great way for businesses to offer it.
For consumers, finding coffee that suits their taste preferences can be tough, especially when they are also looking for sustainably and ethically sourced beans. Ecommerce platforms allow consumers to purchase coffee more efficiently, while still ensuring they receive all the necessary information.
A large part of this is focused on traceability and transparency, as more and more consumers are keen to understand how and where coffee is grown.
The fact that more people are buying goods from the palm of their hand is also key. Statista estimates that by 2027, nearly 7.7 billion people around the world will have a smartphone – with the US, China, and India having the highest volume of users.
Essentially, the world is only becoming more and more digital. Selling coffee online is now a necessity for any roaster or trader, and it’s becoming increasingly important for some producers, too.
Impact of the pandemic
The Covid-19 pandemic also amplified this demand, as physical premises for many coffee businesses were forced to shutter.
The British Coffee Association found that one in five British nationals increased their coffee intake during the pandemic. At the same time, social distancing measures forced around 92% of UK out-of-home coffee businesses to close their doors at some point in 2020. This means consumers had no other option but to turn to online coffee sales in the UK as well as in other countries.
Through ecommerce, roasters, traders, and producers now have more information about their customers’ preferences.
Matthew tells me how he was surprised to see how far Bean Box’s customer base expanded over the years, thanks to data from online sales.
“We started local in Seattle,” he says. “We then extended north up to Everett and Bellingham, then down to Olympia and eventually to Portland.
“Now we have customers in California, Nevada, Arkansas, and all over the country,” he adds. “Within the first three months of operating, we were shipping coffees to all 50 states.”
Craig Russell explains that Mercon’s ecommerce platform has helped to “lower the barrier of entry for anybody who wants to roast and sell coffee”.
He adds: “The business may or may not grow to the preferable size, but it can certainly get into the market and roast and sell coffee if they have a website and a place to mail coffee from.”
What does the future hold for coffee in ecommerce?
Online coffee sales are only going to grow as the world becomes increasingly digital. But how might ecommerce in coffee develop in particular?
Craig says that he thinks that Mercon’s platform will gradually adapt, and in time look to sell coffee online to roasters of any size.
“There’s going to be a lot more development where coffee sales are going to become more self-service online, even for larger roasters,” he explains.
A full transition to online sales for large roasters can be a logistical minefield, especially when dealing with major volumes of green coffee. It can also be an extensive process, with payment plans negotiated accordingly.
“Bigger roasters may need to manage more of their needs online than previously,” Craig says. “Technology and apps allow roasters to track their shipments more closely.”
Jolene adds: “One of the challenges I think we’ll face going forward is continued shipping delays.”
Over the course of the past two years, Covid-19 has massively disrupted shipping on a global scale. This came at a time when at-home coffee consumption was surging.
Altogether, this has meant that actors all across the entire supply chain, including roasters, traders, and producers, have all had to take greater care managing their stock levels.
“Ecommerce software needs to provide the most relevant information that we have on our coffee inventory,” Jolene adds. “If a coffee moves too quickly, the technology has to be able to adjust inventory levels before a customer buys the next batch of coffee.”
However, as these technologies become more advanced, they are likely to be far more accurate and efficient than any human. Eventually, purchasing green coffee will become easier and more flexible.
Furthermore, coffee businesses based at origin may see the potential to improve their market access and reach more international customers.
In an ever-growing digital marketplace, it’s essential for roasters, traders, and producers to remain competitive. Understanding how to successfully navigate the ecommerce sector will only serve to do so.
Ultimately, for the handful of coffee brands who haven’t already started moving towards ecommerce, it is soon likely to be more than an edge. In time, customers and consumers alike will come to expect it as standard.
Enjoyed this? Then read our article on ecommerce & coffee in China.
Photo credits: Mercon Specialty, Bean Box
Perfect Daily Grind
Please note: Mercon Specialty is a sponsor of Perfect Daily Grind.
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