As more consumers continue to move online for their shopping needs, some producers are looking at eCommerce as an extremely viable market for their produce. Data from eMarketer suggests that online food and beverage sales will grow to nearly $20 billion in 2019, making it the fastest-growing sector of internet sales. President of eCommerce Services for Advantage Solutions, Robb Powell explains that there are different types of online retail available to sell and market goods.
“It starts at the base with what’s called DTC, or Direct-to-Consumer. Almost always that means from your own brand site to a consumer,” said Powell. “Somebody comes into X-Y-Z.com, they order something and you’re doing all the shipping, all the fulfillment, all the customer care.”
The next step up would be Third-Party Marketplaces, with the largest being Amazon. A producer provides a percentage of sales to allow them to use the platform as a point of sale. “In effect, you’re renting space on a marketplace, no different than if you are renting space in a stall of a farmer’s market, or in a strip mall for a retail footprint,” Powell noted.
Continuing up the scale would be what Powell calls “1P” or First-Party sales. This type of online sale is most similar to traditional retail, in which the retailer is essentially responsible for the sale of the product and not the producer. Amazon is projected to account for a full third of online purchases of food and beverages in the U.S., but retailers such as Walmart, Target, and Kroger are also making inroads as First-Party retailers in the internet marketplace.
“You’re selling to Amazon, or Walmart.com, or Target.com, etcetera; and they’re buying it wholesale and they’re managing that sale which means they have that customer touchpoint,” said Powell. “As you move up that scale you get a little further away from the customer, but also in theory you have a bigger volume that’s going through that pipe.”