Perfect Daily Grind: The rise of ecommerce in the coffee industry
Between 2014 and 2021, global e-commerce sales grew by over 269%. According to Statista, by 2027, the global e-commerce market will be worth almost US $7.4 billion.
This figure has 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 e-commerce platforms.
To learn more about the rise of e-commerce 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 how e-commerce has become more prominent across the sector.
What is e-commerce?
E-commerce 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, e-commerce 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 that businesses must contend with as far as e-commerce 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 andenough information on the product itself so that consumers can feel informed.
Jolene explains why e-commerce has become so popular in the coffee industry.
“E-commerce 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 e-commerce evolve in the industry.”
E-Commerce in Coffee
There’s no doubt that the coffee industry has grown exponentially over the past couple of decades. This includes the e-commerce market.
According to sales figures from Amazon, coffee was the most popular food and beverage category in 2018. That year, Amazon’s coffee sales alone totaled 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.
Roasters
Matthew Berk and his business partnerlaunched 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 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 grew.
“The business didn’t grow how 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 educate less-informed consumers constructively. E-commerce platforms can provide all the necessary information about coffees – including tasting notes and roast profiles – while offering an efficient, streamlined user experience.
Traders & producers
Navigating e-commerce can be more difficult for those making commitments to purchase or sell more significant amounts of coffee, such as traders or producers. These B2B marketplaces are often not as well-developed or prominent as B2C e-commerce 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 e-commerce 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 purchase.
“We follow the same protocols when we send out green or roasted samples to customers,” she adds. “We can 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.
“E-commerce allows us to trade with smaller roasters,” she says. “If a roaster wants to buy one bag or container, it equals the same transaction time. If we can automate the process, we can sell coffee to more customers across the board.”
Why has e-commerce become so popular?
Coffee consumers increasingly demand convenience, and e-commerce is an excellent way for businesses to offer it.
Finding coffee that suits their taste preferences can be challenging for consumers, especially when looking for sustainably and ethically sourced beans. E-commerce platforms allow consumers to purchase coffee more efficiently while ensuring they receive all the necessary information.
Much 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 crucial. Statista estimates that by 2027, nearly 7.7 billion people worldwide will have a smartphone – with the US, China, and India having the highest volume of users.
The world is only becoming more and more digital. Selling coffee online is now necessary for any roaster or trader, and it’s becoming increasingly important for some producers.
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 option but to turn to online coffee sales in the UK and other countries.
Through e-commerce, 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 shipped coffees to all 50 states.”
Craig Russell explains that Mercon’s e-commerce 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 e-commerce?
Online coffee sales will only grow as the world becomes increasingly digital. But how might e-commerce in coffee develop in particular?
Craig says that he thinks 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 complete transition to online sales for large roasters can be a logistical minefield, especially when dealing with significant volumes of green coffee. It can also be an extensive process, with payment plans negotiated accordingly.
Addressing challenges
“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 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 across the supply chain, including roasters, traders, and producers, have all had to take more excellent care managing their stock levels.
“E-commerce software needs to provide the most relevant information 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 will likely be far more accurate and efficient than humans. Eventually, purchasing green coffee will become more accessible and more flexible.
Furthermore, coffee businesses based in origin may see the potential to improve their market access and reach more international customers.
In an ever-growing digital marketplace, roasters, traders, and producers must remain competitive. Understanding how to navigate the e-commerce sector successfully will only serve to do so.
Ultimately, it will soon likely be more than an edge for the handful of coffee brands that haven’t started moving toward e-commerce. In time, customers and consumers alike will come to expect it as standard.
Have you enjoyed this? Then read our article on exploring trends in experimental coffee processing.
Photo credits: Mercon Specialty
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Please note: Mercon Specialty is a sponsor of Perfect Daily Grind.