In this episode, Andy & Lindsey sit down with Chelsea Ford, a seasoned CPG expert, to discuss how smaller CPG brands can compete with the larger, well-established brands in the industry. With a wealth of experience in the food space, Chelsea shares valuable insights and strategies for small brands looking to succeed and stay profitable in a competitive market.
She discusses the key factors you consider around pricing strategy, offering different prices or promos to different channels, and strategies to stay competitive without losing your shirt when selling online.
Chelsea also talks about the state of women in food businesses. This interview is a must-watch if you’re a smaller CPG brand looking for actionable advice on succeeding!
Find Chelsea here:
Chelsea Ford, Females in Food founder, joins Andy and Lindsey to talk all things e-Commerce, DTC, and food & drink. Chelsea is the host of the Foodpreneur podcast and creator of the Foodpreneurs Formula Coaching program.
Chelsea got her start on the “big end of town” with companies like Hyatt, Sara Lee, Nestle, and Kellogg, but her values stopped being in alignment with theirs. She started realizing that consumers were starting to – like her – follow their hearts more. She started Females in Food to support female food entrepreneurs as they build their businesses and put more money in their pockets for every product sold.
You have clients in different markets, like the U.S., Australia, and the U.K. What can you tell us about the differences between these markets? Can you tell us about your global experience?
I’ve lived and worked in the U.S. and Canada, as well as Japan, India, Singapore, Indonesia, New Zealand, and the U.K. And there are differences, but I think people would be surprised to learn about all the similarities. If we had more realization around that, perhaps we’d be better at empathizing and supporting each other.
I’m an authority on females in food and drink at the smaller end of town. I can say that English people, British people from the U.K. are incredibly polite, don’t color outside the lines, or really understand challenger brand marketing and comms very well. With Americans, I’ve noticed that they are not as confident as the world seems to think they are. There’s a lot of imposter syndrome. But I can also say that imposter syndrome is pretty universal among women. People in America have to be really sharp because the competition is so great. But there’s also a large opportunity there due to the free market.
Though there’s a lack of opportunity to understand the different sales channels and stick to their knitting; staying focused on specialty retail, food service, or DTC. There’s a lot of DTC happening in America, but because of the size of the market, it’s difficult to make it in DTC in Australia.
I also think there’s a lot of spaghetti being thrown at the wall to see if something sticks, not being clear around channel strategy. Australian women, women in America, and other places need to be clear on their channel strategy and open their eyes to what’s available. I think people can be very blinkered, having a focus on wanting to get into a specific store. There are opportunities and similarities across all markets.
When you first start working with a new brand, what are some of the major things you take into account when you start thinking about pricing strategy?
Channel focus is a big one. How does your channel work? How are you going to market? How much is that going to cost in terms of resourcing time and money, the two most precious things for all small businesses? DTC seems very attainable and easy. You set up a market stall or sell online and attract a customer. They purchase the product and you deliver the product. But, as we know, that value chain of attracting your customer to your site, the customer experience within your site, the purchasing of the product, and the picking, packing, and shipping is quite complex and really tiring.
I look at have they done the pricing backward from the postage, packing, and shipping. That’s all labor and materials. One of the biggest things I see is that people at the small end of town don’t charge for their labor. We have to look at the capacity to deliver, because the making, baking, crating, picking, packing, and shipping are a lot.
If you’re selling online, you have to drive people to your site and you want to keep them there. You want them to come back, so it has to be sticky. And that value proposition you provide, price is only part of that, the user experience is also part, and so is being part of a tribe.
This is a bit older data point, but I’m going with it. It’s around 25 times cheaper to keep a client than it is to find a new one. You have to drive people to your e-Commerce store and then you have to sell to them. If you’re a values-led or values-aligned business, the product still needs to be desirable and tasty, as well as look beautiful.
You build a tribe with your tone of voice, your brand. There are elements of your brand, perhaps unwritten, that we all buy into. I think the younger generations want that more than ever.
What would you say to these brands who are seeing the big guys take up so much space on the shelves and feel like they’re fighting alone? What drew you from the big side of town to the small side? And what is so compelling about small food brands?
The big end of town, for so long, has been destroying our planet with packaging. We have packaging covenants and the intent from the big companies to do something different. But I only see it starting now and it’s not across the board. What drew me to foodpreneurs is values alignment, passion, and creativity.
As far as shelf space, that’s the way of the world. They’re the ones who can afford the bigger listings and the biggest point of sale. Most of the foodpreneurs I work with don’t do it for the money. For me, as their coach, I have to educate them on how to do something that’s not their first intention. Not mine either. I’m not driven by the money; I’m driven by the beauty. That’s the shared heart space; I just want to see them do well and make a greater impact. Whatever it is for them, I just want to see them live life on their own terms. That’s what’s important to me. That’s why I do what I do.
Andy: It’s so exciting to hear you talk. You’re giving them the tools they need to give the big guys a run for their money. They now have the resources to take on this fight. I also think it’s exciting that they are shaking up the market and making it more values-driven.
Chelsea: Many foodpreneurs think of sales as an afterthought. It’s very scary for them. I give them solutions around story-telling.
Andy: It’s tough to compete, especially talking about price and margin. You can’t undercut the bog brands on price. That’s why we love the e-Commerce channel so much. It allows brands to differentiate a little more. First, they have more space to tell their story. It’s no longer just a label on a box. There’s a whole website to run through your products, your mission, and your background. You’re also not just sitting on the shelf next to your competitor. The website eliminates the price comparison. With a website, you’re giving great value, building a tribe, providing a great product, giving back to the community, and these great things the brand is doing. Now they can charge the proper price while they’re differentiating themselves.
Chelsea: I love how you talk about telling stories. You can talk about recipes and other uses for your product on your website; you can’t do that in a store. There are also combo deals you can do on your site; a bundle of products that make sense together. You’re creating the user experience; the know, like, and trust factor.
When you are working with brands in both channels, retail stores, and e-Commerece, how do you advise on that? Would you have a different pricing strategy of different prices for different people in different places?
You can’t undercut your wholesalers. In building your wholesale business, you can really only have the one price facing forward and behind the scenes. In retail, you can’t dictate the price, but your wholesale price does have to have a degree of benchmarking; you can’t undercut your wholesalers. If you’re a new foodpreneur and you’re in multiple channels, I’d ask you to rethink that. I have this model I call the five ones:
- Choose one target market and be really clear on them; do your avatar research. It’s not you. Many founders, around 41%, describe themselves because they’ve created a product that solves a problem for them.
- Choose one sales channel: retail or e-Commerce, etc.
- Choose one marketing channel, like Google ads.
- Chose one category.
- Do all of that for one year.
Get really tight on those. Then once you’ve got all that running smoothly, you’re ready to take on another channel.
For pricing, consider bottom-up or backward pricing. Make sure to include all the elements.
Andy: We sometimes try to push in the opposite direction in terms of selling for a higher price on your website, finding other ways to bundle products differently, or adding a subscription. On the e-Commerce side, you’re dealing with shipping, marketing, and paying for all of your own advertisements. See if you can get creative and differentiate your products across different channels without undercutting.
Chelsea: I love the idea of bundling so you can’t really compare apples to apples. You might even have online products that aren’t available anywhere else; exclusive to your site.
Andy: I love the idea you brought up a few minutes ago about your five ones. One thing we see with brand new entrepreneurs is trying so many different things and then saying that nothing’s working. Let’s try one thing, the one most likely to work, and see that through. Then move on to the next thing. That shiny object syndrome gets a lot of new folks stretched too thin.
Chelsea: It’s an art to have a strategy. Stop, read, reflect, and have a think about where you want to go. Where are you steering your ship? Your business? Then set yourself up for success. I understand the throwing spaghetti at the wall factor. You’re trying to make money. You’re hoping against hope that whatever sticks will be making you money so you can continue. You don’t want to go back to your day job or pick up more hours at a job you don’t want to do. You want to live your best life in your business and be your own boss. I strongly encourage people to sit in that uncomfortability and the not knowing. Take risks, but do it in an educated fashion. There are plenty of Facebook groups and chats where you can ask questions and set up that strategy.
It doesn’t matter how small or big you are, those five ones are good business strategy. Ultimately, you know you’re going to expand and not just have one product category, but get really clear on your first product category, your target market, your sales channel, your marketing channel, and your time frames.
Andy: I think that’s a great place to tie this together for today. What you’re saying is to make sure you’re super clear on your strategy. That’s one of the biggest things small brands can do as they come in and turn their passion into a successful business and compete with some of the big guys. Was there anything else you want to touch on today, Chelsea?
Chelsea: You know, Andy, there’s absolute beauty in so many e-Commerce brands. The most beauty I see is those who have compelling photographs, key messages, and marketing messages. Create your user experience; be your own customer! Ask your “friendlies” – the people you trust to give honest feedback – to go through your experience and give that quality feedback. Then listen to their answers. Thank you for having me today!