Maximizing all Direct Retail Sales Opportunities for Farmers
Small and Medium sized farms are BUSINESSES and must be run as a business. With the plethora of fantastically fun farmers’ markets springing up like wildfire, there is a sense of false security that direct retail sales, by being a vendor at a farmers’ market, is the best and most valuable avenue for generating business profit from your farm.
Smart farm businesses diversify their sales mix to add on other forms of profit generation to minimize the high risk of vending at farmers’ markets while still enjoying all the positive benefits that farm markets bring – direct consumer interaction, community involvement, business and branding exposure, and much, MUCH more!
Let’s start with some defining terms.
Direct selling is the marketing and selling products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales. A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."
Direct selling is distinct from direct marketing because it is about individual sales agents reaching and dealing directly with clients. Direct marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet. Direct selling often, but not always, uses multi-level marketing (salesperson is paid for selling and for sales made by people he recruits or sponsors) rather than single-level marketing (salesperson is paid only for the sales he makes himself).
Farmers’ markets are FANTASTIC opportunities for direct retail sales. The opportunity to create a community and directly interact with consumers is unparalleled. As with all retail sales mixes, direct consumer engagement is fundamentally the most important as it allows consumers to engage directly with your farm’s brand, personality, and business ethos. The downside of direct selling at a farmers’ market is that it is the most variable of all retail sales outlets, and therefore carries the most profit risk.
Overlooked Direct Retail Sales Opportunities
One area that small farms seldom engage in direct selling is via the multi-level marketing route – an equally viable, and extraordinarily clever way of increasing retail sales. As this is an ancient form of sales, but completely misused by farming and agricultural operations, creating multi-level marketing venues would work extremely well as a profit generator.
Secondly, another form of retail sales that is completely overlooked by farms is franchising. Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building 'chain stores' -- or in this instance “chain farms’ or ‘chain farmers booths at retail markets’ to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.
I can’t wait to see the creation of farm franchises among small to medium agricultural producers. The large corporate farms use this model all the time! Just look at Tyson! There has been a lot of research done about franchising dairy farms, but what about fruits and vegetables? In addition to other farming operations that could be franchised to produce specific products like mushrooms or heirlooms, non-farmers such as backyard gardeners, Master Gardeners, and Community Gardeners could all be franchisees of a viable small farming operation. The buy in? More stable and more profitable than selling CSA shares!!!!!
Creating 4 Sales Channels for Solid Agricultural Sales: the proper product mix for an agricultural business is to mix and have all 4 modes of profit activities: Direct Retail Sales, Indirect Retail Sales, Wholesale Sales, and Partner-Profit Sales.
Diversifying your Agricultural Sales Mix Blog Series
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