The Gift That Keeps on Giving

by Adam on December 19, 2012

With the holiday season upon us, I’m looking ahead to Christmas and trying to wrap up the last of my Christmas shopping (relatively soon, if possible, as the day is fast approaching). In looking to offer a variety of gifts under the tree, I realized how many people in my life truly enjoy and appreciate (and want to share) good food. Indeed, more and more of the gifts I’m giving this year are gifts of food and I’ve tried to find ways to offer new and different items to family and friends in that vein.

One of the relatively new developments in the food/entrepreneurship world is the trend towards companies that offer mail-order delivery of food from artisan producers. Some of these companies have packages available for one-time delivery (Eat Boutique is a great example in Boston, which has grown incredibly well both through the mail-order business and the in-person events), others offer monthly subscription boxes where users can receive 4-6 different sample items from a variety of producers. Foodzie was perhaps best known for this, billed as an “Etsy for food.” In a testament to the model (or not, depending on how you look at it), the company was recently acquired by Joyus.com

In recent months, I’ve seen other models where users can sign up for a monthly food subscription service, and indeed I myself signed up for a Foodzie box about a year ago. I found the experience to be a balance of emotions. On the one hand, I always was very excited for the serendipity of the experience. On the other, there were always 1-2 products I just didn’t like. And this is the first point in the model where things start to breakdown. Foodzie was charging $20/month. There are others out there, such as Gourmet Spotting, The Missing Ingredient and others that are charging more. But even at $20/month (or $20/box, which is essentially the same thing), I felt a certain pang of disappointment whenever even 1 of the products was not of interest. These are small samples by the way, so at $3+ each for 6 samples, the value you get from that box matters.

I think this is an interesting business model though, one that caters to a growing number of informed food lovers who want to discover new products (and also plays to the locality of product sourcing). But, I’m not sure how it will actually play out in the days ahead. Walmart is now moving into this space, and depending on how well they perform and source products, they could be a category killer given the breadth and depth of their distribution network (and also because they could operate the business at a loss without much issue, at least in the beginning).

The biggest challenge for new businesses in this space is much more about logistics than anything else. If you offer a 6-item tasting box, how does that box get assembled? Foodzie was taking the product into their offices and assembling 5,000+ boxes per month, not exactly a scalable business model (especially when you consider that the producers all had to ship the products to Foodzie first and then Foodzie had to turn them around to consumers). But, the alternative is allowing the producers to ship them directly, and a consumer ends up with 6 packages on their doorstep. Not necessarily efficient.

I like the idea, and I do hope that it’ll help to open up more opportunity for food discovery and also producer/consumer connection, but as with all things in business, it comes down to the dollars and cents of each model.

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