EcommerceBytes-Update, Number 234 - March 01, 2009 - ISSN 1528-6703     4 of 8

Foodzie Whets Appetites with Gourmet Marketplace

By Greg Holden

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Word-of-mouth is building for the gourmet and specialty food marketplace called Foodzie. This endeavor has been online less than a year by three entrepreneurs who are in their twenties and all starting their first company. As such, it's a good example of a business that's facing some tough challenges. For one thing, selling food online has never been easy. (Remember Webvan?) And in these tough economic times, are people really going to pay $6.99 for 4oz. of ginger and pistachio caramels, or $99.95 for a box of olio and spices? How do you advertise such a site and keep it growing?

For Emily Olson and Foodzie's two other co-founders, Rob LaFave and Nik Bauman, the solution is to focus on the producers who create and offer their tasty and unique wares. By getting to know their producers and building up a strong selection of delectable offerings, they're certain the "foodies" will come.

"People still have to eat," she says. "We have researched how economic slowdowns affect small luxury items. People may not go out to eat, but they may buy a nice box of chocolates for $20. Everyone wants a little something special now and then."

Along with heirloom tomatoes and lots of chocolate products, she points out that Foodzie also offers $5 bags of heirloom popcorn, "a really nice product for a bargain price."

Foodzie.com doesn't handle the tricky business of packing and quickly shipping the precious perishables. Its producers act as drop shippers. Foodzie handles the presentation, marketing, and transaction processing so their talented cooks - who are often individuals or mom-and-pop businesses - can focus on what they do best.

Olson, 24, has always loved food and cooking. "My aunt cooked a lot, and I learned a lot from her," says Olson. She, LaFave, and Bauman all met on their first day of college at Virginia Tech University. Olson started as a major in communications, but soon switched to food nutrition. "I realized what I wanted to do with my life when I realized how much time I was spending cooking in the kitchen," she explains. "Going off campus and starting to cook for myself, I learned how much better and healthier I could prepare food. Whatever I did for a career, I knew I wanted it to be related to food."

She points out that LaFave, 26, and Bauman, 25, share her passion. "They are foodies as well. I would cook and we would all eat together."

After graduating from college, Olson took a job with Greensboro, North Carolina-based The Fresh Market, a specialty grocer with branches around the country. "Ours were the best quality products you could find, and I worked with buyers and the opportunity to taste a lot of food. I saw how many small producers were trying to get into Fresh Market and I knew how hard it was. I saw that simply having a great product was not the only way to get on the shelves - it was also packing, distribution, and price There were so many hoops to jump through that these products were not getting discovered by the consumer and just weren't getting on the shelves."

She brought the concept to LaFave and Bauman, whose skills balanced Olson's perfectly. LaFave had majored in business, Bauman in computer science. The three decided to create a new marketplace based on the model of Etsy (www.etsy.com), the marketplace for craftspeople. They decided to follow a drop-shipping model as well. That was in May 2008.

"Once we had the idea and decided we really wanted to do this, we had to leave our corporate jobs and structure our days so we could focus on Foodzie," continues Olson. They applied for a Boulder, Colorado-based program called TechStars, an investment fund that provides mentorship and seed money for startups. This incubator program selects 10 companies from around the world who apply to the program. TechStars provided the trio of Foodzie founders with business space in downtown Boulder and helped them get off the ground. "They taught us how to pitch and helped us get funding," she says.

Foodzie first went online in beta version in July 2008. The official launch was in December. In the past several months, Foodzie has received attention in the blog TechCrunch and the New York Times. Olson and her partners aren't flooding cyberspace with advertising. They're saving their money and focusing on providing desirable food products.

Foodzie is turning out to be a delicious place to work. Every day, packages with tasty things to eat arrive at the offices in San Francisco. "We do try to get to know every one of our producers," she says. "They send us a description of their business and the kinds of products they sell. They also send samples so we can make sure they produce a good quality product - so people can come to Foodzie and know they're going to buy something really delicious."

Along with getting to personally know sellers, Olson points to these other strategies for making Foodzie work:

  • Streamlining the purchase process, so it's as simple as possible to buy something on the site.

  • Giving sellers tools to grow their business and get data about how many people have visited their product pages.

  • Emphasizing the stories of individual producers so shoppers can find out who they are and what makes them special.

  • Involving themselves in the food culture and attending cooking classes, conventions and food-related events to build visibility in the industry and promote word of mouth advertising.

The last point is basic to understanding the appeal of sites like Foodzie. "We have really lost our connection to people who make our food," says Olson.

As an example, she describes one of the first producers on Foodzie, Leslie Cooper from Luca Chocolates. Her business is a one-woman operation; she produces made-to-order chocolates; she produces them only after receiving an order. "She didn't have the time to market her site; we have been able to do that. She has a "bacon box" consisting of chocolate covered bacon that has been selling like crazy. She began making it at a request from a blogger."

The biggest challenge facing Foodzie, according to Olson, is the need to create a platform where producers of specialty food can achieve success and grow their businesses. Another is to serve two constituencies - customers and producers - at the same time. To bring the two together, Foodzie plans to create user forums in the near future.

The thing that Olson loves best is discovering new foods. "Creating Foodzie, I was also a consumer. I realized I wanted to find these products myself. The ability to discover all these products is something we are really happy to provide."

Foodzie has set up a page where food producers can learn more about selling on the site. There is a 60-cent per transaction fee and a 20% commission fee on sales, but no other monthly fees or other fees to operate a store on Foodzie.


About the author:

Greg Holden is EcommerceBytes Contributing Editor. He is a journalist and the author of many books, including "Starting an Online Business For Dummies," "Go Google: 20 Ways to Reach More Customers and Build Revenue with Google Business Tools," and several books about eBay, including "How to Do Everything with Your eBay Business," second edition, and "Secrets of the eBay Millionaires," both published by Osborne-McGraw Hill. Find out more on Greg's website, which includes his blog, a list of his books, and his fiction and biographical writing.


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