In an ongoing blog series, we will explore how companies can endure the COVID-19 pandemic with innovative short-term tactics while also strategically planning for a post-pandemic business environment.
When Sam Lash, the director of operations and purchasing at Farm to Table, got to the office on the morning of Monday, March 16, the up-to-that-point theoretical threat posed by the coronavirus became a sudden, crippling reality.
“Before that Monday, I was optimistic that, like other outbreaks, it would be contained before it hit Texas too heavily,” Lash said. “You could say that outlook changed abruptly.”
The Austin-based wholesale business functions as the go-between for Texas farmers and restaurants in the Austin, Dallas, Houston and San Antonio metro areas. Restaurants and hotels generally place large orders on Sunday and Monday after the weekend rush. Lash said he usually wakes up to around 130 emails and 20 voicemails at the start of each week. The drop-off on March 16 was swift and significant.
“I walked in that morning and there were no voicemails, maybe 20-25 emails and a couple texts – mostly requesting order cancellations,” said Lash. “It was the absolute rock bottom. It was as far down as we’ve ever been.”
Like many U.S. B2B distributors in March 2020, Farm to Table saw an unprecedented drop in demand almost overnight. Adding to the stress was a warehouse stocked full of perishable items. Rock, meet hard place.
A Hard Pivot
Lash and his team changed course immediately. Recognizing that local grocery stores like H-E-B were quickly turning into coliseums of “competitive grocery shopping,” he saw an opportunity to deliver an alternative solution, right to customers’ front door. To do so would require a complete business model overhaul, at lightning speed, given the perishability of his inventory.
How do you turn a B2B wholesaler into a B2C home delivery retailer in under a week? With a lot of trial and error, and even more sweat.
“We started working 12- to 14-hour days, seven days a week, nonstop, because it was just pure chaos. We had no systems in place, no tech, no marketing in place. We essentially just said, this is our wholesale product list, now you at home can order whatever you want off of it. We soon found out the logistics (of B2C) are extremely complex,” said Lash.
To streamline order-taking and fulfillment, Lash simplified the menu and scrambled to stand up an online store. Farm to Table began offering two pre-constructed options, an omnivore box and a vegetarian box, with a la carte items that could be added to any order. As orders come in, the boxes are assembled each morning and one-off a la carte items (like a whole chicken) can be quickly pulled from inventory and loaded for delivery.
This one-two punch of technology and reimagined product assortment has led to a rush of orders. Even as he’s gone through a crash-course in the world of B2C customer expectations, Lash reports he is busier than he’s ever been. (In fact, he was personally making deliveries while fielding this interview.)
“We would not be where we are right now if it weren’t for the eCommerce site. We had our first conversation with a developer on a Friday night and we rolled out the site the next Friday. Before that, we were trying to parse together orders from email and had other people just emailing us about where they were supposed to make an order,” said Lash.
Cost and Pricing Implications
In addition to overhauling logistical and sales processes to serve a brand-new market, the company’s pricing approach needed to fundamentally change. For years, the commercial process entailed, at a high level: buying in bulk from farmers, reconciling new orders against a sizable inventory, fulfilling replenishment orders and delivering in bulk to each restaurant. Prices were highly negotiated in a slim-margin environment. While still making some lighter deliveries to restaurants, a vast majority of Farm to Table’s business is now being conducted via a published online list price.
The new normal has drastically changed the company’s cost basis, as it stocks less inventory and makes more frequent, smaller purchases from farmers to resell directly to consumers. Instead of buying one case of kale, Lash is buying one head of kale. Downstream, rather than selling 20 cases of New York strip per week to a single hotel, he’s selling cut strip steaks one at a time off the a la carte menu. Each individual farm purchase may cost less, but the increase in order volume and deliveries drives up the company’s labor and fuel costs. Lash and team find themselves suddenly navigating a far less price-sensitive market.
"Wholesale pricing is much more cutthroat (than retail). But with retail, you're doing way more work for the same dollar amount - so you better make more money on that dollar amount," said Lash.
Opportunity Awaits the Diligent
Businesses like this are proving during this crisis that understanding and communicating your value proposition, while being agile enough to make dynamic changes, makes all the difference. In this case, the company is selling a human necessity. Even when they can’t leave their homes, people need to eat. What Farm to Table realized is that it has the ability to deliver fresh, healthier food to people in their time of most dire need. Through word-of-mouth and guerilla marketing, the news is getting out.
“We’re getting emails from people saying things like, ‘I’m 70 years old, I’m running out of food and I can’t go to H-E-B and there’s a two-week wait time for home grocery delivery,” said Lash. “And here we come, with the healthy food people need, especially right now, and they’re telling us, ‘You saved me.’”
Not only is this gratifying, but it’s opened up a whole new realm of opportunity for the business. Lash said the company will continue home delivery even after restaurants re-open their doors. Through the eCommerce site and social media channels, the company is quickly building new customer relationships that it will nurture in the months and years ahead.
For this small business, it was never an option to let a crisis go to waste.
“We’ve poured so much blood, sweat, tears and anguish into this,” said Lash. “We just had to keep this thing alive.”
How has your business persevered in the face of the pandemic? We’d love to share more innovative and transformative stories like this one. Reach out here.