University of Maryland Extension

Direct marketing alternatives

Author: 
Ginger S. Myers, Extension Specialist, Marketing, University of Maryland Extension and Kim Rush Lynch, Extension Educator, University of Maryland Extension

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 Roadside stands can be convenient for both producers and customers. But be sure to check local zoning and permitting rules. Photo by Edwin Remsberg, © University of Maryland—AGNR Image Library
Figure 4: Roadside stands can be convenient for both producers and customers. But be sure to check local zoning and permitting rules. Photo by Edwin Remsberg, © University of Maryland—AGNR Image Library

Using a direct marketing outlet allows growers to capture the retail dollar that consumers pay at other markets. To receive prices similar to those at retail outlets, growers must provide the same services as other retailers. Consumers, on the other hand, purchase from direct markets to buy high quality fresh fruit directly from producers at competitive prices. Locally grown foods and products are now unique and "special" to consumers simply because, by buying direct (e.g., local), consumers feel they can short circuit the industrial production and distribution systems, a source of food safety concerns and debatable production practices. The popularity of “local” is based on authenticity – real products, from real farmers.

Farmers' markets

Farmers' markets are an increasingly popular form of direct marketing. Farmers' markets differ from other direct marketing operations in that growers share insurance, advertising, and other marketing costs. Successful farmers' markets are very helpful in increasing the incomes of the vendors who participate in them. Maryland now has farmers’ markets operating in every county and the City of Baltimore.

Producers who utilize farmers' markets usually fit into two categories: commercial (full-time) growers or part-time farmers. Full-time growers use the market as an alternative market or, in the case of the part-time farmer, as a viable market outlet. In order to participate in a farmers' market, producers need transportation to the market site, selling tables, a cash box or register with change, price display signs, signs for any applicable certifications such as organic, various containers, certified scales or other measurement devices, and sales people.

Producers should carefully plan production of crops that are to be sold at a farmers' market. They should try to grow a wide variety of crops for availability as early in the season as possible.

Major advantages to producers who sell at farmers' markets include:

  • Producers have limited liability for customers since they are not on the farmer's premises.
  • Parking space, restrooms and other facilities are not the farmers responsibilities. These facilities are provided by the market.
  • Attracting customers is a function of the market and farmers do not have to worry about advertising individually.
  • Many markets accept federal food assistance benefits and have matching programs that allow low-income customers to purchase more with their benefits.

Some of the disadvantages include:

  • Time required to transport and sell at the market takes away from the farm operation.
  • Market hours are controlled by the policies set for the farmers' market which may not be ideal for individual producer. Also, advertising, or lack of it, is controlled by the market.
  • Markets that are poorly located may not attract consumers and peddlers may operate to depress price.
Figure 5 The variety of produce supplied in a weekly CSA share is one of the big draws for customers, and one of the big challenges for producers! Photo by Edwin Remsberg, © University of Maryland—AGNR Image Library
Figure 5: The variety of produce supplied in a weekly CSA share is one of the big draws for customers, and one of the big challenges for producers! Photo by Edwin Remsberg, © University of Maryland—AGNR Image Library


Community Supported Agriculture (CSA)

Community Supported Agriculture (CSA) is a term that has come to describe a variety of direct marketing model with certain common characteristics, including:

  • Emphasis on community and/or local produce
  • One share is generally enough to feed a household of four or more.
  • Shares are paid in advance by subscribers, providing farm capital for spring start-up costs.
  • CSAs helps build agriculturally supported communities.
  • Weekly deliveries or pick-up to members/subscribers.

CSA is a partnership between consumers and farmers in which consumers pay for farm products in advance and farmers commit to supplying sufficient quantity, quality, and variety of products. This type of arrangement can be initiated by the farmer (farmer directed) or by a group of consumers (participatory). CSA is sometimes known as "subscription farming," and the two terms have been used on occasion to convey the same basic principles. Subscription farming (or marketing) arrangements tend to emphasize the economic benefits, for the farmer as well as consumer, of a guaranteed, direct market for farm products, rather than the concept of community-building.

Most CSAs offer a diversity of vegetables, fruits, and herbs in season. Some provide a full array of farm produce, including shares in eggs, meat, milk, baked goods, and even firewood. Some farms offer a single commodity, or team up with others so that members receive goods on a more nearly year-round basis. A typical CSA will grow over 30 varieties of crops and harvest at least 7-12 crops per week!

Good communication is a hallmark of many successful CSAs. Many include recipe ideas with their weekly deliveries, especially early or late in the season when cool-season crops (beets, turnips, kale) are harvested. These crops may be unfamiliar to many consumers, who may be waiting for more familiar later-season crops. It is common for CSA farms to issue a newsletter in each share. The newsletter can provide facts about the farm, as well as update members on how the season is progressing and how the various crops are shaping up for harvest.

General advantages CSA operations for producers include:

  • Guaranteed market
  • Advanced payment provides working capital
  • Allows better off-season planning
  • By tailoring production to the market, greatly reduces crop waste
  • Containers are re-used until they wear out.

Potential disadvantages to the producer are:

  • Must educate consumers to eat seasonally
  • Added labor of packaging and delivery
  • Weather challenges
  • What to grow/varieties − you like “big” sizes but customers want “small’
  • Must be a “people” person

Selling on-line, a 24/7 opportunity

The USDA’s first survey of Local Food Marketing Practices, conducted in 2015, found 167,009 U.S. farms sold $8.7 billion in edible food directly to consumers, retailers, institutions, and local distributors. Consumers accounted for 35 percent of these direct food sales, and retailers, 27 percent. Direct farm sales include both fresh foods and processed or value added products such as bottled milk, cheese, meat, jam, cider, wine, etc.

Although 73 percent of all farms in the survey reported internet access, only 8 percent sold product via on-line market places. Not too long ago, access to reliable internet service proved to be a barrier to on-line sales for farms in different parts of the country but, since three-quarter of the farms responding to the survey had access, that problem can’t be the deterrent any longer. The popularity of sites like Amazon, countless retail sites, and the annual “Black Friday and Cyber Monday” shopping seasons, attest to the potential customer base that exist for on-line sales. So why aren’t more direct marketing farms selling their products through on-line sales channels and engaging in e-commerce?

Electronic commerce (e-commerce) is a transaction for goods or services enacted on-line. It could be the sales of products, reservations, or providing a service all simply paid for on-line. E-commerce can be an attractive and very cost effective way to allow customers to shop anytime, anywhere, and on multiple devices. It can also allow you the flexibility to fulfill orders on your own time schedule. But like any other marketing channel, you need to consider both the positive and negative impacts launching on-line sales can bring to your business.

You should consider:

  • What on-line tools will I use (e-commerce, website, social media, e-payment gateway, etc.)?
  • Do I want to offer shipping and if so, what are the charges and carriers for that service?
  • How will I promote my on-line sales?
  • How will I accept on-line order and payments?
  • What procedures will I need to implement to get orders processed quickly and efficiently?
  • What’s my costs/benefits equation?

A major component of e-commerce, and the one producers often reference that challenges them the most, is the need for customers to be able to make a payment on-line. Electronic methods of taking payments are called “gateways.” The most common gateway is credit card processing. Third party merchant accounts are very secure but can be cost prohibitive for small businesses. Alternatives to a merchant account are Person-to-Person (P2P) payment services. These keep track of funds available to both the buyer and the seller. The buyer and seller (or service provider) both need to have an account with the P2P service. The most popular P2P service is PayPal, but others are now gaining market acceptance. On-line payment options are a must when considering developing your on-line store.

“With 90 percent of all online purchases made with credit cards, you literally cannot afford not to add this payment option to your site. If you've been hesitating to accept credit card payments online, the good news is that, as soon as you give your customers this option, you should see a noticeable jump in sales.”

Corey Rudl, Payment Options for On-line Shoppers, Entrepreneur

Setting up and operating an on-line store for your products or services is a big job, but it can have big returns for your business. Internet sales are only growing, not contracting. If you think e-commerce is the next step for your business, here are some basic pieces of infrastructure you’ll need to develop. Don’t think you have to go it alone. Hire the technical assistance you need.

  • WEBSITE
    A website is the cornerstone for a farm’s online presence. Not having a website is like not have a phone number.
  • SHOPPING CART SOFTWARE
    When offering multiple items on-line, a shopping cart helps. Check with your web hosting company or e-commerce platform provider to see what they offer.
  • PAYMENT PROCESSING
    Figure out how you’re going to take payment on-line.
  • EMAIL SUPPORT
    You’ll need to have an email address where customers can contact you if something goes wrong, they want to change their order, or arrange for pickup.

Setting up an e-commerce store doesn’t need to be overwhelming as long as you’ve done your research and made informed decisions. Additional resources and publications supporting direct marketing opportunities are available on the University of Maryland Extension Agriculture Marketing website: https://extension.umd.edu/agmarketing

Best practices when working with chefs

If possible, dine at the restaurant you want to sell to so you can experience their menu and their facilities.

It would be a good idea to market to chefs before planting but this doesn’t work unless you have photos or samples from storage. Your first contact with a chef may be just to gauge if they are interested in purchasing directly from a farmer.

Don’t just show up at their kitchen door with your products. Call ahead and make an appointment. If you don’t know who to ask for, request the Executive Chef. Don’t call between 10:30 AM and 1:30 PM, this is their busy time of the day. The best time to call is between 2:00 PM- 4:00 PM.

Show up on time for your appointment. Bring two samples of each item you would like them to consider. Bring your best products and do not charge for them.

Have your logistics in order. How will you bunch, pack, or case a product? Know your product- organic, sustainable, hormone and antibiotic free, how was it grown? Be able to tell your story. Bring your business card and contact information along to leave with them.

Have your invoicing and payment terms in writing and agree on a payment schedule or C.O.D. Discuss the need for a delivery charge on less-than-minimum orders, and the need for on-time payment. Ask what the restaurant's normal billing schedule is. Two weeks, 30, 45 or 90 days is common; can you live with that? Be sure your pricing still leaves room for the chef to make a profit.

Don’t make promises you can’t keep. Don’t make promises you can deliver on Saturdays when you can’t every Saturday. Or promise you’ll have asparagus until middle to late summer. Be honest, be clear. The chef knows if he’s worked with farmers, whether it’s produce or livestock, that prices fluctuate. Be honest and communicate. Communicate and be clear on what you’re able to do and how you’re able to do it.

Weekly or biweekly check-ins. Let them know about supplies as weather dictates. Whether it’s voice, text or email. It’s probably best to send a product list through text or email and not voice because a chef has something to go off of when it’s written down. Talking to farmers is great, but when it comes to product lists, it needs to be in a written format.

Since restaurants have limited cooler space, they require frequent deliveries and accept only limited volume per delivery. This means more invoices and paperwork.

Chefs need lead time. If they are aware of what you have and plan on it, they can get it on the menu and really showcase the items. If you show up with something new un-announced, it can be difficult.

Chefs want information about how to store and handle the products, shelf life, and ways in which the product can be used.

If you can’t make a delivery, the delivery will be short of the agreed upon amount, or product isn’t up to par, let the chef know right away so they have time to make menu changes.

Stay nimble with your products and in conversation with your chefs. What is a “hot” item this year may be different than a newer request for the next season. Be ready to source new varieties of seeds or meat cuts to keep up with chefs’ menu changes.

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