Sponsored story provided by Cropster.
Roasted coffee options for consumers are exploding online. Specialty coffee shops and roasters offer every coffee imaginable, supermarkets and big box shops offer everything from instant through beans to pods through capsules – often selling all manner of coffee devices alongside. There are even subscription services that send consumers a new coffee every week to help make breakfast even more interesting.
Business buyers are way behind this experience. Opportunities to search for commercial green coffee online are very limited and practically non-existent from a mobile device. Part of this is due to business buyers very specific requirements depending on their industry focus, location, size and existing relationships. But a lot of it is related to a seller model where offer sheets are vendor specific and normally only available as pdfs, spreadsheets or emails – formats every industry struggles to move away from. The advantages of moving are well established yet online shops and marketplaces encounter resistance in every market they touch. Green coffee is no exception. As the world’s second most traded commodity, coffee flickers across computer screens every hour of everyday. But good luck trying to buy a Colombian Caturra with floral aromatics and citric acidity online.
At Cropster we are very familiar with this challenge. As software developers, we are well versed in the technology behind online markets. Our focus on the specialty coffee market gives us a unique insight into this industry’s online needs. Cropster started with products to help farmers manage their farms and has moved into roasters, labs, traders and most recently into online shops and marketplaces. At every stage, the move has been in response to customer requests. Our latest move, Cropster Hub, has followed this same path. We have chosen to invest in this area based on extensive feedback from roasters, green coffee buyers and traders, all of whom see the benefits of online but not how to achieve it. As entrepreneurs and techies, we see compelling reasons for online shops and marketplaces in the specialty coffee industry. These include:
- Coffee buyers are getting younger – with the changing of the guard across an industry dominated by family businesses, buyers are getting younger and more internet savvy. In a 2015 report, IBM estimated almost 50% of B2B buyers are millennials. Pew research says over 50% of the US workforce are already millennials. Given the demographics of roasters we work with, we believe the buyers in this segment are already way past 50%.
- B2B buying is being consumerized – specialty coffee will go this way and early movers will gain a tremendous advantage. According to Forrester Research, 74% of B2B buyers research purchases online and 30% already complete half their purchases online. Green coffee buyers are buying everything from TVs to concert tickets online. They expect their B2B purchases to follow the same model. In many cases, they are delivering that experience to their roasted coffee buyers and they expect it from their vendors.
- Buyers increasingly prefer online purchasing models – Forrester Research and Internet Retailer surveyed B2B buyers and discovered something amazing. Over 70% said they preferred buying from an e-commerce site over buying from a sales rep. 93% of B2B buyers said they prefer to buy online once they know what they want to buy.
- Mobile commerce is the fastest growing sector of online commerce – vendors and buyers communicate daily via smartphones and tablets. According to Gartner in 2015, B2C on mobile devices already made up over 20% of online sales. Early movers in the B2B arena will gain significant advantages in the marketplace against ‘old tech’ like pdfs, emails and spreadsheets, all of which are difficult to consume on mobile devices.
- The cost of creating and running an online shop has dropped enormously – online selling has gone from a specialty operation requiring an in-house team of developers to an online service one can set-up in hours. If a person can email a picture or use a social network, they can setup a basic online shop. The trick now is where to build an online presence and specialty marketplaces are winning because that is where the B2B customers are looking.
- Buyers pay more for a great experience – relationship and brand loyalty are key parts of experience loyalty. One 2013 study (Avanade) showed buyers were willing to spend over 20% more for a superior online buying experience. One only has to think about the site they use to buy airline tickets or household goods to see this in action.
There are many traditional reasons to move online: reduced administration (updating an online offer sheet saves time for traders and buyers), speed to market (alerts can be set for price adjustments), automation of ordering, inventory management, etc. These are well-established business processes with compelling benefits for businesses where the product decays. Bottom line: specialty coffee sellers and buyers who recognize these benefits and take advantage of them will significantly increase returns and reduce costs.
So why is it taking so long? There are two challenges that we most frequently hear and they are common across many industries:
1. I could jeopardize my existing customer relationships by going into a marketplace.
This is a common fear that is unfounded based on extensive discussions with buyers. Buyers tell us repeatedly that they have multiple trader relationships and that they spend considerable time comparing across offer sheets in multiple formats before purchasing. Coffee buying is not Tinder but, based on our research, it is not the monogamous relationship sellers suggest exists.
2. Buyers could gather information from my shop and use it to negotiate or buy elsewhere.
This is a legitimate fear based on the fact that most online shoppers have done this. However, this simple selling truth has not changed – buyers search out easy and reliable buying models. Once they use them successfully, they are very loyal. One only has to look at the explosive growth of markets like Amazon, Alibaba and Ebay, or speciality ones like AirBnb, Etsy and MFG, to see this in action.
These issues sit in stark contrast to buyers whose feedback focuses almost exclusively on how time consuming it is to purchase specialty coffee compared to other products. Many successful green buyers have built complex systems and processes to enable them to search across traders. They are proud to show these systems but also quick to say these solutions are time consuming and lacking. Conversations always lead back to what I want is an “X” (Amazon, eBay, Etsy, Uber, etc.) for purchasing.
These contrasting experiences were the genesis for Cropster Hub – a site where green buyers can find unique coffees online, anytime. The site was built with sellers looking to gain an early mover advantage in the specialty coffee B2B space and buyers looking to reduce purchasing efforts and improve quality. In the months since release, Hub has led to the release of a number of new innovations specific to the specialty coffee industry. These include:
- Shareable offer sheets – allowing sellers to sell on Hub, their own site or any other site using a single offer sheet that is always up to date.
- Warehouse and location searching – giving buyers and sellers the option to see spot coffees, leverage existing shipping and storage models and limit relationships to their services areas.
- Simplified online auctions – allowing sellers to quickly and easily build an online auction with verified buyers, sample handling, etc.
- Free shop setup for sellers – making it quick and easy to build a shop and upload coffees with a concierge service available for larger sellers.
- Software connectors – enabling buyers and sellers to connect existing in house systems directly to Hub.
- Respecting existing purchase models – this is not a technology innovation as much as a process one. Hub allows buyers and sellers to connect, establish terms and move transactions off the market. This unique arrangement supports existing business models and relationships at both ends of the transaction.
These innovations, combined with a robust technological base and a growing number of sellers and buyers worldwide, are leading to accelerating growth on Hub. The platform is open for sellers and buyers to browse and includes all the tools necessary to establish an online presence or purchase in minutes. More Information.
Paul Bartholomew is head of marketing at Cropster, the specialty coffee market’s leading software development company. He has been helping businesses benefit from advances in technology for over 30 years.