Over the years, farmers have always been on the short end of the value margin in the agriculture and food supply chain. They have suffered gross margin erosion due to the increased number of middlemen in the supply chain, reducing their earnings per dollar.
The middlemen in this scenario are grocery stores and food manufacturers who pay farmers less than the retail price for their products and sell these products at higher margins to consumers. As a result, farmers have been forced to sell their products at lower prices than they would like. This has led many farmers to look for ways to escape this system and connect directly with consumers.
The Farmer’s Direct-to-Consumer Movement
In the last few years, there has been a movement among an increasing number of farmers to sell directly to consumers.
The rise of direct-to-consumer (DTC) sales has been a game changer for farmers and consumers alike. Farmers can sell their products directly to consumers, cutting out the middlemen in the supply chain while earning higher margins, and consumers get access to higher quality and fresher products.
This direct connection between producers and consumers has allowed many farmers who have a hard time making their business profitable in other systems to thrive.
Drivers of the Farmers Direct-to-Consumers Movement
Farmers selling directly to consumers is a growing trend and one that is making farmers more money than ever before. The USDA is projecting a record high for farm income in 2023.
There are many reasons farmers are opting to sell directly to consumers. Some of the most common include:
Change in Consumer Behavior
Consumers are demanding more local, healthy food than ever before. As a result of this demand, there has been an increase in farmers’ markets and CSAs (Community Supported Agriculture). Farmers who want to sell directly to consumers can take advantage of these trends by selling their products at farmers’ markets or through CSAs.
Farmers desire to control the Price and Quality of their products
Farmers want to control the price of their products and how they are sold. Selling directly to consumers allows them to set their prices for goods rather than rely on middlemen who take a large cut. This allows farmers to make more money per dollar of products sold, driving many to choose direct marketing over conventional sales channels.
Customer Focused Service Delivery
In addition to seeing an increase in revenue and profit, the need for a more customer-centric service experience is driving the shift to direct marketing channels. Farmers want to engage directly with their customers so that they can receive feedback on how their products are being used, and they use this data to improve their practice.
Adoption of Technology
The increasing acceptance of technological concepts like eCommerce, social media marketing, etc. is also driving the shift to direct marketing channels. Farmers are adopting technology at a faster pace than ever before, allowing them to engage directly with their customers and fans through digital channels.
Online marketplaces such as Local Chow are one among the digital channels farmers are using to directly connect with their customers.
The Benefits of Direct-to-Consumer Sales for Farmers
Direct-to-consumer sales provide several benefits to farmers, including:
- Increased Revenue: By selling directly to their customers, farmers can increase their revenue by as much as 50%.
- Reduced Overhead Costs: By eliminating the middleman, farmers can reduce overhead costs and increase profits.
- Improved customer loyalty: Customers who buy directly from the farm are more likely to be loyal and return.
- Market Research: Direct-to-consumer sales allow farmers to hear directly from their customers and gather feedback on how they can improve the quality of their products.
- Improved Customer Experience: Customers who buy directly from the farm can enjoy a more personal relationship with their farmers and get access to fresh, high-quality products.
- Improved Farm Reputation: By selling directly to customers farmers can build a reputation for their products and brand.
- Increased Flexibility: Selling directly to customers allows farmers to sell when they want and how they want.
- Improved Farm Efficiency: By selling directly to customers, farmers can reduce costs associated with marketing and distribution.
- Reduced Risk: Selling directly to customers reduces the risk of spoilage and waste by allowing farmers to sell only what they can produce in a given season.
How to Join the Direct-to-Consumer Movement
As direct-to-consumer sales are on the rise, farmers are using different methods to sell their products directly to consumers. While significant sales are happening through farmers’ markets and CSAs, farmers are increasingly adopting online marketplaces like Local Chow. This is because technology platforms like these help them reach more customer base in less time and with fewer resources.
To sell on Local Chow’s online marketplace farmers can take the following steps;
- Download the Local Chow mobile app, sign up for free, and create an account.
- Once approved, they can then list their items for sale on the marketplace and set prices and availability. Local Chow takes care of all aspects of selling, including listing management, inventory tracking, order processing, and payment processing.
- As soon as they have their store up and running, they can start selling products on Local Chow’s marketplace.
Farmers must be able to provide high-quality, fresh produce. To ensure the highest quality, Local Chow carries out preliminary vetting and requires all farmers to provide only quality goods. So that when customers buy from a farmer on the platform, they can rest assured that they adhere to strict safety standards and are committed to producing the best food possible.
Direct consumer sales are growing fast in the U.S
Direct-to-consumer sales are on the rise in the US, and agriculture sales are increasing overall, with farmers reporting higher sales from direct-to-consumer channels than through the traditional wholesale supply chain.
While it’s tempting to chalk this up as just a win for small farms, it’s an indication that Americans are changing their shopping habits and becoming more interested in local food systems. Farmers who are seeing this trend are seizing it and leveraging platforms like Local Chow to grow their farm sales and boost the food supply chain of their local community and the nation.