Progressive Grocer - December 2008 - (Page 42)

Wake-up call Tough-love tips on smart retailing The ballad of The Egg Man A young food-retailing entrepreneur breaks into the business, and in the process reminds us all of the fundamentals for success. By David Diamond t the start of this past summer, my 15-year-old son Ted decided, after discovering conventional jobs were not to be had, to start a business, and since he’s my son, he got himself into food retailing. Each summer we decamp from our home in New York City and head about 70 miles north to our weekend home, the village of Pawling in largely rural Dutchess County, N.Y. There, we’d become big fans of farm-fresh eggs. Several small farmers within a few miles of our home were glad to sell us their extra eggs for about $3 per dozen, and we started routinely bringing them back with us to the city each week. This was the seed for Ted’s business idea. One day, as he passed through the Union Square Green Market near our city home, he noticed farmers selling fresh eggs for $7 per dozen. It struck him that if he could buy eggs by the dozen for $3 in Pawling, and sell them for $7 in NYC, that would be a profitable business. And if lots of people were willing to pay $7 for farm-fresh eggs at the Green Market, then at least some of them might like to have the eggs delivered to their homes, and might pay more than $7 for that convenience. Hence, Ted became The Egg Man. After emailing just about everyone he (and his parents) Valuable lessons Of course, how to transport 15 dozen eggs knew in Manhattan, Ted identified about 20 families ready to buy eggs delivered for $10 per dozen. posed a challenge, and required a few failed experHalf of the families wanted them weekly, and the iments before he found the best conveyance (a other half every two weeks, which meant he had shopping cart and lots of towels). Each week brought setbacks—unhelpful subway clerks, orders for about 15 dozen per week. He lined up four local farms willing to sell him demanding doormen, product breakage, and the the eggs—at $3 per dozen, and not a penny more. aforementioned foxes among them. But each week the system got smoother. By By traveling from Pawling via More ONLINE Aug. 15, Ted was catching the off-peak train to New York For more on train home two hours earlier. ($24 round trip) and buying a retail trends, go to What’s more, his business one-day unlimited-use Metro Progressivegrocer.com showed real growth potential. Card ($7.50) for the subway, Ted found some prospective new Ted would keep transportation 42 • Progressive Grocer • December 2008 A H E A D O F W H AT ’ S N E X T A costs under control, and he determined he could make about $75 ($7 margin x 15 dozen - $31.50 for travel = $73.50) for a day’s work. As soon as he talked his dad into paying for lunch while he was running around the city, the deal was set. Then came the challenge of logistics. Armed with train schedules and invaluable Google maps, Ted plotted his delivery route—from Pawling to Grand Central in midtown Manhattan, then downtown, then to the Upper West Side, then the Upper East Side, then back downtown, and, finally, back to Grand Central for the 3:48 p.m. train to Pawling—the last train before the fares went up for rush hour. Guess what? It worked. Despite a late-summer attack by foxes at two hen houses, his supply chain was secured. He cultivated a loyal clientele of egg-loving city dwellers. At the end of the day, the only issue left was getting him out of the egg business when school started up in September. clients. Early experimentation with fresh corn, tomatoes, and bacon indicated his offering could expand. The bottom line is the business was a success, and could return next summer, unless Ted decides he wants to do community service in Shanghai. My son the entrepreneur learned some clear, important, and timeless lessons via his venture this summer—lessons that should resonate with the managers of larger food-retailing enterprises, too. • First, food is a customerdriven business. Ted found his biggest problems always involved making sure his customers were satisfied. Did they receive enough eggs? Too many eggs? Prettyenough eggs? • Second, life might be unreliable, but you need to be the opposite. His customers were expecting eggs, not excuses. • Third, if you have a good idea that connects with a small group of committed consumers, you can create a business with almost no costs or overhead. Aside from borrowing a shopping cart and some towels, Ted was able to get his business up and running using just his PC and e-mail. He even got one sucker (we know her as “Grandma”) to pay for her entire summer’s worth of eggs upfront, funding his first week’s inventory and transportation costs. At the end of the day, these were three quite valuable lessons for a teen entrepreneur. They also remain lessons that the larger food retailers among us need to keep in mind as we face our own, proportionally scaled, challenges. Contributing Editor David Diamond is an independent consultant focused on marketing and strategy, and was most recently chief vision officer for Catalina Marketing. His e-mail is david@ddiamondassociates.com. www.progressivegrocer.com http://www.progressivegrocer.com http://www.progressivegrocer.com

Table of Contents for the Digital Edition of Progressive Grocer - December 2008

Progressive Grocer - December 2008
Contents
Front End: Onstead Becomes Interim Bi-Lo C.E.O.
Nielsen’s Shelf Stoppers/Spotlight: Shelfstable Juices/Vegetable Juices and Drinks
Market Snapshot: .Seattle-Tacoma,Wash
Retailer of the Year: Taking the lead
Lempert Report: Obama Prepares to Tackle Food Industry Issues
Independents Report: What Grocers Need to Know About Market Day
Consumer Research: Reason for Relevance
Shopper Culture: Reimagining Convenience Foods
Wake-up Call: The Ballad of The Egg Man
Eggs: A Kinder, Gentler Egg
Shelf-Stable Juice: Making a Splash
Post-PMA Show Analysis: High Yield
Niche Pork: Go Whole Hog for Local
Pharmacy: Chronic Customer Service
Technology: A Small-Town Grocer Discovers Digital DIY
Equipment Innovations
What’s Next: Editors’ Picks for Innovative Products

Progressive Grocer - December 2008