100+ sales. 6 registered businesses. By the test launch (Feb 2021), the wait-list included over 100 companies and eco-producers.
The organic food market ($150bln) today is one of the fastest-growing trends. During the last 20 years, it has grown tenfold and continues its vigorous progression.
For the analysis we used data of the US market, which sets the pace for the trend in other countries. We compared services that allow customers to look for and purchase organic food products. The results we gained formed the basis for the development strategy, business model and the rationale for the figures below for the investors.
COVID-19 pandemic reshapes consumer behaviour. Today we are witnessing the galloping increase in the number of those wishing to buy products online, the demand for such services has grown many times since the start of 2020.
Farmers, green-house owners, eco-producers, distributors and stores;
Private drivers, transport companies, delivery services;
Wholesale and retail buyers, stores, supermarkets;
Our customers are middle-class and higher. These are well-educated people, residents of megapolises, new moms and others — all those who make a conscious choice and are ready to pay the extra money for high-quality natural products.
Problem or Opportunity
The organic food and eco-services industry demand the involvement of the participants at all stages — from production through the sale to the end consumer. The model suits well for large businesses but is not appropriate for small companies that are often limited to family members and/or 3 to 5 employees.
The problem is small companies lack the expertise and resources to efficiently promote, deliver their products and do other required activities. Thus they do not go beyond selling their products at trade fairs, brick-and-mortar stores, or via Instagram in a best-case scenario.
In order to raise efficiency and cost-effectiveness, SMEs desperately need a convenient tool that will solve associated tasks and will allow them to focus on the production directly. This was evidenced by a strong interest on the part of local companies and farmers in our service even before its launch.
Solution (product or service)
The project goal is to provide a platform that will facilitate the search for and the sale of organic food and eco-services offered by farmers and small companies. In other words, the platform brings together all the agents of the supply chain to ensure direct and efficient cooperation.
In order to achieve the goal, we developed the Green Bee app that functions as a showcase, helps find customers and takes care of the delivery and payment issues. As a result, not only our solution solves the above problems for manufacturers but also makes organic food products readily available and cheaper for the end consumer.
Nowadays large companies and chain stores are attempting to enter the growing market of organic food products. However, they are unable to meet their demands using traditional approaches. The primary manufacturers of organic food products are small companies, for which cooperation with big business is “expensive, time-consuming and complex”. The few that finally make it to the shelves of supermarkets have strict limitations imposed on them as concerns the quantity and the range of goods and the payback often take over six months.
A classical solution for many producers is trade fairs. However, a face-to-face interview of over one hundred businesses in the USA showed that the approach is far from perfect: it is irregular, takes a lot of time for preparations and goods delivery and is rather expensive — the cost of a trading place at a fair starts from €200 per day. And it shall be highlighted that in view of the COVID-19 pandemic the number of fairs and their visitors has dropped dramatically.
Web-versions of supermarkets and platforms like Instagram or Facebook Market are stripped of these drawbacks. However, they provide nothing more than the pure show-case functionality: businesses themselves have to draw a relevant audience, engage in the promotion, deliver the goods, etc.
There are various services that can help with the search for the audience, but all of them have their limitations and often they do nothing more but a simple Yelp-like registration of eco-stores and services.
It is worth noting that currently most countries already have services that deliver organic food products, which confirms the demand, even in light of the fact that they amount to a simple catalogue of products from a small number of local suppliers.
Our platform is aimed at creating a global green community uniting everyone from manufacturers to end consumers, with deep segmentation depending on the organic food market peculiarities: vegetarians, vegans, rawtarians, etc. To that effect, we have developed green criteria that will allow ranging uncertified businesses and services based on the points scored.
Small businesses have many needs apart from the basic listing of goods: search for clients, order handling, payment, accounting and delivery. Our advantage is in the comprehensive, efficient and cost-effective solution. This will free up highly limited resources of SMEs and will make it possible to focus on what they can do best of all — production.
Advantages or differentiators
Effective management of small business issues at all stages following the manufacture of goods: from packing through the delivery to the end consumer.
At the moment we're working on a Green Scoring system that will help customers to understand sustainability level per business: do companies use renewable sources of energy, how they deliver their products (e.g. electro bicycles and how much CO2 do they save per delivery, do they use eco-packaging and so on).
The service charges 10% on every transaction. The basic package is free of charge and allows placing up to 5 goods. The premium packages provide access to additional functionality.
The company generates additional income fr om ads and special offers.
The accounting system is a premium feature of automated record keeping of residual stock based on the manufactured/sold products. Business owners will always know: total value of, wh ere, how many and what types of goods are available. Combined with the sale by subscription it will allow businesses to plan delivery and production beforehand and with great accuracy. A fine-tuning of the supply chain will help to prevent losses from unclosed deals (if the goods are not available) or disposal of goods with expired shelf-life.
By the launch, the wait-list included over 100 companies and eco-producers. Every one of them has from 50 to 5,000 customers. Figures vary greatly depending on the business, but an average sales check amounts to €10-15 and 2-3 orders per month from a customer.
Plans and forecast towards the end of 2021:
Register the first 50 businesses, eco-producers and farmers. The surveys showed that companies are ready to pay at least €30/month to register their stores at our platform (up to 80% in the USA, up to 60% in Kazakhstan).
Bring the total amount of transactions up to €50,000 and the fees up to €5,000 per month. After the optimization of the payment processing, we’ll be able to keep up to 70% of the fee.
Inclusion of goods into the flash-sales section, a large-sized banner at the top of the application: €20 per day. Simultaneous placement of up to 5 items.
At the start of 2021 the above amount is the break-even point. By the end of 2022, we expect to sell goods totalling €1,000,000 per annum. Given the trends, the clients base growth rate and the increment of an average “green” check around the world, reaching the €10,000,000 mark is scheduled for 2025.
It shall be noted that in the US we will make additional profit from selling the application itself.
Our clients are businesses that manufacture and sell limited batches of unique products. Such goods don’t have a standard price like Coca-Cola, Snickers and other mass-produced goods with similar prices all over the world and a minimum margin. Since customers have no preset price for the products sold through our Platform, they can be sold at market prices, i.e. prices the end-consumers are willing to buy them given the unique character of the goods.
Money will be spent on
€250,000 are to be spent on the development (40%), marketing (35%), salary (20%) and other/reserve (5%).
We received the 2021 Go Global Awards Certificate https://international-trade-council.verified.cv/en/verify/69171778131643 in the Top Placer eCommerce category.
Furthermore, we received another prestigious international award (EuroAsian Startup Awards) as part of the largest international event — The global Startup Award https://kapital.kz/business/99803/kazakhstansko-belorusskiy-startap-vyshel-v-final-mezhdunarodnogo-konkursa.html [RU] in the Best Newcomer category