How to Start an online coffee company – Balance Coffee Founder James Bellis

So you’re thinking of starting an online coffee company in 2022?

Great Idea.

There are a number of things you’ll want to consider to make sure you stand a chance in the busy online word of e-commerce.

He shares his top tips and considerations so that you think through each step of your business plan carefully before starting.

1. Capital / Investment

When starting an online coffee company or any business for that matter, you have to think about the type of investment required to make it a success. Running out of capital could mean business failure and so this is absolutely critical to achieving the success you want.

Most online businesses require cash up front to sell because you have to generate traffic and potential customers. This means you are paying up front before you actually acquire that customer. This certainly has an impact from an investment point of view so you need to be sure this is carefully planned out.

2. Choosing to Roast Yourself Vs Using a Coffee Roaster

You’ll need to make one very important decision when starting an online coffee company. That is whether you decide to roast your own coffee or not? There are pro’s and con’s to both so I’ve shared some thoughts on each.

Roasting Your Own Coffee

Pro’s

Complete Control – If you decide to roast your own coffee, that’s amazing. You are in complete control over the process. From sourcing your green beans, selecting and sorting the bean quality, roasting the beans to perfection, bagging them up and shipping them out.

Creativity –  If you decide to roast your own coffee, you’re adding an aspect of creativity  to the wider supply process. This is great if you love to get creative and decide what coffee origins and blend components you’ll want to mix.

Authenticity – By owning a coffee roaster you can truly share your creative process with your customers. Inviting them into your roastery will connect them closely to the product and hard work you put into the entire process from bean to cup.

Con’s

Investment –
Coffee roasters typically cost a lot of money to begin with. An investment of around 30-100k is likely required for the full setup. This may inform your decision making around whether it’s viable for you personally.

Time – Roasting coffee takes up a significant amount of time in labour. You’ll need to allocate ‘roasting days’ per week to prepare the coffee for shipping to your customers. If you’re thinking about hiring a coffee roaster in the early days that’s also an additional cost you’ll have to factor in. Large coffee companies can be very profitable due to the huge volumes of coffee consumed in the UK every day. .


Purchasing from an existing coffee roaster

Pro’s

Low-Risk – A low-risk way to start your online coffee company would be to purchase from an established coffee roaster. Here’s a useful list of the best coffee roasters in the UK. Purchasing from an existing roaster means you’ll have less up-front cost and you can lean on their expertise to get you started.

Knowledge – Depending on your level of knowledge within the coffee world, it might be beneficial for you to first learn all about the coffee roasting process from your supplier, before diving into the world of coffee roasting. This decision will ultimately come  down to your goals and ambition for owning your own online coffee company but they are key questions to consider.

Con’s

Margins – Your business margins will naturally be lower when you are re-selling coffee online. This is natural because you won’t be managing the entire coffee roasting process.

Qualzty Control – The quality of the product will be in the hands of the coffee roaster. There’s a high chance they’ll do a great job as it’s what they are doing for their own business day in day out. However, it’s something to bear in mind. If their own quality standards dropped, it would have a direct effect on your own quality control which would ultimately affect your customers' experience too.

Service – In some capacity, you will be handing over an element of your product and service to another company so this is a factor to consider.

3. Where are you going to sell coffee online?

This is an important question to answer before you get started. Will you sell on an existing marketplace like Amazon or will you build out your own ecommerce platform?

  1. Your own ecommerce platform

The benefits to this is you own the data and have full control over the brand, design, feel and customer journey. However, this is harder to get started than a marketplace because you won’t have any organic traffic or potential customers coming into your website. Therefore, this is likely a more costly option than choosing a marketplace.

One other benefit to having your own-ecommerce is if you plan to run a coffee subscription service, you’ll get complete control of that process which can dramatically increase your customer retention and lifetime value. Like we did with Balance Coffee, we have set up our own coffee subscription plan when we started the business. And at the moment we have the best coffee subscription in Uk.

  1. Online Marketplace

Using a marketplace such as Amazon, Esty, Ebay to sell your product is a great route to go down for a beginner.  However, you’ll be handing over an element of your business to the giants like Amazon as they’ll own the customer information and you won’t be able to build a deep relationship with your customer.

If you’re launching an interesting new product for the first time, it could be a faster way to determine whether that product has market fit. With access to thousands of potential customers, it could be the quickest way to test out your idea of owning your own online coffee business.

4. Marketing Strategy

Your marketing strategy is integral to the growth of your business. How you acquire new customers is an essential part of the process. Below I’ve summarised some of the key channels you’ll need to consider when starting an ecommerce business in 2022.

Organic


Organic refers to traffic that you acquire through search engines related to keywords online. Our top tip is to start a blog on coffee so you can provide authority around the topic you are talking about. Organic takes a lot of time to ‘kick in’ as you’ll need to prove to google that you are a trustworthy source.

Paid

Paid marketing is exactly what it says on the tin. You pay for traffic to enter your website with the goal of that traffic converting into customers. Ideally they become repeat purchases too making your paid media strategy more profitable. However, our word of warning here is to approach with caution. You can spend tons of money online very easily and if you don’t have a robust website, brand or demand for your product you can fall short and waste your budgets quickly.

Referral

Referral traffic is a great source of traffic for your business. It typically has a high conversion rate because it’s another website that has recommended or mentioned your business online. This means the customer instantly has more trust and is more likely to buy coffee from you based on the recommendation. Particularly if you can get a well established company to write about you, it can yield on-going results which is great for your business.

Social Media Marketing

Social Media marketing is everything nowadays. As we spend more and more time connected to our phones it’s a great opportunity to get your online coffee business in front of potential customers. It’s also common for potential customers who haven’t come across your brand before, to hop onto Instagram or Tik Tok to get a feel for the company before they make a purchasing decision. Do I trust this company and should I buy from them?


Email Marketing 

Email marketing is a really good opportunity to engage, educate and inspire your customers. The main benefit is that it’s a relatively low cost way of staying in touch with your customers and keeping top of mind. With all the noise out there online these days, people enjoy getting a reminder or two if you have a promotion for example.

In summary, you can focus on a couple and get them right and you can also look for a blended approach which gives you good returns and mitigates the risk if one channel suddenly underperforms. Ultimately, no matter what you might hear or see online, starting an online coffee business takes time, effort and cash to become successful.