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Theta Ridge Coffee

Online Coffee Business:
Post "Dot-Bomb"

BY LYN LEVERETT

Even though many web sites stormed on the scene, touted with much fanfare - in addition to numerous TV ads - they quickly disintegrated into nothing more than a web page announcing that the URL no longer exists. One reason for their decline may be explained by the recent study that found that most people visit the same sites regularly. It seems that thrill of the hunt for new sites is gone. However, the internet is still a powerful tool in commerce, especially for international industries like tea and coffee. Whether it be Cup of Excellence Internet Auctions, industry information web sites - such as CoffeeNetwork.com, on-line shopping like Peets.com or Mightyleaf.com, or a simple home page for your local coffee bar, the internet’s an invaluable resource for learning about new things and conducting business.

Some companies have created an entire businesses around providing services via the internet. Some customers either don’t want to deal with a customer service representative or don’t have the time to. Now that many internet security concerns have been alleviated, several people are choosing to place orders on-line because it is often faster and more convenient. Usually, there is an e-mail confirmation of an order that has been placed; whereas, in the traditional phone order, you just had to wait and see if your order was processed. Also, if you are placing an order for a product that is located in another country with different business hours, you don’t have to worry about long-distance phone fees and different time zones.

The internet is definitely the premier source for information. In addition, any one can set up a web site; you do not have to be an industry expert, all that is required is a good idea that fulfills a need. For example, AltCoffeeShop.com and Coffeeshopstuff.com both cater to the coffee industry, but their founders’ past endeavors run the gamut from tech support to setting up cigar stores.

Just Starting Out
Michael DeGon of AltCoffeeShop.com launched his web-based business in June and has high hopes for its success. He came to the coffee industry with a background in computers. DeGon says, “My previous employment was a system administrator on a software development project. I have also had jobs working tech support and on a Unix help desk. Previous to that I had been working with computers since the late 80’s. I come from a technical background and am learning the coffee business. Most coffee-based businesses owners seem to have learned about coffee first and about the internet element of the business on a ‘need to know’ basis afterwards.” Instead of the internet being a useful tool for business, DeGon has created his business around the web. “The internet is the basis of my business. For wholesalers and vendors of materials and wholesale products, the use of online catalogs is ideal,” says DeGon. He understands that he has to rely on some conventional methods of marketing his product beyond the ether world of the Internet. He believes in the power of personal interaction and maintaining a good reputation. He adds, “My business is not solely based on web interaction. Locally, I have to market my business and the existence of my business to local constituents. The marketing of the business is a multi-channel effort. The use of search engines alone would not draw enough traffic. Repeat business and referral by happy customers to their friends is only way a web site can survive. A web-based small business must be very responsive to the needs of its customers or its “one-time” customers will patronize its competitors instead.”

After the decline of Internet companies starting in 2000, the question has often been raised about the viability of web based commerce. Some people are apprehensive about either starting a web site or spending the money to maintain an on-line presence. Despite all of this Altcoffeeshop.com is launching headlong into e-commerce. DeGon has been confronted with many skeptics with his decision to launch a web-based business in 2002. He says, “According to the marketing director of the SCAA, no one has yet to “pull it off.” Internet sales as the sole revenue source for a coffee-based business is not an easy task. It may be possible to build a following over time through providing a good product and good customer service. On the most part, I think it is really only a viable “side business” for large established coffee companies with other sources of revenue. As for my business, I do not think I will be able to have the business be my sole source of income until the end of the second year of operation.” He understands the commitment involved in starting a company, especially an on-line venture, “Starting a small business is “capital intensive” and one must be willing to operate at a loss until the business can establish itself. Some of the biggest hurdles are overcoming the costs of shipping the product to the customer. A customer will have to think your product is superior to what they can get locally and be willing to pay upwards of $5-$6 extra for shipping of their purchases. Hence, one must encourage “buying strategies” and really upsell the “sizzle” to the customer.”

An Internet Success Story
Greg George is the president of Coffeeshopstuff.com, which is a one-stop shop for turnkey coffee shop. By his own admission the web has opened up a new realm of commerce, “The internet has expanded our vision of developing the total “one stop shopping“ program via the internet. We don’t actually sell very many products over the web. We do however develop many relationships that turn into sales of great magnitude.” Using the Internet as a tool has been very profitable, “Our first six months in business we did $1,000.00 in sales and the next six months we did in excess of one million dollars in sales, all through the internet.”

He merged onto the information superhighway like many entrepreneurs; “We got into the web thing like a lot of other small businesses. We knew that the business of the future was on the web. We actually have developed our web site hand in hand with Fujipub.com. The founder of that firm Bobby Holstein has been with us for over 5 years through the good and the bad. Without the help from Fujipub.com we would not have the presence we have in the coffee and tea industry.” He has benefited from the sometimes maligned web, “We know e-commerce and the web are valuable. We expect sales to exceed four million dollars in sales in 2002. All due to the internet.”

George, like DeGon, promotes his business the old fashioned way, “Our firm, Coffeeshopstuff, advertises via multiple print media companies. Our print ads are simple but effective, they strictly are used to direct our potential clients to our web site.” Coffeeshopstuff.com adheres to strict business protocol of building and maintaining strong relations with the customer/client. George says, “The dot.com meltdown has not affected our business as we are focused on the coffee and tea business. We are not a dot.com firm, we are a company that utilizes the web to develop customer relationships. We don’t list our pricing on the web as we want our clients to call us so we can tell them about our offerings and discuss their goals and desires.”



Tea & Coffee - July/August, 2002
Tecpacking

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