Marcia Woods’ frustration at not being able to buy the high-quality food that she knew was being grown right down the road evolved into an online business that not only connects farmers with wholesalers, but also solves their transportation and cash-flow headaches.
Coming from a long line of Oxford County farmers in Ontario, Woods, who’s now the CEO of FreshSpoke, understands that there was a serious disconnect between those who produce food and those who buy it.
With a background in marketing, and having been a serial entrepreneur in the tech space, Woods and co-founder Henry Quach launched their business in September 2016.
“With the emergence of the sharing economy — and companies like Uber and Airbnb leading the way, we realized crowd-source delivery became an option for solving the food distribution problem,” Woods says.
While they initially looked to sell both to consumer and to wholesalers, FreshSpoke evolved into a strictly business-to-business operation with farmers selling to the wholesale retail, restaurant and institutional trade.
“By attacking the problem at the head of the snake — figuring out answers on a business-to-business level, we’re reaching the access point where consumers want to buy local,” Woods says. She explains that while consumers — especially millennials — are savvy shoppers and want to buy local, they also want the convenience of local shops and restaurants, rather than farmers’ markets and on-farm stores.
Woods is one of several people and companies currently working on shaking up traditional food distribution systems.
Going to an online marketplace was also Thorsten Arnold’s idea for a local food business model, but Eat Local Grey Bruce is much more like a traditional farm co-operative, while also providing the customer flexibility that’s demanded these days.
“We’re trying to make buying local food as convenient as shopping in a grocery store,” says Arnold, who’s the co-op’s general manager.
For him, that means a model that draws on small-scale ecological farming, is collaborative, offers a high-quality product and maintains the value of direct marketing while addressing its limitations.
Those limitations for the farmer, he says, include either spending a lot of time at farmers’ markets, or, in his case, needing to scale up to make it worthwhile to ship to the Ontario Food Terminal in Toronto.
“It costs about $500 round-trip in transportation, so you have to sell at least $2,500 in products each time to make it worthwhile,” he says.
Combining the convenience that customers want while resolving farmers’ marketing and distribution hurdles are the reasons Arnold and his colleagues developed Eat Local Grey Bruce. Based in Owen Sound, it works like community-supported agriculture (CSA), but prospective customers aren’t locked into receiving a food box every week. Instead, they can order items from a list provided by over 30 full-time local farmers on the website eatlocalgreybruce.ca.
Orders are completely customizable and there’s no requirement to order on a regular basis. Orders are delivered to the door, or picked up at central locations in rural areas. Lamblicious, a farm and retail shop 20 minutes west of Owen Sound, is one of the depots.
Arnold says it’s not modeled on any one system that’s already up and running, but rather combines aspects of a number of different operations. He emigrated from Germany seven years ago with a PhD in agriculture and a background in environmental science.
“I see a very large vision for local food in this world — as a driver of employment and as a way to go forward by integrating the knowledge of ecological systems,” he says.
The service had about 450 consumer members as of late 2016.
“This is farmer-driven,” Arnold says. “There’s a lot of interest — farmers especially see the potential,” and he adds that about 60 people attended the co-op’s first annual general meeting in October.
In these early stages, Arnold says only a handful of farmers are selling enough product to make an economic impact on their farms — and it’s limited by demand, although he’s optimistic the business model is sound.
Work is ongoing to encourage farmers in the Hanover and Walkerton areas to join up. And now that it’s up and running, Arnold says he will be step down as general manager in order to help the co-op be sustainable through its next growth phase, with his duties taken over by four staff who are currently being trained.
Back at FreshSpoke, 63 producers were on board for selling their products by the end of September and 550 wholesale buyers signed on to the service.
A mobile app was due to launch in December, and Woods anticipated additional sign-ups from buyers at that time.
Besides connecting wholesale buyers and producers, the company takes care of logistics and transportation. As of January 2017, Woods says that producers will be able to sign up to make extra money delivering items from other FreshSpoke farms. They will set their own times and schedule pick-ups with the people for whom they will deliver.
Eventually, as a result of anticipated volumes, she says the company will need to employ independent operators through its own dispatch system and, as a third option, will go to established fleet operators.
“It’s like Uber, only for commercial drivers,” she says, adding that the service opens up opportunities to create jobs in rural communities. Anyone wanting to transport farm products will need to be licensed and have all the appropriate equipment to maintain food safety.
Woods outlines three advantages to farmers signing up to her service: expanding their market access to a qualified group of buyers, getting their goods transported in an efficient way, and improving cash flow.
“We take care of invoicing and collecting payments,” she says. “Farmers get paid on the 15th and 29th of the month like clockwork, giving them a predictable payment schedule.”
FreshSpoke’s fee structure includes prices for beginning producers, small producers and larger, year-round producers. For larger fees, FreshSpoke provides more services. The fees begin on a pay-as-you-go basis for five products with a 6.5 per cent transaction fee up to an $899 annual subscription for up to 500 products with a 4.9 per cent transaction fee.
Woods has big plans for the future of FreshSpoke. When asked if she would be looking at expanding to across Canada, she said she expects that the service will go continent-wide, and could go global.