Could online coffee sales help roasters absorb price increases?

Yker Valerio
-
October 28, 2022
Could online coffee sales allow roasters to absorb price increases?

Since the Covid-19 pandemic, many roasters have set up online stores to help boost coffee sales.

It is a solution that has been met with incredible success, allowing roasters to extend their market reach, develop brand identity, improve customer relations, and provide a more flexible service.

STiR magazine reported that during 2020, smaller online coffee businesses saw an increase in orders by size or frequency for over 15% of customers, while coffee subscription services also increased. During 2020, these services rose by an estimated 109% in the US alone.

While offering online coffee sales may seem relatively simple, the specialty coffee ecosystem depends heavily on the global climate and fine-tuned supply chains across numerous continents.

Extreme weather events in producing countries, international conflict, and rising energy costs have put immense pressure on coffee businesses globally, as the price of coffee continues to grow.

This has led many to wonder whether online coffee sales could allow roasters to absorb price increases.

Subscribe to our weekly newsletter

Sign up
An image of a coffee shop full of customers in an article about whether online coffee sales could help roasters absorb price increases

The challenging coffee business landscape

The business landscape for coffee enterprises is becoming increasingly complex. 

Green coffee prices are rising while operating costs keep increasing, and customers are more knowledgeable while the competition becomes fiercer.

The significant factors at play involve powerful and major external forces.

Climate volatility

Around the world, the climate is becoming less predictable. As a result, coffee producers have faced lower yields and significant losses, both immediate and in the long run.

Over the past few years, Brazilian coffee producers have faced severe frost and drought. In Central America and Africa, many farmers have dealt with extreme weather events too, and many small producers have left the coffee business as a result.

Global economic unrest

Amid economic uncertainty, instead of diminishing, coffee consumption has been growing steadily. As coffee demand grows, existing stocks are reduced, and the price of coffee increases. 

Combined with global supply bottlenecks and the ongoing crisis between Ukraine and Russia, roasters’ costs keep rising, while supply chain and logistics have become less predictable and more difficult to manage.

Hospitality workers’ shortage

The Covid-19 pandemic and subsequent effects on health systems around the world have pushed the hospitality industry out of millions of members of staff.

Additionally, workers are looking for better-paid positions after facing severe income shortages and high inflation. Overall, a recent report by the American Hotel and Lodging Association claims skilled worker scarcity is a problem for 97% of hospitality businesses

Although numbers may vary, similar trends have been reported in Europe and Australia. In light of these factors, it is likely coffee consumers will see price increases, too. 

However, putting pressure on customers’ pockets poses a serious risk for roasters and coffee shops: customers may stop buying from them and look for more affordable alternatives. 

An image of a coffee consumer buying coffee online in an article about whether online coffee sales could help roasters absorb price increases

Ecommerce: A solution for coffee roasters?

When selling coffee online, there are several factors to consider, such as packaging, shipping, and marketing, to payment processing. 

It can be difficult to know where to start – but the truth is that ecommerce offers a host of benefits for roasters, from increased reach to higher margins. 

Here are just a few of the ways selling coffee online can help roasters to deal with the current challenging market conditions.

Reach a wider customer base

Geographic limitations are less relevant for online stores, therefore, it is possible for roasters to reach customers across the country and even internationally. 

Launching an online store can be a highly cost-effective way to expand and scale operations. 

Furthermore, it can appeal to specific customer segments who are more open to online interactions.

Revenue streams diversification

Instead of having to depend solely on retailers or other business-to-business clients, selling coffee online can help roasters create additional revenue streams.

An online store allows roasters to create new and unique products and sell branded or custom-printed merchandise, such as grinders, drippers, and even clothing. 

An image of coffee roasters in a large-scale roastery determining stock levels in an article about whether online coffee sales could help roasters absorb price increases

More control over margins

Online stores also allow business owners to bypass traditional retail markups. In turn, roasters may be able to absorb some costs while building a more profitable sales channel. 

Additionally, selling coffee online reduces the friction and work involved in negotiating prices with retailers, increasing sales and marketing efficiency.

Increased flexibility

Product and price offerings can be more flexible using an online store.

Popular strategies such as discounts, coupons, and special promotions can be straightforward through ecommerce.

More so, it is easier to experiment with different pricing models and marketing campaigns to find what works best. 

An image of roast coffee in an article on whether online coffee sales could help roasters absorb price increases

Better customer relationships

Roasters selling coffee online can build closer relationships with their customers. 

Social media and website content are powerful tools to help build customer engagement and may help attract new clients. 

While online relationships may seem distant or disconnected, they can be a highly effective way to connect with a customer base’s main interests and concerns. 

Additionally, online interactions produce data that can easily be collected and analysed through online platforms. 

Online stores also offer a clean brand interaction without third parties competing for attention, which is the case for many retailers. 

How online coffee sales may allow roasters to absorb price increases

There are a myriad of strategies available to deal with the current problems the specialty coffee industry is facing. 

That said, ecommerce comprises some of the most interesting ones.

Reducing operational and transactional costs

Online coffee sales may help roasters deal with increasing operating costs without having to transfer them to their customers. 

Online stores are less labour-intensive than brick-and-mortar establishments. As a result, ecommerce cut the costs associated with personnel recruitment, selection, training, and wages.

Finally, ecommerce streamlines and automates several tasks that many coffee shops and roasters process manually.

For instance, this includes having to register sales, save customers’ information, and organise sales data.

Providing data to improve pricing strategies

Several ecommerce platforms are able to gather data that provides roasters insightful analyses. 

Based on analytics, roasters can identify consumers’ purchasing patterns, helping them to better understand their most profitable blends, single-origin selections, and other relevant products, such as ready-to-drink beverages.

By gaining a better understanding of their client’s needs, roasters can set sound pricing strategies based on the company’s goals and the analytics available.

An image of a coffee roaster packaging freshly roasted coffee in a kraft paper coffee bag with a transparent window in an article about whether online coffee sales could help roasters absorb price increases

Opening an online store may intimidate many business owners, but it offers several advantages that are worth considering.

Additionally, investing in sustainable coffee bags is an excellent way to support a value-based pricing strategy and build a stronger brand.

MTPak Coffee can help roasters and coffee shops create the ideal coffee packaging for the online store. We offer roasters and coffee shops a range of 100% recyclable coffee packaging options that include compostable coffee bags and takeaway coffee cups

Our line of coffee packaging options is made from renewable materials, such as compostable kraft paper, and rice paper, as well as multilayer LDPE coffee bags with an environmentally friendly PLA lining.

We also give you complete control over the design process by allowing you to build your own coffee bags. Our design team is available to help you create the ideal packaging for online coffee sales. 

Plus, we are able to custom-print coffee bags using innovative digital printing technology, with a quick turnaround time of 40-hours and 24-hour shipping time. 

For more information on custom-print sustainable coffee packaging for ecommerce, contact our team. 

Subscribe to our weekly newsletter

Sign up
Yker Valerio
Yker Valerio

Yker is a writer for MTPak Coffee and is very passionate about his craft.

MTPak recommends