Freshfield Grove

Tales of Tasmanian Adventures in Olive Oil

The Cost of Business

19 Comments

I’m keen to be able to sell online and this week I’ve registered with Farmhouse Direct to set up an online stall (not live yet, need to sort out a couple of things…) It’s an initiative from Australia Post to form an online farmers market, and has a great layout, focused on the needs of farmers and producers. Getting set up has however focused my mind on the costs associated with selling anything, anywhere. Everyone wants a bit of the action. Fair enough, they’re all running businesses too and have costs of their own, but it really eats into the bottom line!

Screenshot of my draft Farmhouse Direct market stall

Screenshot of my draft Farmhouse Direct market stall

The costs are relatively high for a small business like us at the moment, partly because it’s not really practical for our cash flow to buy the quantities of various items needed where you really start to get costs down. Australia is a big country, with pretty low population density especially in Tasmania (which I like!), but it makes it difficult to be in close geographic proximity to lots of people who might be interested in buying our olive oil. By looking at an online model we can increase our range considerably.

The standard cost of postage for a 375ml bottle of our oil is $15.35 (glass bottles are heavy!) And there’s packaging on top of that – box, bubble wrap, sticky tape, packing paper or peanuts… Farmhouse Direct have slightly better postage prices, and the payment side is handled on the site by PayPal, but they both take a percentage. 7.5% for Farmhouse Direct and 2.4% + $0.30 per item for PayPal. The postage still isn’t really really cheap either. $11.70 for flat rate postage in a medium box which  can weigh up to 3kg. (Our bottle doesn’t fit in the small box!) But the box has to be an AusPost one, $2.40 if bought singly, down to $1.75 each for 20, or $1.16 for 200+. But you do get to sign up to be able to buy postage online and print at home, so packages can be posted out of hours, without having to stand in line – invaluable when I’m doing a regular job as well!

There are obviously costs associated with attending a market. There’s the time – for prep, travel, set-up, actual market, and clearing up. There’s stallholder fees (variable, perhaps $50-200 per time), insurance, table, gazebo, stuff to make the stall look attractive, cups for tasting… A huge plus of course is the opportunity to talk to potential customers, guide them through tasting, and tell them how fab Australian extra virgin olive oil is. An online community allows me to engage with my readers, which I love, but I can’t do tasting online! Although I’m wondering if it’d be possible to post small samples out somehow…

Other online channels have similar costs with varying structures. Ebay looks as if it would be more expensive, although they also have the preferential pricing with AusPost. And payment is still through PayPal, so there’s still that fee. Etsy is an online marketplace for handmade items, and has lower percentages, but a small listing fee. And it would still be PayPal. It’s also less well known in Australia. Another option is to sell directly through this blog / website, but we’d have to upgrade our bank account, and frankly it seems easier to have someone else responsible for that side of things!

I’d be really interested to know if any of you buy food online? Have you heard of Farmhouse Direct or anything similar? FFx

Author: FarmerFi

I'm a British doctor who married an Aussie, moved to Tasmania, and bought an olive grove. Now making extra virgin olive oil and olive leaf tea. I'd love you to join my adventures in the beautiful setting of Southern Tasmania.

19 thoughts on “The Cost of Business

  1. I have purchased bulk health food products online but that’s about it thus far, I am watching with interest. How would you pack it to ensure it doesn’t break?

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  2. I get stuff from Aussie Farmers Direct which is kind of ordering food online but since I get the standard large fruit and veg box every week, not really. I picked up on Farmhouse Direct when the logo and website link was on a parcel pickup card one day. Haven’t ordered through there yet, though.

    You’d think they could come up with a parcel box for accommodating bottles…

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    • I used to get a veg box in the UK, but haven’t done it here. Thanks for the feedback on AFD. You’re obviously happy with them if it’s a regular thing. There is an AusPost bottle box, but it’s designed for 750ml bottles, although I reckon with a bit of bubble wrap it’d be good for our smaller ones. But it’s about $3.50 per box. So even though I need fillers, it’d probably end up costing more!

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  3. Good luck in deciding how to get your stuff to customers. I’d imaging the costs of sending your oil to England would be ridiculous otherwise I’d be an early customer. Best wishes. Simon

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    • Thanks Simon. It would be $40 for postage for one bottle, $75 for three!! Ludicrous. There may be a bespoke delivery service to the UK just before Christmas though… Not that postage within the UK is particularly cheap anyway 😦

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  4. I am in US, so, not so relevant… I have sold through Etsy and they really are the cheapest. What about facebook? You can link your etsy shop to facebook free with storeya. facebook is a great way to get known over here. Good luck! We have similar issues in rural Texas.

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  5. I’ve bought from them, Fi – but only the once … it was VERY expensive, and now I understand why !

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    • It’s a bit of a pain M-R. Especially when you look at bigger companies in all sorts of fields offering free postage. It gives a definite competitive advantage to be a huge corporation! Farmhouse Direct do have free postage offers from time to time, although now I’m wondering if they’re funded by the producers…

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  6. The postage is what kills you. People have asked me to buy SCOBYs but by the time I pay for the postage, I would have to charge a fortune! And then I worry that the SCOBY will die in transit, although I haven’t had that problem with the free ones I’ve mailed people. Maybe I should sell them…

    I set up PayPal on my blog to accept payments for my hands-on workshops. Could you do that? It isn’t ideal but it is free. I can’t add coupons I don’t think, which I would love to, as I just started a Facebook ad campaign and wanted to include a promo like “Bring a friend for 1/2 price” but I can’t figure that out. So much to do! Here’s the link to my registration page if you are interested in setting up something similar: http://zerowastechef.com/register/

    I had a PayPal “Buy Now” button but it was so garish…Like I said, not perfect but it’s okay for now.

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    • The postage is awful, but the more I look at it, the advantages in terms of the vastly reduced time commitment and the fact that the cost is only incurred at point of sale are significant. It would be entirely possible to spend a couple of hundred dollars on market fees, insurance, and equipment, and 10-12 hours time, and not cover costs. So then it seems the biggest loss is the missed opportunity to talk to people! I’ve considered just setting up a payment system on my site, but I think Farmhouse Direct adds some credibility and security, and it reduces the postage costs a little. It might generate some traffic too. I think you have an advantage in that you get to meet people at your workshops. That physical connection would be important to me if I were buying something off a previously unknown blog. I like the setup on your site, very straightforward 🙂

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