Is selling homemade marmalade your jam? Looking to put the cherry on top of your cupcake store? Dig into our expert guide as we teach you all you need to know about selling food online.
By 2020, the global food industry is estimated to be worth a whopping $12.24 trillion.
From getting takeout on a Saturday night to doing your weekly shop online, there’s never been a more popular time to purchase food over the internet. Not only that, but more and more independent stores are now taking to the web, offering services we didn’t even know we wanted!
Whether it’s joining your local wine club for a monthly batch of free samples, or getting all the ingredients for that perfect vegan meal sent straight to your door, it seems as though everyone’s in on the action. Isn’t it about time you got a piece of the pie?
Well, now you can!
Thanks to global marketplaces and ecommerce platforms, it’s now easier than ever to start selling food online. Before you jump straight in, though, there are a few things you’ll need to learn.
We know that studying international food regulations, sourcing suppliers, and creating your own website all sounds very daunting. But fear not – we’ve broken it all down, section by section, to show you just how simple it all is.
By the end of this guide, you won’t just have a clear idea about how to sell food online – you’ll be able to put what you’ve learnt into practice, and create your very own online store.
So, now the entrée is out the way, let’s dig into the main course and find out how to make your dream a reality.
The first thing to know about food law is that regulations vary depending on where you’re from. Rules in the U.S are different from those in the E.U, for example.
If you live in the U.S, you’ll need to follow what’s known as the Cottage Food Laws. Again, these can differ slightly from state-to-state, but we’re going to run through some of the essentials you’ll need to be aware of, wherever you’re from.
To get legal approval, you’ll need a few things:
- An annual kitchen inspection conducted by the health department
- A zoning clearance/permit from the department of agriculture or health
- A valid state business license
- Proof your store meets sanitary regulations for all food storage spaces, cold and dry
- No pets in the kitchen, or in the house if it’s a home kitchen
These are just the very minimum requirements needed to run your food business. We’d be here all day if we listed everything, but we would recommend having a proper read of the Cottage Food Laws website for more details, and to find information on your specific state.
If you live in the E.U, there are separate rules and regulations you need to abide by. For more info on those, head over to the European Commission of Food Law General Principles.
Some of you may already sell food in person. Others may just be set on a killer idea. But if you’re yet to nail your niche, allow us to help.
A good place to start is by researching food trends. Waste reduction is a hot topic at the moment, so advertising that you cook with misshapen fruit or veg could be a nice angle, for example.
Next, you need to know where you sit in a crowded market. Are you an affordable, everyday brand? Or a gourmet luxury? Is your focus clean-eating health? Or indulgent treats?
All of this will play into how you brand and advertise yourself. Everything from picking a company color palette to understanding what text and logo design to use will hinge on how you want your products to be seen.
After that, you need to set a budget and some expectations. How much can you afford to spend monthly? Are you planning on selling locally, nationally, or worldwide? Where do you see your business in three to five years time?
The answers to these questions will help you know how much money to invest in things like your online store, marketing, and ingredients – which ultimately dictate the prices you charge customers.
Finally, ask yourself – what are you bringing to the table? To stand out, you’ll need a USP (Unique Selling Point). Here’s an example.
JK Gourmet nailed its niche by producing grain-free products targeted at people who need help managing ulcerative colitis – a condition which affects 1.6 million Americans. Head of the business Jodi told Shopify:
“We’ve carved out our niche with grain-free products, which ensures we’re gluten-free as well. We also address the needs of the growing paleo community, and because we have always eliminated the use of refined sugar and artificial sweeteners, we’re appealing to a wider audience than ever before.”
Whether cooking your own food or buying pre-made goods to sell, you’ll need to find a supplier. The tricky thing is knowing which ones are credible.
Using sites such as Food Master can help you source suppliers that specialize in the ingredients you need. Once you’ve drawn up a list, you’ll want to check for certificates, and can even ask for references.
This is all very common, so don’t be afraid to ask a supplier about its credentials. Remember, anything supplied to you will directly represent your company. If the supplier says its produce is organic, don’t just take that as gospel – look into it.
Top tip: A lot of small businesses start off by using Costco. It’s a reliable, well-known brand, and a trustworthy supplier.
At this point, you should have a clear idea of what food you want to sell and how you’re going to produce it. You’ll have also given some thought to your branding. Now, it’s time to put your decisions into practice.
A business name should be three things: memorable, relevant, and easy to spell.
Sure, ‘Mary’s cupcakes’ is relevant and easy to spell, but will it stick in people’s minds?
Try and get creative. Think outside the box, and ask others for their opinions. If you’re planning on selling internationally, you’ll also want to make sure the name isn’t misrepresented or lost in translation.
A color isn’t just a shade – it’s an emotion. The colors you choose make people feel certain ways. You can be bold and inspiring, heated and passionate, or cool and innovative, all through the colors you decide on.
When it comes to psychology, food companies tend to go for bright colors. They’re exciting, clear, and can encourage impulse purchases. Yellows, reds and oranges are all associated with indulgent food, while greens and blues typically express health and vitality.
Your product images are a customer’s first point of contact with your food – and first impressions count!
Unless you fancy yourself as a skilled photographer, we’d recommend paying for professional product imagery. This can help make your food jump off your web page and into a customer’s cart.
This is an important one. By U.S law, your packaging must contain the following information:
- A full list of all the ingredients used in the product
- The quantity or amount within the package
- The weight of the product
- Your company name and any supplier you used
- ‘Used by’ / ‘best before’ dates
This should not only be on all your packaging, but in your online product descriptions too. It’s also good to include nutritional information as well, so people have an idea of the health benefits/concerns that come with your food.
It’s all very well creating a cool brand with a great USP, behind which sits some tasty delights – but as the old saying goes, ‘money talks.’
However good your products are, you still need to know how to price them. Under- or over-valuing your food in the long-term could see your business tank. So, how can you work out the right price?
Well, Shopify has a brilliant step-by-step guide that helps you work this out, which we’ll give you a brief overview of below.
Calculate your variable costs
First off, you need to know how much your food is costing to produce and sell. Things like the cost of ingredients, packaging, and shipping all need to be taken into account.
If you sell soups, for example, add up all the variable costs involved and find out how much you’re actually paying per carton.
Create a profit margin
Next, you need to know how much of a profit you want to turn. To do this, think of the amount of profit you wish to generate (e.g. 15% profit).
Once you have a percentage in mind, you need to turn it into a decimal. This is simply done by dividing it by 100 (e.g. 15 / 100 = 0.15).
Now you have a figure for your variable costs, and a decimal number representing profit margin. From here, calculate how much you should charge per product. This can get a little maths-y, but don’t worry – just follow Shopify’s simple equation, shown below:
Target Price = (Variable cost per product) / (1 – your desired profit margin as a decimal)
Factor in fixed costs
Other costs to consider are things like rental space for food preparation, cooking equipment, storage rental, insurance, licencing fees, and employee wages. All of these need to be factored in to ensure your business at leasts breaks even.
Top tip: Shopify’s break-even calculator can help you with this.
Trial and change where necessary
You may find you hit the nail on the head first time around. Chances are, though, you’ll need to test your target prices and review them every month or so. It may take a little time to get right, but once you’ve found your position in the market, you’ll be on the right path.
It’s the moment you’ve been waiting for… time to put your plan into action!
There are two distinct ways you can sell food online. The first is via online marketplaces – such as Amazon and Etsy – while the other is through your very own ecommerce website.
Below, we’ll run through your two options, explain the differences, weigh up the pros and cons of going down either route, and explain who they’re best suited to.
Selling food online through marketplaces
How to do it
All major marketplaces will have their own regulations when it comes to selling products, so to avoid your head spinning, we’ll stick to covering the largest global marketplace: Amazon.
Firstly, you need to get seller’s approval to use Amazon, and this means meeting certain standards. After signing up to a professional selling plan, you’ll need to provide all your legal documentation and licencing (which we’ve discussed) to prove you’re a legitimate merchant.
Once signed up, there are a few performance targets you’ll need to hit. These include:
- Having an order defect rate less than 1%
- Having a pre-fulfillment cancellation rate of less than 2.5%
- Having a late shipping rate of less than 4%
Of course, you also have to be legally compliant with all your shipping and packaging, but we’ve already touched on that too.
Pros and Cons
Who we recommend this for
Selling food on Amazon is right for you if you want a minimal, hassle-free set-up process, and aren’t too fussed about creative flair. Web design is taken care of, and your products are more likely to get eyes on them given Amazon’s global appeal.
The problem is, you’re constantly fighting against Amazon itself – a battle you’re not going to win. Amazon will always prioritize its own products, and funnel shoppers towards them. You also have a general lack of control, so it’s not recommended if you take pride in the finer details.
Selling food online through an ecommerce website builder
Before we get into anything, let’s first clarify what a website builder actually is.
A website builder is an online tool that helps you build your own website without any technical skills or experience.
Creating your own website sounds like a big job… but it doesn’t have to be. These tools are designed for everyday folk who need to build their own online store, and don’t have tons of time, money, or expertise.
Choosing your platform
There are so many platforms out there, it’s easy to be left scratching your head. Luckily, you’re in the perfect place for recommendations.
Website builders are what we specialize in, and we’ve done our own expert research into which are the best on the market today.
Shopify is renowned as one of the biggest and best ecommerce platforms out there. Used by everyone from budding entrepreneurs to retail giants, Shopify is the ideal place to design your very own online store. In short, it’s the best ecommerce platform on the market today. Read our review of Shopify for the full lowdown.
Unlike Shopify, Wix isn’t purely for ecommerce websites. You can design all manner of sites, then add the ability to sell. Wix is perfect for people who need an easy-to-use website builder, and don’t plan on selling in bulk. If you’re only looking to ship a baker’s dozen or so products, Wix is the platform for you. Read more in our detailed Wix review here.
With BigCommerce, the clue’s in the name – it’s big! Big businesses use it, it has tons of big, built-in features, and it offers you big value for money. It’s closer to Shopify than Wix, focusing specifically on online stores, but can be a little tricky for complete novices. There’s no doubting its power, though, and you can read more about BigCommerce here.
Purchasing a domain
Whatever ecommerce website builder you end up using, your site’s going to need its own URL. After you’ve signed up to a premium plan, your platform will prompt you to buy a domain name.
Most businesses will opt for their company name with ‘.com’ at the end. Naming the site after your business is only logical, and ‘.com’ is a globally recognized top-level domain.
Designing your template
Now you can get stuck into the platform itself.
First, you’ll need to choose a template or ‘theme’ to work off. These are pre-designed layouts which are populated with example content, to show you where things are meant to go. They may look something like this:
Once you settled on a template, you’ll enter the platform’s editor, where you can start to add your own content and move things around with a few simple clicks. Imagine creating a slideshow using PowerPoint – Wix is just like that, only for web pages!
Setting up payments and shipping
Every platform will use different payment gateways. They all tend to use the big ones, though: PayPal, Apple Pay, Stripe, Square etc. Shopify even has its own payment gateway.
Once you’ve selected which payment methods you want to accept, you can tackle shipping. Again, these platforms have set couriers you can use: FedEx, DHL etc. You’ll have to look into which couriers can ship food first, though, as the FDA (Food and Drug Agency) has set regulations around things like speed and temperature.
Benefits and Limitations
Who we recommend this for
Ecommerce website builders are for the more ambitious sellers out there. You can design your very own website and get it live online in an afternoon, and there’s no limit to how big your business can grow. With around-the-clock support, multi-channel revenue streams, and scalable apps, ecommerce website builders are the stronger choice for just about anyone.
Building up a relationship with your customers is one of the pillars of ecommerce success. Marketing is a fantastic way of not only getting your products into the public eye, but building a rapport with shoppers and making them feel like they’re part of your business’ vision.
There are many ways to get your message out there – too many for one section in an article, anyway – so we’re going to focus on some of the most impactful things you can do.
SEO (Search Engine Optimization) is the process of getting your site to appear on search engines, like Google and Bing. Google currently has over 200 ways of deciding how highly websites rank in its search results, but here are a few key points to be aware of:
- Keywords – You need to make sure the content around your products is related to what you’re selling. If you’re a Manhattan-based bagel company, you’re going to want phrases like ‘New York bagels’ in your product descriptions so it’s easy for Google to tell what your web page is about.
- Metadata – This is the text that appears in the search results. It needs to be an optimum length, include keywords, and entice the reader into clicking on your link.
- Backlinking – A way of showing Google your food is popular and well-respected. Other websites linking to yours is looked upon highly, kind of like a recommendation.
- Mobile Responsiveness – One thing search engines hate is sites that don’t work properly on mobile and tablet devices. Fortunately, all the ecommerce platforms we listed above are automatically fully mobile responsive, so it’s not something you need to worry about.
Having a strong social following only adds to your company’s credibility. It’s also a way of interacting with your customers, and giving them a point of contact. If you include social sharing buttons on your website (which you can do with any of our recommended platforms), then shoppers can also share your food with their followers – it’s literally free advertising!
Shopify and BigCommerce take things a step further, actually allowing you to sell directly on social media and marketplaces. Whether it’s Facebook or Instagram, Amazon or Etsy, you can use your website as a hub while also tapping into other online markets.
Ecommerce website builders have their own, built-in email marketing. You can fill in pre-designed email templates with your latest deals and offerings, before sending them off to all your subscribers.
Whether it’s tasty, free samples of strawberries or buy one get one free on donuts, email marketing is a surefire way to pique a customer’s interest and keep them coming back to your store.
Selling at Food Markets/Festivals
With all these fancy online ways to market your business, it’s easy to forget about good old-fashioned word of mouth. Get out there and advertise your food in person at local markets and festivals. After all, the best way to advertise your food has to be through letting others taste it, right?
Make sure you’ve got some snazzy business cards to hand too – the last thing you want is people going home saying: “I loved those sweets… where I can I buy them from again?”
The food industry is booming like never before. There’s always a reason to put off getting online, but if food is the focus of your business, then there’s no time like the present.
By following our comprehensive, seven-step guide to selling food online, you’ll be able to turn your dream into a reality. To recap, here are those seven steps again.
7 steps to selling food online
- Know the law
- Find your niche
- Source your supplier
- Create your brand, packaging, and labeling
- Price your products
- Create your online store
- Market your products
These steps are not only the ingredients for getting your food business online, but also your recipe for success.
Unlike many of you, we won’t sugarcoat it – you will have to invest time into getting your online business up-and-running. Just like whipping up a soufflé, you can’t just rush your way through it – the proof will always be in the pudding.
Follow our steps, take a measured approach, and watch your very own online food business come to life. Trust us, few things will taste sweeter.
Do I need a license to sell homemade food?
Unless you’re just baking cakes for the office charity fundraiser, the answer is yes. The commercial sale of any homemade foods will require a valid state business license. In order to obtain one, you’ll need to pass a health inspection by meeting your local health regulation standards.
How much is a business license?
Many things impact the value of a business license, with things like location and number of employees factoring into the overall cost. Generally speaking, this can be anything from $25 to $7,000. Most food startups or small businesses, though, will pay between $50 and $200.
What is the benefit of having your own food website?
First and foremost, you’re in total control of the display and advertising of your food. Using ecommerce website builders can also be of massive benefit as it makes website creation available to anyone. You can even sell across different channels, such as marketplaces and social media.
How much do ecommerce website builders cost?
All ecommerce website builders will offer a variety of different pricing plans. These range from totally free to bespoke quotes. Small food businesses can expect to pay a monthly fee of around $20 to $80. That covers the design, hosting, and security of your website, plus loads more.