What's the secret to selling tomatoes online? Cut out the middleman.
When it comes to tomatoes and other fresh vegetables, Floridians are spoiled. After all, we can grow them in our backyards or buy them at a roadside stand almost any time.
But people who live north of the state line have to pay up for freshly picked tomatoes in winter and spring, if they can get them at all.
That's where Jimmy Augustine Jr. hopes to cash in. The 38-year-old has cubicle and greenhouse credentials. He grew up working in the tomato fields of eastern Collier County where his father heads up tomato research for
Gargiulo, a large grower. Most recently, Augustine was vice president of marketing with Allen Systems Group, a Naples-based technology firm.
But when Augustine was laid off with others last November, he combined his knowledge of technology with his farming roots to create a company that delivers to tomato aficionados anywhere in the country. It's a good lesson in how former white-collar corporate employees are using skills learned over the years to entrepreneurial ventures.
Augustine launched The Fresh Garden Web site (TheFreshGarden.com) and began selling tomatoes and other vegetables online late last year. Despite little publicity, Augustine got about a dozen orders a week over the holidays from people who sent tomatoes as gifts instead of citrus.
The secret to making money on this commodity using the Web is to provide freshly picked product and eliminate the middleman. Augustine has arranged deals with the growers so he can buy 25-pound boxes at a discount and for now ships them out of his home. “If you go to my house there's tomatoes in my living room,” he chuckles. Typically, a farmer collects 27 cents per pound of tomatoes, he says.
Despite the $6 to $10 it costs to ship a box of tomatoes via UPS, it's still less expensive than buying comparable vegetables in a fancy food store in the Midwest or Northeast in the winter. A seven-pound box costs $20, or $2.75 per pound. While the average grocery tomato costs less, vine-ripe varieties often cost more.
A potentially lucrative niche is the so-called “heirloom” tomato. Food lovers seek out these specially grown tomatoes because they're so much more flavorful than ordinary varieties. It's hard to find heirloom tomatoes in stores because they're often odd-shaped and have unattractive colors. A box of those will set you back $70 at The Fresh Garden.
As a startup, Augustine doesn't have a big marketing budget. The only advertising he's purchased is some pay-per-click Google ads. Instead, Augustine posts messages on tomato-lover social networking sites (there's an “I love fresh tomatoes” group on Facebook) and he makes sure the search engines bring up his company's Web site. With little promotion, the company has received more than 100 orders and 10% of those are repeat customers.
While he's developing the Web site, Augustine has also been targeting two other kinds of customers: restaurants and consumer co-ops in the Naples area. Restaurant chefs are looking for locally grown produce they can tout on their menus and some families seek out organic and locally grown vegetables that won't break their budgets.
For example, for $10 or $20 a week, families in the Naples area can get a bag of tomatoes, cucumbers and other vegetables. Augustine meets families at a pre-arranged time and place for pickup. “It could surpass the Internet business,” Augustine says. He's also working with local consumer co-ops to supply them.
On the restaurant side of the business, chefs are looking for locally grown vegetables they can tout to their diners. It's part of the “slow food” movement that can be marketed to customers. And because Augustine deals directly with the growers, he can be more competitive on price. For example, his beefsteak tomatoes are 33% less expensive than a large distributor, he says.
Because chefs prefer to deal with one supplier for all their vegetables, Augustine doesn't limit his deliveries to just tomatoes. So far, Augustine delivers to five undisclosed area restaurants and he hopes to grow the volume of that business. “Our Internet business is more profitable than our restaurant business,” Augustine says. “The restaurant business is almost all about price.”
To grow the business, Augustine and a silent partner are seeking $150,000 in financing. They need to lease warehouse space and buy a truck so they can expand their territory and deliver to the east coast and Orlando. “There's not really a lot of startup costs,” he says.
Sales are now running about $20,000 a year, but Augustine is preparing for faster growth. “Our business could easily triple in the next two to three months.”