Short circuits
Sale through a single intermediary
In this practical guide, you'll find all the keys you need to start up a stress-free short distribution channel. A compendium of best practice, advice and tools from a network of 100 or so experts and producers who are doing it successfully !
Get more out of your produce, reduce your dependence on a major customer, diversify your business... Direct sales offer enormous opportunities and keep their promises ! Provided you do it properly.
What you need to know before you start
Don't jump in headlong without asking yourself the right questions. You need to structure your approach to make it a success.
Why do you want to start ?
- Better income : The fewer intermediaries there are, the more the value of your products comes back to you. You become the sole judge of your selling prices, which means you need to know what the market and your competitors are charging. Do you know how much you can sell your products for ?
- Diversify your business : Direct selling is a business in its own right. There's nothing insurmountable about it, but it does take time ! You need to think about reorganising your business.
- Being independent : Selling direct means limiting your dependence on retailers. You have to be careful not to create a new dependency on a single type of customer - you can't put all your eggs in one basket. No longer outsourcing sales may mean taking on new staff, so how far do you want to go ?
- Responding to strong demand, standing out : Direct selling is a major trend in society and a good bet for the future. Are your products good value as they stand ? Do you need to rethink your packaging or do some processing ? How will you market and communicate ?
- Social link : Selling direct is also a way of opening up to the outside world, of making contact with customers. Will you be delivering to ? Join a producers' group ? Welcome customers to the farm ? Create a new legal structure ? You've made the choice to go into customer relationship management - it's exciting but demanding.
The current context
As we all know, demand for short distribution channels has increased, thanks in particular to the COVID 19 health crisis. The ecological emergency and growing environmental awareness have led to a boom in short distribution channels. And demand is growing all the time. This demand has been met by 23% of farmers who have already started selling through short distribution channels (+15% each year). Yes, the context is favourable for starting up a short distribution channel business !
Choosing your model
Questions to ask yourself
- What type of customer do you want to target ? Selling by retail means you can sell for more, but it's restrictive (lots of small orders). The easiest way is often to start by selling to professionals : the canteens, grocers, shopkeepers and restaurateurs around you are certainly looking for local products, so go and see them.
- Can I deliver ? Professionals will want to be delivered, but beware, it's time-consuming and expensive. You need to organise your delivery rounds and limit the number of delivery days as much as possible. Define your delivery charges and your free delivery : the amount above which delivery is free, to encourage your customers to order.
- What are my sales channels ? You shouldn't be dependent on just one type of customer (during COVID, those who only sold to canteens and restaurants had a tough time of it at first). Below is a list of the main sales channels, so start somewhere and work your way up.
- On your own or with others ? Participating in producer groups is often very beneficial : you can share resources, pool logistics for deliveries, and put together a more complete offer to attract customers. Going to see your neighbours to discuss it can be worthwhile.
- Raw or processed products ? Depending on who your customers are, you need to think about what type of product will sell best : should you sell by the unit or by the parcel ? (Be careful, it should be easy for you to manage, as each customer will want their own offer, so it's up to you to decide). Washed or unwashed ? Peeled or not ? Don't take the guesswork out of customer selection, ask them what they want and decide accordingly.
Sales channels
Direct sales to professionals (canteens, restaurants, retailers)
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Individuals & farm sales
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Producer shops or groups
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Online sales (on your own website or via online marketplaces)
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Legal structure
To make sure you make the right choice, we advise you to consult your chartered accountant. This choice is key to the smooth running of your business. The financial impact can be very significant : will you be subject to VAT or not ? How will you be taxed ?
This article may help you : Farmers : what opportunities are there in direct sales (Pleinchamp).
Structuring your approach
Defining your offer
Before you get started, you need to carry out a market study. Market research will enable you to assess demand and the competition. This will make it easier for you to find the differentiating factor that will set you apart. You will have a perfect knowledge of the market, your target, the products that attract customers, the prices at which to sell, etc. Once the market study has been carried out, you will need to define your offer by creating your product catalogue.
The stages in your market study : 4 stages in carrying out your market study (bpifrance-creation.fr)
Calculating the selling price of your products is not based solely on the prices of your competitors; it's something you need to take into account. You need to calculate the cost price of each product, taking everything into account : the time spent on preparation and marketing, the cost of production, taking into account the impact of your operating costs (depreciation of machinery, equipment, property, etc.). Your accountant can be a good source of advice on your cost structure.
Promoting your products
The visual aspect of your product is a key factor. People judge a lot by the way your product looks. Labels and product marketing are highly differentiating factors. And there are often regulatory obligations to comply with.
Find out more in this article : Traceability of food products
Planning logistics
When it comes to logistics, you need to decide how to manage your deliveries. Delivering internally will take more time, but delivering externally will be more expensive, so you need to define your priorities. You also need to manage the sales area. For farm sales, an area that can accommodate the public needs to be set up. It must comply with all safety standards, you must define and clearly display opening times and provide suitable parking. If you're selling outside, alone or with others, you need to think about renting the site, which will increase your budget.
To help you anticipate costs, you can use a free tool : https: //www.logicout.fr/couts/.
Learning a new trade
Trading is a very different business from farming. You're going to come up against new problems that you'll need to know how to deal with. Selling in the short circuit means knowing how to sell your product, communicate about it, manage customer relations and after-sales service. It also means choosing the right graphics and packaging, and dealing with the administrative side of things. We'll give you all the tools you need right after this.
Making yourself known
To make yourself known, you need to start by creating your own distinctive brand image. Come up with a catchy name and create a small logo so that you can be easily identified. You can have several targets (depending on the products you sell, which need to be adapted to the type of customer) and therefore several lines of communication.
Then you can create your website. There are now free tools that make it quick and easy to create a showcase site (Wix, Jimdo, WooCommerce). If you want to sell online via your site, you'll need a paid version. Shopify is a popular tool that's easy to set up. Don't forget to list your site on Google Maps- it's simple, free and increasingly essential (you can invite your satisfied customers to leave you a Google review).
Next, you'll need to publicise your offer via all the communication channels : Facebook works very well, inform your contacts by email, if you feel like creating an Instagram and Tiktok account to show off your products. List your products on local producer websites (regions often have lists, as do chambers of agriculture, etc.). The more you communicate, the better your website will be listed. Get in touch with local associations and the PAT (Plan d'Alimentation Territorial) referent in your region.
You can also communicate in person (more time-consuming but often much more effective) : distribute a flyer around your home, take part in trade fairs, organise an event at your production site, etc.
To find out more : 15 tools for publicising a shop or small business (conseilsmarketing.com)
Let's get started
Finding the right tools
This new business will require new tools. This is the digital age, so don't spend your evenings doing administrative work - there are tools for everything.
Fromthe basics to management tools, there are tools you can use to keep track of your business :
- Lisy.co, a free order management tool (allows you to manage and share your offer, generate delivery notes, ensure product traceability, etc.). A more comprehensive version automates invoicing, stock tracking and online distribution of your products (for a subscription fee).
- Sucrine club, a tool to help you structure your marketing and find customers.
- If you want to go further, you can switch to ERP software (a more comprehensive management tool), such as Socleo (software specialising in short distribution channels) or Ekylibre (which offers a complete open source tool).
Sales : If you're a cashier, you'll need a cash register system. If you want to keep a close eye on your customers, use a CRM (customer relationship management) tool (for example Hubspot, the free version lets you keep a record of all exchanges with customers, including e-mails). To sell online, sign up to marketplaces such as : Pour de Bon, La Ruche qui dit Oui, Ankorstore, Faire, etc.
For accounting : Henrri lets you issue invoices free of charge, Indy lets you keep track of your accounts, Lisy.co can automate this part of your business (note that Quickbooks was a great tool but they are discontinuing their service in France).
To find out more : Free tools for starting up a short distribution channel - Le coin des circuits courts
Developing your customers
First you need to define your catchment area : How far are you prepared to deliver ? There are a few steps you can take to develop your business :
- Go and see the shopkeepers, restaurateurs and canteens around you - there's an ever-increasing demand for local produce, and this could be an excellent way to get started.
- Find out about local AMAPs.
- Go to markets and other events.
- Join producers' associations (you can find partners to help you offer a more complete product catalogue and develop your customer base).
- Get yourself listed on local websites and Facebook groups. Some people are influential on these networks, so you can ask for their help.
- Use word of mouth.
Finding partners
The most important thing is to surround yourself with the right people, to find experts who can help you throughout your project. Your advisor at the Chamber of Agriculture is there for that, so ask him or her. Ask your accountant for advice on the project, and your banker for advice on the financial side. You can also ask advice from producers who have already taken the plunge, to get feedback on their experience.
Starting up a short distribution chain is a great project, but to make it a success, preparation upstream is essential. Every stage is important to the success of your business. You now have all the keys you need to get started, so go !
