Natural, organic product makers adjust to evolving retail, e-commerce environment

BOULDER — How much should I focus on selling my product directly to consumers versus brick and mortar retailers? Should I look at e-commerce giants such as Amazon as sales channels or a marketing opportunity? Boulder is a natural and organic product mecca, but can I afford to set up shop there given the extremely tight labor market and ever-rising rent?

These are the questions on the minds of the leaders of the Boulder Valley’s natural and organic industry, who gathered Tuesday in Boulder to participate in BizWest’s Natural and Organic CEO Roundtable.

“We’re all facing a changing retail landscape, a changing competitive landscape, and we’re all facing the practical pressures from costs increasing and revenue being capped,” Made in Nature LLC CEO Doug Brent said. “It’s an interesting time to be in the natural foods business as more people see opportunities and try to jump in.”

As more firms — both startups and established consumer packaged goods players — enter the already crowded marketplace, natural and organic companies must devote more time and energy to “finding ways to stand out on the shelf and finding the right margins,” Made in Nature LLC chief operating officer B.J. Howard said.

Doing business is complicated not only by the number of companies involved in selling organic products, but also the variety of outlets where and how products are sold.

“It’s gotten so much more competitive online, especially in our industry because the barriers for entry are relatively low,” Eco Vessel LLC president Jonathan Fox said. “… Brands have really shifted toward going after customers online and getting sales directly.”

Online retailers such as Amazon provide not only a platform for the natural and organic industry makers to sell products, but also a platform for consumers to discover and review those products. But relying heavily on third-party sales channels can quickly eat away at a firm’s profits.

“Amazon has become the Google of product investigation,” Brent said. “You can’t not be there.”

Companies that sell on Amazon must decide whether they want to operate a “seller central” or “vendor central” sales model. The seller central model involves the sale of goods directly from the producer to the customer. Under the vendor central model, Amazon’s distribution teams buys a firm’s wares and resells them to customers. Each option involves its own pros, cons, costs and complications.

“To make it work selling on Amazon, you really have to do your homework and know your stuff,” Keen One Foods CEO Christopher Algea said. 

While some of the natural and organic products industry’s challenges are unique, it’s not immune to economic factors that impact many other industries: trade wars, real estate prices and the tight labor market, for example.

“It’s a good time to be a little bit more conservative in terms of planning … [because] there could be some headwinds coming our way,” Boulder Food Group founder and managing partner Tom Spier said. 

WishGarden Herbal Remedies Inc. CEO Sam Hunziker said his firm, like so many others in this ultra-low unemployment environment,  “definitely has some concerns about the labor market here in Boulder.” 

Boulder’s sky-high commercial real estate prices are also a challenge for the industry.

“First it was the cannabis guys and now its the CBD and hemp guys” who are gobbling production and warehouse space in the region, Claremont Foods LLC CEO  Alex Cioth said.

Companies in search of large industrial spaces are frequently looking to areas such as Broomfield or eastern Boulder County rather than within Boulder or Longmont city limits.

“How far out of Boulder can we be where we can still attract talent?” is a question leaders of these firms are asking themselves, Sunrise Strategic Partners chief operating officer Vincent Love said.

BizWest CEO roundtables are sponsored in Boulder by Berg Hill Greenleaf & Ruscitti LLP, Plante Moran and Community Banks of Colorado.

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