This is the sixth part of a larger guide on how to sell private label coffee.
Drop shipping "Private Label" coffee comes with its own challenges, but also presents several upsides. First, let's define what we mean by drop shipping:
Drop shipping is a way of operating where an online store can accept orders and "sell" a product without storing anything. You sell / promote the coffee, accept payment, and the send through the order details to a company that either makes the product and ships it or at least manages the inventory and shipping.
The advantage of this model is drop shippers don't have to worry about the work and costs associated with inventory and shipping. You don't source, roast, store, or ship the coffee. Your role is to promote / market the coffee and setup the appropriate mechanisms needed to "transfer" the orders to someone who will fulfill them.
Given the implications to quality and the high standards food products have when it comes to storage and safety you might be wondering...
Can I drop ship *coffee*?
The answer is a definite yes. In fact, there's no shortage of coffee companies and roasters that advertise their willingness to work with drop shippers and there's even a number of tech platforms the facilitate the shipping and payment solutions needed.
Make no mistake, generally speaking when you drop ship a product you own the product. You're the one who accepts the orders, so if it's your business that gets full credit or full blame depending on the quality of the coffee and the customer experience.
You can choose to drop ship another coffee company's brand, but this article will detail how to drop ship your own "white label' or "private label" coffee. The model is the same regardless, but when going the private label route you are really owning everything customer facing about the business.
Is Drop shipping Coffee Profitable?
According to Research and Markets 2020 study the drop shipping market is projected to reach $591.77 billion by 2027 and growing at a CAGR of 18.3% from 2020 to 2027.
The same report further added that "With the right technology, it is easy to facilitate online shopping and delivery to the customers, even in rural areas. Thus, these factors are propelling the growth of the Dropshipping market in APAC".
As we've documented elsewhere, selling coffee in general is profitable - the sales of coffee are growing and there's evidence that demand for purchasing coffee online specifically is quite robust.
This means that even Café owners who know coffee, but aren't too keen on learning to manage shipping and inventory at scale could benefit from a drop shipping relationship with coffee roaster.
How to Build a Business Drop Shipping Coffee
Externalizing your coffee sourcing, shipping, and inventory means your focus will exclusively be on building a coffee brand and marketing it.
Becoming a coffee drop shipper sounds easy on paper. You sell / accept orders and someone else manages the rest.
Customers pay whatever price you determine for the coffee, you of course need to pay the coffee vendor their "wholesale" price, and the remainder is your profit margin.
As long revenue exceeds the costs of your marketing investment / website operating costs in theory you're good to go.
As is often the case when it comes to private label business models, the single most important thing to consider is the coffee supplier that you partner with.
Sourcing a drop shipping partner means you give up almost 100% control of product quality and customer service while at the same time assuming nearly 100% responsibility for it (in the eyes of customers).
You simply cannot overestimate the time you might need to properly locate and fully vet a drop shipping partner. Things you'll like want to consider include:
- How much control do you get over the roast? This means everything from the source of the coffee beans, the roasting type, the flavour profile etc..
- What parts of the operation do you need take responsibility for? For instance you might be surprised that some suppliers will ask / require that you provide your own coffee bags / labels.
- Transparency and collaboration. To what degree does the drop shipping supplier work with you to tailor the coffee, the packaging, and the service level to your needs and expectations? Do the provide samples for approval? Do they offer different tiers of shipping service levels?
Make sure to do the math.
Make sure the prices are reduced enough that you can sell the coffee for a higher retail price while remaining competitive. This will almost certainly require an "order minimum" to unlock the wholesale price by purchasing large volume.
Also ensure you account for *all* the costs associated with the partnership. Costs could include extra fees for coffee bags and labels. Of course there will also be inventory management and shipping and handling fees.
You'll need to run the numbers through a formula similar to the following:
Your retail price x volume sold -
(Wholesale costs per bag of coffee x volume + shipping / handling fees + any additional fees for bags or just a flat cost)
= Your profit per bag sold.
The the question becomes "at what quantity of coffee sold (and at what retail price) am I profitable".
But now you need to do more math to account for your own operating costs including website management and marketing.
So the question changes to "how much coffee do I need to sell at a given price to cover the wholesale coffee supplier costs + my own costs."
Locating and Working With Coffee Suppliers
As mentioned elswhere, there's no shortage of coffee roasters that will help you build a business private labelling your own coffee.
It can be more challenging to source a coffee company that will help you drop ship. You'll need to find a supplier that will offer whole sale / private labelled coffee but is also willing to handle the inventory and shipping.
That said, they are definitely "out there".
We've put together the following table to help you find some available coffee roasters that will also help you drop ship the coffee.
Please consider these a sample. Many of them are quite reputable but we can't 100% vouch for their reliability. Make sure to do your due diligence. Don't be afraid to ask them for testimonials!
|Name||URL||Region||Automated Orders?||Private / White Label?||Comments|
|Bondi Beach Tea||https://www.bondibeachtea.com.au/pages/wholesale-tea-suppliers||Australia||Yes||Yes|
|Buy Coffee Canada||https://buycoffeecanada.com/pages/private-label-coffee||Canada||Uncertain||Yes||Requires large orders (100lbs per month or more).|
|Aroma Ridge||https://aromaridge.com/fulfillment-drop-ship-program/||United States||Yes||Yes|
|Old Chicago Coffee||https://www.oldchicagocoffee.com/dropshippers.php||United States||No||Yes|
|Path Coffee Roasters||https://pathcoffees.com/private-label-dropshipping-program||United States||Yes||Yes|
|Seattle Gourmet Coffee||https://seattlegourmetcoffee.com/pages/wholesale||United States||No||Yes|
Become a Coffee Drop Shipper w/ Shopify
If you use Shopify to build a coffee website it does open the door to one particularly compelling opportunity: you can use a Shopify App called Dripshipper to facilitate and automate the whole process of drop shipping coffee quite easily.
Dripshipper allows you to both private label and drop ship the coffee through their integrated Shopify App.
As they put it:
"We sync your orders with the roasters automatically. When you sell a product, the supplier will fulfill the order automatically. Nothing for you to do."
They offer samples, volume discounts, and custom labelling (for additional fees).
Also, you only pay for what you sell, which makes their product an attractive option in terms of being able to try it out with minimal risk.
Finally, the choice of coffee they make available is fairly extensive. You can choose from single origin, blends, specific flavours and even decaf options.
The main take-away here should be that coffee drop shipping is very possible. Furthermore, it's possible to drop ship coffee under your own private label brand.
The advantage is that you make your initial startup investment a lot lighter, especially in those cases where you only pay when the coffee is sold. As a long term business model drop shippping will always have some limitations, as beyond a certain point you may find it much less costly overall to cut out the middleman and manage your own inventory or shipping.