Drop shipping Private Label coffee comes with its own challenges, but also presents several upsides.
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 that 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 that’s “customer facing” about the coffee and the business.
Drop Shipping Your Own Private Label Coffee
The Benefits of Drop Shipping Coffee
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 promote and then sell the coffee online, accept payment, and then 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 set up the appropriate mechanisms needed to "transfer" the orders to someone who will fulfill them.
As with all drop shipping models one benefit of drop shipping coffee is that you don’t store any inventory, which significantly reduces your risk of losing time and money on a product that doesn’t sell.
Another benefit to drop shipping / selling coffee in particular is that it is a frequently and regularly repeating purchase. Coffee consumers are in the habit of drinking coffee regularly which means, if you have a good product, it’s easy enough to get repeat customers. This also makes it easy to set up a regular coffee subscription model for your business.
Another benefit to drop shipping coffee is that it’s a product that is sufficiently in demand that you will not have too hard a time finding suppliers and tech platforms that can help you put together the drop shipping business, which we’ll discuss later on.
By outsourcing and automating your inventory and fulfillment through drop shipping + setting up a monthly coffee subscription model you can create a self sustaining and semi-automated business while you focus on marketing and growing your customer base. Externalizing your coffee sourcing, shipping, and inventory means your focus will exclusively be on building a coffee brand and marketing it.
According to Research and Markets May 2021 report” “..the global market for Coffee Shops estimated at US$156.9 Billion in the year 2020, is projected to reach a revised size of US$201.4 Billion by 2027, growing at a CAGR of 3.6% over the period 2020-2027”.
The Challenges of Drop Shipping Coffee
The global coffee industry is dominated by some dominant players and really well known brands. The industry definitely does not lack for competition and coffee drinkers tend to be increasingly discerning in their tastes.
This means you’ll find major competition across all different kinds of customer segments. There’s big players who look to target consumers who are looking for value while many others seek to carve out space in the niche for premium or gourmet coffee offerings.
Another major challenge is the fact that your coffee business operates in the food and grocery industry, which means special attention needs to be paid to quality and logistics. Coffee beans, like most food, are vulnerable to temperature, storage conditions, and packaging errors. If quality control and logistics are not carefully planned you could end up shipping your customers bad or stale coffee.
In a drop shipping model you give up a lot of control over production and quality, which is why selecting the right partner or partners is so critical.
How to Start a Coffee Drop Shipping Business
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.
It’s fair to say day to day operations of a coffee drop shipping business are straight forward, so in this section of the guide we will walk you through the longer (and more complicated) part of the business journey: actually starting the business.
Step 1 - Find a Coffee Drop Shipping Supplier
This is absolutely the most important step. It’s exciting to start thinking about building a website for your coffee, or deciding on the logo and packaging for the brand etc.. but the key part of your business is the partnership you will need to establish with a coffee roaster.
You’ll start by looking for a coffee roaster who can sell coffee wholesale and who allows for the option to “private label” the coffee with your own brand (not to worry, as many do allow this) and finally, one who accommodates drop shipping.
As you can probably guess, finding a coffee wholesaler / roaster who can also function as a drop shipping partner is not always easy.
Most coffee roasters specialize in sourcing green coffee beans, roasting them, and then selling them in large amounts to coffee retailers (online or otherwise) who handle the distribution and order fulfillment themselves.
Having said that, the drop shipping trend has caught on in recent years and you will in fact find quite a few roasters who are able to not only roast the beans but turn around and sell them direct to the consumer. Moreover there are even some tech platforms that integrate directly with eCommerce website’s and marketplaces that will help facilitate the drop shipping arrangement (more on this later).
Chances are you will want to start looking for your drop shipping partner by checking out coffee wholesaler directories online. Once you find a supplier that operates in your area you’ll need to check out their website or contact them to find out if they offer drop shipping as a service.
Before getting to that, you’ll need to give some thought to what you’re looking for in a coffee supplier / drop shipping partner.
What to Consider When Choosing a Supplier
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), so you need to really think through your needs in advance of contacting anyone.
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 to 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 they provide samples for approval?
- Do they offer different tiers of shipping service levels?
Coffee Roasters Database
To help make the process of finding a coffee roaster who offers drop shipping easier please feel free to make use of the database below:
|Joe's Garage||Yes||United States||Kent||20232 72nd Ave S, Kent, WA 98032||https://joesgaragecoffee.com/||206-202-6450|
|K&F Coffee||No||United States||Portland||2801 SE 14TH AVENUE PORTLAND, OR 97202||https://kandfcoffee.com||503-234-7788|
|Austin Roasting Company||Yes||United States||Austin||720 Bastrop Hwy #301, Austin, TX 78741||https://austinroastingcompany.com/||512-751-2272|
|Orinoco Coffee & Tea||No||United States||Jessup||265 Patuxent Range Road, Jessup, MD 20794||https://www.orinococoffeeandtea.com||410-312-5292|
|Club Coffee||No||Canada||Toronto||55 Carrier Drive, Toronto On||https://clubcoffee.ca/||416-675-1300|
|Bondi Beach Tea||Yes||Australia||Sydney||35 Baxter Rd, Mascot NSW 2020, Australia||https://www.bondibeachtea.com.au/pages/wholesale-tea-suppliers||61284168019|
|Rumble Coffee||Yes||Australia||Melbourn||8 Thompson Street, Kensington||https://www.rumblecoffee.com.au/pages/coffee-dropshipping-with-rumble-coffee||03 70340271|
|Buy Coffee Canada||Yes||Canada||Windsor||3110 Marentette Ave.||https://buycoffeecanada.com/pages/private-label-coffee||1-800-870-8982|
|Café Hormozi||Yes||United Kingdom||Kent||Unit 2, Precision 4 Business Park, Styles Close Sittingbourne,||https://hormozi.co.uk/coffee-dropshipping/||01795 229233|
|Coffee Direct||Yes||United Kingdom||Lymington||O Box 433, Lymington,||https://www.coffee-direct.co.uk/collections/coffee-dropshipping||[email protected]|
|Limini Coffee||Yes||United Kingdom||West Yorkshire||Unit 6 Luddite Way Business Park, Rawfolds Way||https://www.liminicoffee.co.uk/wholesale_dropshipping||01274 911 419|
|Aroma Ridge||Yes||United States||Marietta||1831 West Oak Pkwy. Suite C||https://aromaridge.com/fulfillment-drop-ship-program/||770-421-9600|
Using a Tech Platform to Find a Supplier
Depending on the website builder you use to set up your online store you may be able to use a service that fully facilitates the process of sourcing coffee from a roaster who will drop ship.
We'll itemize some of the more notable "apps" or platforms that provide this service:
Another option is to use a service that integrates directly with eCommerce platforms like 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.
Setting up Dripshipper is relatively painless.
This is how it works:
1. You define the packaging for the coffee you wish to sell.
2. You add their available coffee products to your (Shopify) store. You can choose the coffee, the grind type, the size of the bag etc..
3. The Dripshipper interface allows you to design a custom label and use that on the coffee you are selling.
4. You setup your store so customers can buy and you process the payments.
5. Once you have collected the payment the Dripshipper app automatically fulfills the order.
Dripshipper handles the shipping labels, ultimately ships the order to the customer (with tracking info) and then marks the order as fulfilled once it’s received.
Using Spocket to Drop Ship Coffee
Other, similar options, you can use to drop ship coffee include Spocket.
Spocket is a fully-automated dropshipping platform that houses suppliers in the USA and Europe. Unlike Dripshipper they don’t focus exclusively on coffee and in fact have a wide range of products they can help you drop ship.
Unlike Dripshipper Spocket also integrates with a broader variety of eCommerce platforms. So they can be used with a Shopify store but they can also be used with Wix, WooCommerce, and other eCommerce CMS platforms.
One disadvantage with Spocket is that they tend to have more non-food related products available to sell, to the variety of coffee suppliers might be somewhat limited.
Using Oberlo + AliExpress to Drop Ship Coffee.
Oberlo is another example of a drop shipping platform that integrates directly with Shopify. Simply put Oberlo acts as something of a “middle man” to integrate AliExpress (a marketplace for wholesalers who drop ship) directly into Shopify.
Similar to Dripshipper and Spocket, the Oberlo App helps you automate the product feeds and inventory from a chosen supplier.
The major limitation is that Oberlo only brings you wholesalers listed on AliExpress and they mostly ship from China. Given food regulations as well as concerns about the length of time to receive the products this may be a tricky option to pursue in the coffee vertical.
Step 2 - Build an Online Store
Once you’ve determined how you will find your coffee supplier and sell the coffee to the end customer you’ll want to figure out how you will build your online store to sell and promote your coffee.
The fastest and least costly way to do this is to choose an e-commerce platform (or CMS). One popular (probably the *most* popular) platform you can choose is Shopify.
Choosing a platform like Shopify enables you to build a sleek, professional-looking online store without having any prior experience in web design. It’ll also be super secure so your customers can rest easy giving their payment and shipping information.
You can read our more detailed guide on setting up a Shopify store to sell coffee here.
For the purposes of drop shipping your own private label coffee the key call out is that you will work with one of two scenarios.
Scenario A: Working with a coffee wholesaler / supplier you directly partnered with.
In this scenario you will need to manually build out not only your products but most importantly an inventory tracker.
This means you’ll likely want to setup a “product feed’ that tracks all the coffee types you sell, their pricing information, and their inventory levels. All that information needs to be tracked and updated so you know how much coffee your wholesale partner has “in stock” or ready to ship.
This means you’ll need to establish some kind of communication process with your coffee supplier to keep your product feed up to date and maintain it within your Shopify store.
Scenario B: Using a an app (like Dripshipper) that integrates directly with the Shopify platform.
There’s not much to worry about in this case. A fully integrated app will manage your product feed and inventory levels as part of the service. Generally speaking this means you can add all your coffee products to your Shopify inventory management system with a single click of a button.
Step 3 - Drop Ship Through a Marketplace Like Amazon
You can definitely drop ship coffee through online marketplaces like eBay and Amazon. You can choose this option as an alternative to selling through your online store or in addition to selling that way.
In the case of Amazon the process is actually relatively simple. In one approach you could leverage Amazon’s FBA (Fulfillment by Amazon) service. Amazon FBA basically promises to have Amazon “pick, pack, and ship your orders for you”.
So in a drop shipping arrangement the process would look as follows:
1. You have your coffee supplier ship a predetermined volume of your coffee inventory to one of Amazon’s fulfillment centers.
2. You sell your coffee on Amazon.
3. Once the coffee is ordered, Amazon automatically handles payment processing AND fulfilling the order. When Amazon’s inventory of your coffee starts running low, you have your coffee supplier ship more over as a “top up”.
The major drawback or challenge with this approach is that if the coffee takes too long to ship to the customer (as it’s going through multiple steps to get to the end consumer) or stays in Amazon’s inventory for too much time it will lose freshness and flavour.
For this model to work you would need to make sure your coffee orders are coming at a regular and somewhat predictable pace otherwise you risk having too much inventory waiting too long to be consumed, negatively impacting the product quality.
Of course this model could also work if you were selling coffee products like K-Cups or coffee pods / capsules.
Check out our full guide for more details on selling coffee through Amazon.
Keep in mind that Fulfillment by Amazon (FBA) can also be a clever way to drop ship coffee from coffee suppliers who do not offer coffee drop shipping as a service. You can have those coffee roasters ship the coffee to Amazon’s fulfillment center and pay Amazon to handle the inventory, shipping, and fulfillment. Amazon also offers a service called “Multi Channel Fulfillment” so that you can pool your inventory “to fulfill orders from your other channels including your own website”. This means you could sell a coffee roasters coffee through your website (in addition to or instead of having it on the Amazon marketplace) and have Amazon fulfill the orders.
Step 4 - Market the Drop Shipping Business
This step is critical.
Since you’re not handling the inventory, fulfillment or even the product quality your business is less about producing and shipping coffee and more about building a coffee brand and promoting it.
This means roughly 80% - 90% of your time should be spent on deciding how you will position the coffee brand and coffee that you are selling and then finding out how to best reach the audience for the coffee.
A good question to ask yourself is “how is my coffee or coffee brand different and why is that important to a certain segment of customers?”
The answer to that question cannot be “because it’s cheaper”. Outsourcing your fulfillment and coffee production gives you very little control over your costs, which means differentiating on price will probably not be an option.
More likely you will need to identify something that makes the coffee “better” for a specific segment of the market. For instance “this is the best coffee for people who want very dark roasted decaf.”
In practical terms this means you need to give thought to all the copy and design elements that will be visible to consumers on your website (or Amazon product listings). Everything about the packaging of the coffee bags, the way it’s presented on the website, and the way it is advertised anywhere else needs to unambiguously communicate that it’s the perfect solution for someone looking for dark roasted decaf coffee.
Building a Profitable Business Drop Shipping
Your profits are going to come down to a simple formula:
Profit = Retail Price of Coffee – (Wholesale Price + Fees/Costs)
The wholesale price will largely depend on the volume of coffee you order from the coffee roaster. The more coffee you are able to sell the lower the price per bag.
The fees and costs will be a function of the costs from various suppliers that facilitate the drop shipping model (coffee suppliers inventory and shipping costs or costs of Dripshipper type subscriptions) plus your own operational or advertising costs.
This means that when you start selling coffee you might not be able to run a profit until your order volume is high enough to see the benefits of reduced cost per bag sold from wholesalers. In all likelihood the profitability of your drop shipping business is going to be dependant on getting to a point where you sell enough coffee that your wholesale price of coffee is reduced.
For that reason it’s advisable to take a phased approach to building your business until you are profitable.
In the early stage you might want to test a few different types of coffee to sell, and only purchase a low volume of each from your supplier. This way your initial costs are kept low while you figure out what kind of coffee is going to sell the best and be most in demand.
After testing the waters with a small investment in different coffee products and some advertising, you can figure out what type of coffee sells best and then start building towards selling enough of that coffee to hit the required volume discounts that will make you profitable.
Is Drop Shipping Legal?
Yes, it’s legal to run a business through Drop Shipping.
That said, there are legal requirements to running any business and they can vary depending on the type of business you are in.
Like any other business, you are still legally required to register your business.
You also need to make sure you are clearly identified as the seller of your coffee on receipts and any consumer facing promotional assets.
Ideally, you’ll also want to work with your coffee roaster / wholesaler to define and sign a drop shipping agreement contract. The intent of such a contract is to outline all the specifics regarding price, quality assurance, delivery, and returns.
Since coffee falls under food you also need to take special care to ensure the coffee supplier has all the required paper work and certifications to sell perishable food items like coffee.
Is Drop Shipping Coffee Profitable?
It’s definitely possible to build a profitable business selling coffee in general.
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.
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 question becomes "at what quantity of coffee sold (and at what retail price) am I profitable".
What Does the Drop Shipping Supply Chain Look Like?
In the case of coffee generally green coffee beans will be sourced from a farmer by a coffee roaster.
The coffee roaster will roast the beans and sell them to coffee shops and other coffee retailers.
In a drop shipping agreement the coffee roaster would agree let you purchase the roasted coffee beans (and so they would be roasted to your pre arranged specifications) and they would charge you extra to keep them in inventory.
After making a sale and processing the payment you would provide the shipping details to the coffee roaster who would then arrange for the coffee beans to be packaged and shipped to your customers.
So in this model consumers would receive the roasted coffee beans directly from the roaster.
Can I Drop Ship on Amazon?
Yes, you can drop ship coffee through Amazon.
You would first need to register with Amazon and make it clear that you are the official seller of record of the coffee. This is because it’s not legal to simply purchase someone else’s coffee on Amazon and have it shipped to a customer while pretending you are the original seller of the coffee.
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.