May/June, 2000

From the Editor

Modern Day "Big Book"

The stock market is pessimistic right now on the so-called B2C sites – that is business-to-commerce, for those not up on trendy “new economy” lingo. As such, Amazon.com and those geared toward selling to the consumer have seen their stocks tank, and venture capital funding for the sector is drying up. Instead the hot area is B2B – or business-to-business – sites helping businesses buy and sell to other businesses over the web.

Yet when it comes to the specialty food trade, one would be wise to not write off these consumer-oriented web sties. The reason has to do with the nature of the medium and the nature of the specialty food trade.

Efforts to sell direct to the consumer over the Internet more closely resemble catalog sales than any other form of marketing. As with catalog ordering, one must buy after viewing descriptions or pictures of a product, and one must wait for delivery. The Internet does not seem to be changing this basic dynamic.

If the economics of the web are roughly parallel to that of catalogs, we might ask what kind of stuff has most successfully been sold via catalogs?

The traditional catalog market has consisted of two groups; the first is gifts needing to be shipped. Here catalogs had an economic advantage. This market has grown extensively in recent years, and the reasons explain a great deal of the sales success of Internet vendors such as E-Toys.

The second great strength of catalogs, including the old Sears “Big Book”, which was famous for selling goods from the least expensive up to a house, was in rural America. People in Manhattan didn’t buy houses from the Sears catalog, but farmers in rural areas saw it as a viable option because the products were not readily available locally.

Recently the Wall Street Journal ran a piece about a cereal that goes by the name of Quisp. I remember eating Quisp as a boy, and I remember the great TV commercials revolving around his rival, the fictitious feud between Quisp and Quake.

Well, it seems that there are a lot of baby boomers who remember these commercials since on E-bay and similar auction sites, consumers were bidding on Quisp paraphernalia, driving up the bids on things like the once-free Quisp decoder rings to $600. Even more interesting, the cereal itself, which had been withdrawn from distribution in all but a few cities, was being bid on as well.

Now one might think that such devotion to a brand might encourage Quaker Oats Co., the company that produces and markets Quisp, to make efforts to revive the brand. But there are severe disadvantages to such a strategy. First, the attention paid to Quisp shows only the intensity of interest in the product – not how broad the interest is. More importantly, however, Quaker knows that it is unlikely to get supermarkets to devote more space to cereal. So shelf space for Quisp would mean reduced space for another Quaker brand.

What Quaker did instead was to link the Quisp web site to the web site for Netgrocer.com, an online retailer that sells non-perishable grocery items. Almost instantly, sales of Quisp zoomed, becoming Netgrocer’s single best selling cereal. This seems like an anomaly, but really makes perfect sense. Most people who want Cheerios can buy it at their local supermarket; most people who want Quisp have to buy it at Netgrocer.com.

The definition of what is a specialty food is always vexing, and much attention is paid to the ultra-gourmet stuff. But much food that is Kosher, for example, is not particularly upscale. One of the quirks of the specialty food industry is that a strong regional brand can be a staple in its region but a specialty everywhere else.

What the Internet is offering is an opportunity to broaden the definition and the market for specialty food. I would make the case that a cereal such as Quisp – available, and only spottily – solely in Boston, Chicago, San Francisco, Los Angeles and Seattle, plus a few stores in Buffalo – is a specialty food in most of the country.

The Quisp story tells us that in the age of the Internet, we can look for new communities to appreciate a given specialty item and realize that those communities need no longer be defined geographically. Instead, baby boomers with nostalgia for a TV commercial can be one community, émigrés from Nepal another and lovers of Lawrence Welk another still.

Once upon a time (like yesterday), it didn’t matter if these groups liked something. If they were too spread out, there was no effective way to provide them with the products they yearned for. But the Internet means that everyone has a catalog with everything in it, easily accessible. So if a product isn’t sold in one’s neighborhood, one turns to the modern day “Big Book” – the Internet – and buys.

All of a sudden the source of retail power – the control of shelf space – seems less important. After all, if the market starts to fracture and interesting and emotionally powerful brands start selling over the web, what does that leave for supermarkets but being the place for boring food to be sold?  FDM