Fruits of Thought
What makes for a successful sales organization in the fresh produce industry? It is not easy to say. To start with you have the question of what criteria to use when evaluating selling organizations. Is it volume, the one that sells the most? Is it price, the one that provides the highest return to the grower?
Even these decisions aren’t as easy to evaluate as one might think. Some years ago, my family was involved in selling for a farm in Puerto Rico, both in selling their crop in export markets (mostly the U.S. and Europe) and selling it through a wholesale operation we operated in San Juan. The farm, however, continued to do direct sales at the farm for those buyers in Puerto Rico who came directly to the farm to pick up their produce.
The farm constantly complained that our San Juan operation did not get as good a price for the crop as they got right on the farm.
But, as is so often the case in life, a little knowledge can be a dangerous thing, and what the farm didn’t realize was that the high prices its farm based sales organization garnered were only possible because the farm knew that any product it didn’t sell could be shipped to us in San Juan. As such, the sales organization could set high prices for what they sold, and if they sold very little, they shipped the rest to San Juan.
On the other hand, we had responsibility for marketing the entire crop. We thought not in terms of how to get the highest price on a given case, but in terms of how to sell the entire production so as to realize the maximum return for the grower. In many cases, for instance, if we knew we were heavy with an item, we would intentionally propose a lower price to get a chain to go on special and thus help us move the volume and avoid dumping product.
So, the sales team that gets the best prices may not be the one that does the best job for the grower.
There is no evidence that having a large organization, or even many salespeople, means that a sale organization will be successful. Sometimes, in fact, a large organization can be a hindrance because it slows the communication of vital data through the organization.
My father once had a very big deal selling imported melons, in fact, working virtually alone out of a small office in Pompano. My father was actually able to sell more melons at a higher average price than did some of the big multinational produce giants. How was he able to do this, operating without the advantage of numerous salespeople strategically located around the country? Well, the answer is two-fold:
First, those large organizations, with sales offices spread out across the country, are often unaware of information that is crucial to success in these matters. And second, the salespeople working for big organizations often do not have the authority to act expeditiously on information they do have.
Think about how this all plays out. One person selling the whole country gets instantaneous feedback on the market. He learns that, all of a sudden, the West Coast wants Caribbean melons in a particular size because, this week, Mexico can’t meet the demand. A little piece of information such as this is crucial.
A sharp salesperson starts selling his East Coast, Midwest and Southern customers other sizes so as to keep availability of the size needed to satisfy the West Coast buyers. Prices are quickly raised on the crucial size, and may be raised on other sizes as well, all to reflect the additional demand. But in a big organization, the Northeast sales office might not even know what the Southwest sales force is selling, and what personal incentive does a Northeast salesperson have to switch his buyers from sizes they prefer?
And quick decisions are crucial. For much of produce, the ability to adjust prices literally minute to minute is the key to maximizing returns and volume. But, in fact, in large organizations the sales people are less likely to have the authority to be flexible when it comes to altering prices during the day, offering price protection and so forth.
It is important to remember this. For all the talk of marketing partnerships, strategic alliances, Electron Data Interchange and so on, the vast majority of fruits and vegetable are sold, day to day, in a competitive market situation.
There is no substitute for having smart people selling produce, who have access to information and authority to act on it.
This is all vitally important if you are a grower, a shipper, or an importer, and for the obvious reason that you need to maximize returns. But, it is important for buyers as well. Slow-selling organizations are inefficient at allocating and pricing produce and so lead to shortages of desired sizes and varieties. They also tend to warehouse a lot of product which they can’t sell immediately. They also tend to warehouse a lot of product which they can’t sell immediately. This buildup of inventory creates an overhang of declining quality product on the market and leads to market collapses and customers dissatisfied with the home “shelf-life” of the produce they purchased. A good sales team, in contrast, steers product to those who really value it most, and they push it out of warehouses and into stores and restaurants, thus preventing product buildup and keeping fresh produce in the distribution chain. That helps the seller, the buyer and the consuming public as well. pb