The new business venture for evaluation is the online coffee shop named Fair Trade Joe with the domain fairtradejoe.com. The client base that will be targeted includes connoisseurs and regular coffee drinkers who find it important for their coffee to be ethically sourced. For many consumers, coffee represents a crucial part of the morning routine. Some people prefer going to a local coffee shop, while others enjoy their cup of freshly brewed Joe at home or take in a to-go cup on a commute. In the modern digitally driven business environment, the transfer of a coffee business online could be a fruitful venture because the demand for the product offers vast opportunities. Selling coffee can be highly profitable with the right plan of marketing and a strong brand presence even though the competition is high (Adeleke, 2019). The advantages of coffee as a high-commodity product include small-brand advantage, the high value offered to clients, as well as niching opportunities.
Business Proposition
Selling coffee online has many advantages because the product is widely available, and there are different kinds, tastes, strengths, countries of origins, ways of harvesting, and other variations that can be presented in an online café. A diverse and widely available product is easier to sell because customers already want the product, and the business has to make sure that customers want to purchase it from a specific online store (Witcher, 2020). It is expected that Fair Trade Joe will generate a high volume of customers; the clients are more likely to associate small brands of coffee with higher quality compared to corporate brands.
The main objective of Fair Trade Joe is working with the right suppliers with an emphasis on the ethical sourcing of high-quality coffee. In the coffee business, suppliers usually represent the continuation of the coffee brand. Therefore, if the supplier provides bad beans to customers, it will mean that Fair Trade Joe does not care about the quality of their beans. It is expected that the company will source its beans and roast them in-house to have more substantial control over the quality of the product being sold to the end customer. Customer service will play a defining role in the success of the company – the brand’s consultants will have to walk customers through the process of choosing the option that will suit them the best. Price will also play a significant part in the success of Fair Trade Joe because customers need to see that the brand offers a range of prices, including affordable and more premium and expensive options.
SWOT Analysis
The SWOT analysis quad chart presented above allows analyzing what Fair Trade Joe does right at the moment, what are the prominent company issues that limit company success sot those that competitors may exploit if the organization does not fix them (Brandenburger, 2019). When it comes to the strengths of Fair Trade Joe, the brand represents a positive attitude and optimism because the product it sells emits warm feelings in its customers. The availability of a wide selection enables customers to choose the option that is right for them, while the customer-oriented strategy makes it so that clients know that they will be catered to. Through an attractive website design and a clear value proposition, Fair Trade Joe will establish and promote the message about the importance of combining fair trade and high quality in coffee (Lee & Bateman, 2021). When it comes to the company’s weaknesses, it experiences both extensive and robust competition while the market share is limited. Being a newcomer to the business, Fair Trade Joe inevitably experiences lower brand awareness among customers because of the high number of possible substitutions. Besides, more new brands will inevitably emerge because of the lower barriers to entry.
The coffee industry is vast and adventurous, with many opportunities for companies to become quite profitable. Therefore, Fair Trade Joe has multiple opportunities in terms of business, such as using its customer-oriented strategy to develop stronger relationships with its clients, grow retention, and build brand awareness. After building traction through product line extensions and introducing a mobile application for customers’ convenience, the company will use its online sales to broaden the geographic area and increase across-the-board margins by working with multiple suppliers. Finding new suppliers will also help add product line extensions to attract customers. In terms of threats, there are challenges associated with suppliers increasing their costs, thus influencing prices for end customers and aggressive competitor behaviors, which can limit the capabilities of the company to pursue a business. Competitors, especially those that are already operating in the market, can provide more added value to customers, thus creating complications for the company.
Monetary Information
Fair Trade Joe is a business that will sell in-house roasted coffee beans under its private label. This means that an initial inventory purchase will be needed, including payment to transport goods from US-based suppliers who purchase fair trade coffee beans from Guatemala, Nicaragua, Ethiopia, Colombia, Ecuador, Peru, Mexico, and other countries. It is expected that the initial purchase of coffee beans will be estimated at around $1,000-$1,500 (excluding shipping costs) to buy several variations and batches of coffee to roast them in-house, package the beans, print labels with logos, and stock the online shop. The average upfront cost for building a website for Fair Trade Joe will be around $200 using a customizable platform such as Squarespace, with the ongoing cost per month averaging at $50 (Carney, 2022). The initial costs for packaging, printing labels, and miscellaneous expenses are estimated at around $500 to start the shipping of the beans as soon as customers make a purchase on the website. In terms of marketing, the start-up can spend around $100 on online marketing, such as Google Ads, Instagram, Facebook, and TikTok promotions. The breakdown of the monetary information for Fair Trade Joe is below:
The sources of investment for Fair Trade Joe may be varied, with the initial sum collected from personal savings while another part can be raised through crowdfunding. With the help of crowdfunding, the company has the opportunity to advertise its brand by making a business pitch on the online platform where the collection of funds is made and sharing the business model and expectations for potential growth. The main goal is to communicate the message of transparency in the sourcing of coffee around the world. Crowdfunding will essentially create public interest in the business, which is free marketing, while also providing finance for starting up Fair Trade Joe. Besides, crowdfunding eliminates the details involved in placing the business in the hands of investors (Popescul et al., 2020). It is also possible to attract venture-capital investment as the business progresses.
Evaluation
Considering the potential that the online coffee business has on a long-term basis and drawing from the SWOT analysis and the financial breakdown, it can be concluded that Fair Trade Joe has multiple opportunities for success. Coffee is a commodity that is in demand at all times, and customers will value brands of coffee that are dedicated to the ethical sourcing of the product and can vouch for its high quality. While the competition in the market is severe, the focus should be placed on branding and communicating the message of the importance of fair trade in coffee manufacturing. Building customer relationships is possible through ongoing communication and collecting feedback, which will bring more new customers through word-of-mouth marketing. Overall, it is recommended to continue working on Fair Trade Joe because of the abundant opportunities in capturing a large customer base and expand it over time.
References
Adeleke, A. (2019). Marketing strategies of successful coffee shop owners. Walden University.
Brandenburger, A. (2019). Are your company’s strengths really weaknesses? Harvard Business Review.
Carney, L. (2022). How much does a website cost in 2022? (Full breakdown).
Lee, Y., & Bateman, A. (2021). The competitiveness of fair trade and organic versus conventional coffee based on consumer panel data. Ecological Economics, 184, 106986.
Popescul, D., Radu, L. D., Păvăloaia, V. D., & Georgescu, M. R. (2020). Psychological determinants of investor motivation in social media-based crowdfunding projects: A systematic review. Frontiers in Psychology.
Witcher, B. (2020). Absolute essentials of strategic management. Routledge.