Newer startups ranging from Glossier to Goop are launching with a website or newsletter in order to build an audience, and then adding on e-commerce once they’ve built a strong following of readers around a particular topic. As they do so, they often run into growing pains as they have to add on all the features that shoppers have expect from a modern shopping website.
One example is Food52, which first started in 2009 primarily as a recipe and cooking website, is now a full blown e-commerce company. The company first started selling products through its website in 2013, and about 75% of sales now come from its online shop. In 2019, Food52 was projecting that it would do $40 million in revenue. Co-founder and CEO Amanda Hesser declined to comment on what the final revenue tally was for 2019.
Over the holidays, Food52 faced a two-part challenge: the prior year, Food52’s customer service team was understaffed, Hesser admitted, and this year the company wanted to reduce the time it took to initially respond to customer questions. Additionally, Food52 wanted to expand its return policy, which would place additional strain on its customer service team. Historically, Food52 has only accepted returns if a product was damaged.
“We needed to find a way forward that was much more customer centric,” Hesser said. “I think a lot of our products, what you see is what you get, but there is a lot of things like table linens or plates that until you actually see it in person, you don’t actually know if it matches your dining room.”
“Publishers are good at publishing, they’re not [historically] good at making products — they have to learn a whole new muscle,” Richie Siegel, founder and lead analyst of Loose Threads, previously told Modern Retail. It’s not enough just for publishers to add products onto the website. Companies like Food52 are finding that they constantly have to figure out ways to get products to customers faster, and improve the buying experience, so they’ll keep coming back.
While Food52 launched its own direct-to-consumer line towards the end of 2018, the company initially launched its online shop as a dropshipping business. That means that when customers order products from one of the roughly 350 vendors who sell through Food52’s website, the vendor ships it directly to the customer. But, because customers bought the product off of Food52’s website, they would end up reaching out to Food52’s team if they had an issue with the order.
“We were kind of the moderator between the customer and the company who made the product, and that was very suboptimal for everyone,” Hesser said, explaining that sometimes the vendors would want the customer to send a picture of a product to determine that it was indeed damaged before accepting the return and giving them a refund.
So this fall, Food52 extended its return policy in order to allow customers to return products within 30 days of delivery. If an item is non-defective, customers are fully refunded, minus the cost of shipping. If the item is damaged, customers are fully refunded and don’t have to ship the product back.
But, the fact that Food52 is a dropshipper, and doesn’t have one central warehouse where it can store all of its products has meant that the company has to process returns differently than most other e-commerce companies. Shoppers have to email the customer service team in order to initiate a return. The customer service team will then create and send the customer a shipping label, because where the product goes will vary depending on what vendor they bought it from, and where they are located.
Additionally, because Food52 has vendors located all over North America, they have to balance whether or not its worth it to send the product back to the vendor. Though Hesser described it as an “edge case,” customers who return products purchased from vendors in Canada, Food52 will have the customer send the item back to its offices, and offer the product to its employees to buy at a discounted price. If no one ends up buying it, Food52 will eat the cost of that return, and not send it back to the vendor, because shipping it back to Canada ultimately isn’t worth it.
Because all returns have to go through the customer service team, Food52 decided to expand its customer service team in conjunction with this change. During the 2018 holiday season, Food52 experienced a higher-than-expected uptick in sales, and it took the customer service team 12.7 hours to respond to a customer’s initial email received during the four days between Black Friday and Cyber Monday.
Food52 did decide to hire one additional full-time customer service worker this year, bringing it up to a team of five. Additionally, Food52 decided to bring in 4 in-house part-time customer service ahead of the holidays, as well as to hire a remote customer service team in the Philippines. That way the company could have a larger team for the holiday season rush and ensure more workers were available around-the-clock, but then rely on fewer workers once sales tapered off. Hesser said the size of the remote customer service team ranges from 7 workers during Food52’s slowest sales period to 45 during the holidays.
The result: Food52 said the average time it took to respond to a customer’s initial email received during Black Friday and Cyber Monday this year dropped to less than 40 minutes. And, so far extending its return process hasn’t resulted in a significant uptick in returns. Hesser said that Food52’s return rate has actually dropped since it extended its return policy, and just 1.25% of items are ultimately returned.
Hesser said that one of the next steps for Food52 is to figure out how to offer self-service returns to the customer, a functionality that the company wants to build in-house.
“It’s not an easy return system to build because you are not dealing with one or even a handful of warehouses, you are dealing with products coming from 300+ locations,” Hesser said.
This article has been updated to clarify that Food52 fully refunds customers when an item is damaged, and that Food52 is not looking to work with a vendor to add self-service returns to its website, but rather build it in-house.