Most relationships between search and discovery companies and local merchants and services are defined by ad sales (i.e. Yelp) or by their inclusion in paid delivery services (i.e. GrubHub, Uber Eats, Postmates, Amazon Restaurants). Can a search and discovery provider “curate” local merchants and services and help them add new customers and sales through the sale of real-world goods? Can local curation scale?
Two companies in Seattle – Bean Box and Peach — are focused on doing just that. Bean Box has created a subscription and gift service for coffee lovers that relies on curating coffee from local Seattle roasters; Peach works with area restaurants in four cities to provide employees of companies with curated lunch specials. Part One of this report focuses on Bean Box.
Bean Box currently sells a range of specialty coffee products, both as gifts and personal subscriptions. It features hundreds of roasts from 25 artisan roasters in Seattle. “We work with a very local supply chain, but sell products to a national market,” notes Bean Box co-founder and CMO Ryan Fritzky.
After three years, Bean Box has “tens of thousands” of customers – 60 percent of orders are for gifts or specific bags of coffee, while 40 percent take the form of ongoing subscriptions – a share that is rising. The company has built a national audience for its supply chain: 95 percent of shipments leave Seattle, and 90 percent leave Washington state.
Fritzky and his cofounder Matthew Berk, who is CEO, contend that Bean Box’s e-commerce business reflects almost all new, incremental business for their local roasters, who otherwise rely on neighborhood café traffic or mostly local retail distribution.
The most common subscription boxes, a “sampler”, features four trial-sized selections every month, customized to customer tastes. Bean Box also enables customers to order full-sized bags of specific coffees, both online and via SMS, and to send gifts. All of its products are handled on a time-sensitive basis, since their commitment to coffee “freshness” means that all coffee needs to be received, made into product, and shipped to customers within 48 hours of roasting.
“Unlike most roasters, who focus on brick-and-mortar, local retail and wholesale, we are an online-only retail-only business,” says Fritzky. “The value proposition is locally-roasted, fresh, artisan coffee.”
Customers who especially like a specific coffee can send a text to the company to order more. Key to the company’s ability to charge a premium for its boxes is the specialized curation and the focus on freshness: it typically charges $24 for a standard sampler of four 1.8 oz bags of coffee.
Berk and Fritzky contend they have developed a science to their curation of local coffees. Prior to launching Bean Box, they developed software that enabled peer-to-peer sharing of personal recommendations. The system allowed people to easily share their own personal “pearls” such as favorite restaurants, craft beer and travel suggestions. In the process, Berk and Fritzky noticed that many people thought of coffee roasters, cafes, and brewing equipment as some of their most engaging “pearls”, especially in a city like Seattle, which is known around the world for coffee innovation.
“Our recommendation exchange software didn’t take hold and grow as we anticipated, but we had tons of data around user engagement,” said Berk. People were highly engaged when it came to coffee. When Berk and Fritzky considered their own behavior of sending coffee gifts during the holidays – and the fact that specialty coffee is the fastest growing part of the coffee industry – they found a business that was “right under our noses”.
Bean Box’s coffee curation efforts ultimately represents a combination of in-house coffee expertise, thousands of customer reviews and ratings of specific coffees, and a suite of algorithms that match personal preference to origin, roast profile, and other coffee attributes. Developing Bean Box as both an e-commerce business and a supply-chain aggregation manufacturer, however, has proved to be a complex undertaking.
“The way I think about what we do is that it is a software business,” says Berk. “Software helps us not just manage the e-commerce business, but it’s essential to managing the complexity of determining which customers get what product at what time, and coordinating our manufacturing work with hundreds of coffees and thousands of pounds of beans, which we’re committed to shipping within an incredibly tight window.”
Part of the software equation includes managing how all the ingredients go together in an order, and which coffees, biscotti, chocolates, and paired together for specific customers, far beyond the level of a simple SKU. “Our work with coffee is 100 percent based on the software we write,” says Berk. Operating at their scale cannot be done with spreadsheets, or by an-off-the-shelf solution like Shopify, he adds. The only SaaS solutions that Bean Box uses are for postage printing, accounting, and sending email.
Going forward, Berk and Fritzky are expecting rapid growth, and have invested in fully automated packaging robotics in order to handle peak demand. According to Berk, “we’re just seeing the tip of the iceberg when it comes to demand for thoughtfully curated, fresh specialty coffee, with the added convenience of delivery to the home.” The key challenge to scale, he maintains, is carefully linking the demand they are seeing with the supply chain they are aggregating, with smart software.