Thousands of small businesses find it challenging to deal with large distributors that don’t provide the depth of support and transparency they need to complement their logistical requirements.
So imagine how refreshing it would be for emerging brands to find a distribution partner that can help them grow and expand their profits by helping get their products into the hands of their customers without compromising their budget.
That’s exactly what Pod Foods set out to do: create a process that allows brands and businesses to measure out their distribution. Pod Foods is positioned to scale to meet a brand where they're at. It’s no wonder their own business boomed at the height of the pandemic - their flexible distribution solutions and transparent fees are exactly what emerging brands need to survive the changing business landscape.
In this episode, we are joined by their Vice President of Customer Success, April Francis, who shared about how they help small food brands in distributing their products through tech-savvy solutions.
Learn about how Pod Foods started, their transparent fee system, building a region out and reaching capacity, understanding your customer, and developing relationships with your retailer.
Listen in as this might be the right solution for your brand to make logistics and distribution easier, simpler, and more cost-efficient for your business.
Virginia Foodie Essentials:
We are building a national distribution program that allows brands to reach retailers with a direct shipment or via our distribution centers. - April Francis
Choosing the right store and the right distribution partner can make or break your profitability. - Georgiana Dearing
There's a lot of value in visibility and transparency. - April Francis
We work with our brands closely: we mentor them, educate them, help them reach these new customers. - April Francis
We help brands manage their customers because they are so important to their community. - April Francis
There's a lot of control that an emerging brand needs and has with Pod Foods that allows them to build that excited customer base and great track record that can translate to other regions. - April Francis
Key Points From This Episode:
Transparency vs. opaqueness in the distribution industry
Pod Foods distribution process
Supporting emerging brands through transparent and tech-enabled solutions
Building relationships with retailers
More about the Guest:
April Francis is the Vice President of Customer Success at Pod Foods, a tech-enabled grocery supply chain platform.
Connect with Pod Foods:
Follow The Virginia Foodie here:
Click Here for Full Transcript:
[00:00:00] April Francis: The whole ethos of Pod Foods is transparency and visibility into this previously very opaque industry that didn't allow brands to have that control or a sense of security knowing where their product was, what it's selling for, etc.
[00:00:18] Georgiana Dearing: Welcome to The Virginia Foodie Podcast, where we lift the lid on the craft food industry and tell the stories behind the good food, good people, and good brands that you know and love. If you've ever come across a yummy food brand and wondered, "How did they do that? How do they turn that recipe into a successful business?" Then we've got some stories for you.
[00:00:44] Hello there, Foodie friends and family. Welcome back to the podcast. When I work with organic and sustainable package food brands, I'm helping them create strategies to sell in and sell through different channels. While my work focuses on the marketing message and the content creation for their sales campaigns, the two hot topics I always stumble upon are pricing and distribution. Most food brands get their start in a home kitchen. And growing up from small sales in farmer's markets doesn't exactly prepare a food manufacturer for all the costs associated with getting a product onto the shelves of a grocery store. Most consumers don't think about this, but distribution, that process of getting food from the maker to the shelf, can take a big chunk out of the retail price of a product.
[00:01:33] Once a brand gets to the point where they're producing pallets of products, it costs money to hold and deliver those products to each individual store. And why am I telling you all of this? Because when a brand decides to work with a grocery store, choosing the right store and the right distribution partner can make or break your profitability. Any experience food brand can tell you that the contracts with distributors can be very confusing. It may include things like chargebacks, marketing fees, storage costs, and other promotional riders. Lots of small fees can quickly add up to a hefty sum. And I've even heard of companies losing money by selecting the wrong partner for their product category in their sales region.
[00:02:18] A few months ago, I started hearing about Pod Foods. A startup business, Pod Foods is a tech-enabled grocery supply chain platform that is designed for emerging brands. Founders, Fiona Lee and Larissa Russell, originally ran a cookie company. And as their website states, "We needed Pod Foods, so we created it." I was intrigued by their story and I wanted to find out if this is a solution that would work for some of my clients. April Francis, the Vice President of Customer Success at Pod Foods, graciously accepted my invitation for an interview. We had a great conversation, and the result is today's episode. Listen now to hear her describe the company and explain their transparent fee system. I can't tell you if this is the right tool for your brand, but it sounds like it may be a good first step for many small businesses. Check them out. And if you decide to connect with Pod Foods, let me know how it goes.
[00:03:15] Well, today I'm with April Francis of Pod Foods. And April, could you take a moment and put you on the spot and make you do your own introduction?
[00:03:30] April Francis: Hi, George. Thank you so much for having me. My name is April Francis, as you said, and I'm working at Pod Foods, which is an incredible startup disrupting distribution. It's a distribution solution for emerging brands. And my whole career has been dedicated to helping emerging brands, and I think Pod Foods is an incredible tool for brands to use to springboard onto the national stage, the national retail stage.
[00:03:53] Georgiana Dearing: Well, that's a great introduction. That's exactly why I had you here because we were both focused on emerging brands. I've been starting my interviews though because this is the fall of 2021, and you said you're a startup. So starting up amidst a global pandemic, I just need to know. The food industry has been hit so hard. How has it impacted your company?
[00:04:16] April Francis: So we are a resilient team, and we are a rapidly growing team. So I think we actually, I don't think anyone has benefited from the pandemic, but we're offering a solution that allows brands to test the waters, so to speak, so you don't have to go all-in. You can measure out your distribution and Pod Foods can scale to meet a brand where they're at. And we're also able to respond to situations like supply chain issues. If you have a packaging issue, you can have a co-packer. Of course, vendors get frustrated, retailers can be frustrated if they can't get an amazing product because, you know, the vendors having issues. But because we are a small and nimble company and very communicative, we've been able to navigate the waters of the pandemic, I would like to think quite well, and as best as we can as a support for both our retailers and our brand.
[00:05:06] Georgiana Dearing: Well, I'm on the content side of things in marketing, but distribution is something that comes up a lot. Small brands have a little angst over these decisions that they have to make. But can you explain, on your website you talk about national reach? Can you explain where you fit within that whole industry? How would you compare to say, KeHe or other recognizable businesses?
[00:05:30] April Francis: Great question. We were founded by Larissa Russell and Fiona Lee because they were frustrated with the incumbents, the old model of distribution, those that you have mentioned and may have not mentioned. But basically, we are building a national distribution program that both allows brands to reach retailers with a direct shipment or via our distribution centers. So currently, we have six distribution centers that service the major metros in the United States, Northern California, Southern California, the Midwest, New York, Texas, and the mid-Atlantic with plans to expand this distribution center network further and deeper into the country. So I say that we can't supplant a KeHe today, but we can absolutely supplement. And for some brands, we are actually a better alternative, which is very exciting because it shows how much we've grown, and it shows that we're putting our energy where it counts. Brands are really relying on us to be their support, to grow with them as they grow into larger retailers that require a more sophisticated distributor, and we're meeting those challenges head-on and serving those retail customers on behalf of our brand.
[00:06:40] Georgiana Dearing: So you mentioned that you've got six distributions nationwide. Do you literally own those distribution centers, or are these partnerships with existing entities? How is that exactly working as a startup?
[00:06:52] April Francis: So we're partnering with logistics partners in all of our regions. As a startup, we have a solution in place. We make things happen. And I can't say what it's going to be like in the next year. All I can say is that it will be improved. But we love our logistics partners, and we work together very closely with them via our operations team to definitely manage the logistics involved with the distribution.
[00:07:19] Georgiana Dearing: So I ran into this model before with a national brand that I worked with. They realized that all of their shipping was being funneled through very small places. And what they did is they went out and divided the country up and they found points where they were centralized, but then they managed everything with technology. Are you doing something like that? I mean, you've got partners. How are you centrally controlling? This is maybe getting too technical. But if you have partners who are already good at moving products and shipping products and delivering, how are you managing that through the business?
[00:07:56] April Francis: So I think you've stumbled upon that's the genius of working with these partners, they know exactly what they're doing. And how are we managing? We have an amazing team, the growing team that works very closely with each of our logistics partners to make sure that the product gets ready to go. It is incredibly involved. There's inventory coming in, there's inventory going out. There are products going out to retailers, special deliveries, all kinds of things. We have products that have a 30-day shelf life, some have a thousand-day shelf life. So there are all kinds of different needs, but we do manage this primarily with technology. So that is the backbone of our company. And our technology that powers all of our distribution is very sophisticated and powers our relationships with our logistics partners, as well as our brands and our retailers. So each one of those sectors has its own dashboard at Pod Foods.
[00:08:47] So if you're a brand, you have an incredible dashboard that's full of everything about your distribution. So you have data on all of your sales, which buyer is buying what, and when, it's all there. When was it fulfilled? When was it ordered? As well as all the inventory and all of our distribution centers. And if a brand has inventory in three of our distribution centers, they can see the lot codes, expiration dates, the current quantity, the quantity that's currently being reserved for orders that have come in. It's just incredibly detailed. The whole ethos of Pod Foods is transparency and visibility into this previously very opaque industry that didn't allow brands to have that control or a sense of security knowing where their product was, what it's selling for, etc.
[00:09:34] Georgiana Dearing: Honestly, this is going to oversimplify it, but it's kinda a scan-in, scan-out system all the way down. It's tracked electronically in and then out, and all of that's being fed back to the dashboard.
[00:09:46] April Francis: Correct.
[00:09:47] Georgiana Dearing: Okay, that's good. That's like a win for technology. I'm going to flip around to cost. I mean, all of that costs something. And that's one of the angst points for small businesses. And your site says there are no hidden fees, but there are costs involved in working with you. Can you describe what that would be like for an emerging brand?
[00:10:08] April Francis: Absolutely. So correct, there are no hidden fees. Generally, with distribution, you have a PO and then you'll maybe get paid out a fraction of what the product is worth after chargebacks and slotting fees, and all of these things. And you don't have any visibility into why or how, I've heard brands employ people on their team to investigate these deductions, as they call them. Which is costly for a small brand, and overwhelming. So again, our founders had their own small brand, which is why they created Pod Foods. And they wanted to know what distribution was going to cost them.
[00:10:46] So that said, we have a very simple setup for distribution. There's Pod Direct, where brands can ship directly to retail. It's an online marketing place. Any retailer in the United States can use it, and so many do. And this is a flat 8% service fee, which is, I think honestly, the lowest service fee there is out of Hubba fair, all of them. And all the prices on Pod for the retailer are the price the retailer pays for the product delivered. So that's their final price and there's nothing else. So we would deduct an 8% service fee for Pod Direct. And then for Pod Express, an emerging brand can expect to pay an 18% service fee on products that are delivered to retail out of our regional distribution centers.
[00:11:27] So again, the 18% is deducted from the price the retailer pays for the product delivered, and that price is set by the brand. So the brand controls the price that the retailer pays for the product delivered. And I have to say, a lot of time with my brands, talking with them about this and helping them with pricing strategy because it is significantly different than how other distributors operate. Distributors generally buy the product. Sometimes they require it at a promotional or discounted price, and then they will mark it up and then sell it to the retailer. Often the brand not knowing what that final price is. So 8% for Pod Direct, 18% for Pod Express, our distribution out of regional distribution centers. And then there is a fee by temperature, by the number of cases for storage in our distribution centers. It's generally around $30 for a dry pallet in a distribution center.
[00:12:18] Georgiana Dearing: Okay. That was a question I had was, what kind of quantity would a brand start within your distribution centers?
[00:12:26] April Francis: So we invite brands to start with us in a distribution center once they have a number of retailers in a region open. So we don't want to accept inventory from a brand unless they have retailers ready to order. And we work with brands in a number of different ways to help them get up to that level. Not all brands have customers, some just have a great idea and a beautiful product. So they can start with Pod Directs and build up that way, or they can list their product in a Pod Express region as coming soon. Maybe it's a frozen product or it's a very heavy product and they can ship it, the logistics don't make sense. And then they can actively sell with Pod Foods as their distributor along with, you know, we always provide a list of key accounts, select accounts in all regions so that brands know who's already buying from Pod Foods. That was something that we started offering after I started at Pod Foods because brands are like, who do I talk to? Where do I go? And we work very hard to steer brands in the direction of retail partners that are great for them, and try to make it a win-win for both retailer and vendor.
[00:13:28] Georgiana Dearing: So it sounds like you have an onboarding process. Is this guided, or is it available when asked?
[00:13:36] April Francis: It's a guided process currently. It's really straightforward and it's very, very easy. And kudos to the Pod Foods team for making it so easy because it can be very difficult and involved and essentially take a lot of time to set up with a traditional distributor. Brands can be set up and have products in our distribution center with two weeks. It's fast. So they fill out a couple of forms, and if they have retailers ready to go, then we can have them send the product to the distribution center. Once they returned their three onboarding forms, which essentially collects information about the brand, how do they get paid, about their products so that we know how to handle it. Once they fill out their onboarding forms, a brand can actually be in stock immediately after they received their login credentials and set up their products on the Pod Foods marketplace if they want to sell the product via Pod Direct, and they have, of course, product available to send out to retail. So that is an incredibly fast turnaround time for distribution.
[00:14:31] Georgiana Dearing: So it sounds like, I was going to say spitball in here. I'm just off the top of my head thinking, all right, so if I was a small brand and I was trying to get into more retailers, I might sign on with you and do Pod Direct, and then focus on the distribution center that is closest to my manufacturing.
[00:14:50] April Francis: It's a great plan.
[00:14:51] Georgiana Dearing: And maybe set up a coming soon situation and try and sell to that region, and get enough orders to make sense for sending in a palleted product. And then grow that for a while, so you have a track record and know who's a good brand partner and a good Pod Foods and my brand partner, and then start moving into those other major metros that you serve
[00:15:15] April Francis: Absolutely.
[00:15:15] Georgiana Dearing: Is that a good strategy? I just made that up. So let's see.
[00:15:18] April Francis: No, definitely. I always recommend building a region out and reaching capacity and understanding your customer and really developing relationships with your retailer. So that's another thing with us is that we're not hiding. Brands know exactly who their customer is. They can see who is buying what, how often and when, and respond in real-time in their own relationships with retailers to maximize those relationships and to build those relationships, and help move products to the shelf. There's a lot of control that an emerging brand needs and has with Pod Foods that allows them to build that excited customer base and that great track record that can translate to other regions.
[00:15:59] Georgiana Dearing: Can you give me a sense of the kinds of buyers that are in your network? I work with these brands and they're like, I'm selling into this local retail shop. Now, I would like to go into Whole Foods. It's like, to me, that's a big leap. So who's in the Pod buying network?
[00:16:15] April Francis: I love our buying network as much as I love our brands. The network is incredible. We service everyone from small independent to Whole Foods, and we're working with a lot of the quick delivery online marketplaces as well. That last mile gets to the customer fast situation. It can go fast day after door dash. But our retail partners care about emerging brands. And that leap from the small independent that, I love the small independent grocer. That is an amazing company. And you have to give them kudos first, having an incredible assortment that's all their own and it serves our local community. I love those independents. And I think, of course, brands want to have national distribution and be in Whole Foods or Raley's or what have you. But I think you can't forget about that independent customer. And I think that's something that we help brands do is manage those customers, because they are so important to their community.
[00:17:10] Whereas Whole Foods, there are local programs for Whole Foods. It can be a leap. But what we do at Pod Foods is educate brands to help them get to that level so that they can service a retailer like Whole Foods seamlessly. Is the production capacity in line? Do you have enough packaging? Are you going to be able to turn on the spigot if sales go through the roof, or if you land a customer, where are we going to be with production? We work with our brands closely to essentially mentor them, educate them, help them reach these new customers. But again, it all starts with that individual location. And even with Whole Foods, you have to think about them individually. We work with, of course, retailers that are exciting like Erewhon in Los Angeles, Foxtrot, now in Washington DC, Chicago, and Texas. It's fun seeing which products are successful and take off with different kinds of retailers.
[00:18:04] Georgiana Dearing: So if you're working with buyers of that smaller size, what's a typical order size look like for a small brand? I know it varies by category, but is there a minimum quantity that you expect a brand to be able to warehouse with you? Or how would that work?
[00:18:19] April Francis: We do track metrics like this. There's definitely a regular brand or is definitely different by category, but there are so many variables. You can have a beverage brand that's doing two cases per week per location for a larger retailer. And then you can have a spice product that has a large case pack, and it gets ordered maybe every six weeks by independent with one location. It just depends on the category. And we love, the account managers at Pod Foods work closely with each of our brands to help them maximize their turns to work with us in a distribution center. Again, the brands need to have at least eight retailers in a region that are currently ordering, and we don't have any minimums in our distribution center, which can be to the advantage of a small emerging brand. But in that case, where they just have a couple of stores and it's not a fast-moving category, we wouldn't have them send us a whole pallet. Because we want customers, both retailers, and the end-user to have the best freshest experience as well.
[00:19:16] Georgiana Dearing: My mind is now spinning back again to all the logistics involved in managing that. That sounds like a lot, sounds like a lot. I'm going to ask the big question that my clients are always surprised by, and that's the free fill. Where do Pod Foods stand on the free fill for the first round?
[00:19:32] April Francis: So we support free fills. A lot of retailers require it. And we are completely transparent with our brands about retailers that require a slotting free fill or otherwise, a promotional discount, what have you. We essentially pass that information along to the brand so that they can make the decision if they want to fund a free fill, or if they want to fund a 50% discount. We never make that decision for our brands.
[00:19:57] Georgiana Dearing: Yes, that's the question that everybody comes up with.
[00:20:02] April Francis: You have to think about it holistically. Is this customer essentially, are they going to be supporting our brand so much that a free film makes sense? I do think it can make sense because to get your product on the shelf, it takes a lot of setup on the retailer side. Sometimes a free fill, frankly, can feel like a bargain. But again, we never push a manufacturer to move forward with a free fill unless they want to.
[00:20:24] Georgiana Dearing: Well, what is the next thing? You've got six centers set up. You are doing this almost curated onboarding, but you are helping onboard. You've got Pod Direct. What's next? What can we look for down the road?
[00:20:40] April Francis: So we've really built out an amazing team and we've been hiring a lot of great talent at Pod Foods to deepen our personnel, our network, or team to make things happen for our brands and our retailers. So that's essentially what we're focusing on now. It's just keeping our heads down and putting the work in, and making things happen, becoming a better distributor, but a better partner to our retailers as well as our brands, building processes as a startup. It can be like the wild west. So we're in that phase where we're streamlining and making things a little more process-driven. Of course, we're planning on opening up additional distribution centers. We want to be the distribution solution for all brands. We think there's a lot of value in visibility and transparency. And we are beginning to work with larger and larger retailers as well as larger and larger brands. But our core values will remain with the emerging brand because that's where our DNA. We evolved from, we must find a better solution for an emerging brand. And for as long as I'm at Pod Foods, which I hope is forever. I love this company. I think it does such an amazing thing. We are going to stay true to that and not veer from the course of being a friend to both vendors and retailers.
[00:21:59] Georgiana Dearing: Well, I'm going to ask you. How big is your team right now? You said you're small and nimble. I'm just curious.
[00:22:04] April Francis: So we have less than 50 team members. We're not particularly small, but we're not particularly enormous. We still have additional departments so we want to build out. As you mentioned, there's a lot involved with the inventory. We're looking to add a very senior-level person to lead that initiative, procurement, and inventory at our business. That will be fun. And just getting better every day.
[00:22:31] Georgiana Dearing: So do you have people on the ground in every region that you're serving?
[00:22:35] April Francis: We do, and we are continuing to hire to build out a team, larger teams, in all of those regions.
[00:22:43] Georgiana Dearing: Well, how can listeners find you? How would a brand find you or get started with you? Tell us where we could get started with Pod Foods.
[00:22:50] April Francis: It's really, really simple. Just go to podfoods.co and register. If you're a retailer, you can register and actually open up your account and start ordering essentially. Very simple. We're currently building the brand onboarding directly into a podfoods.co as well. But a brand can go on and register, and then either myself or someone from my team will follow up and get on a call and send you all the information, the brand guide, which is essentially a manual for Pod Foods, everything a brand needs to know, and our list of retailers, as well as the onboarding forms. And brands can get started very, very quickly.
[00:23:26] Georgiana Dearing: Well, thank you for sharing all that. I think it's very exciting what you're doing. And I was thinking, as you were speaking, this is probably the first time where I've listened to a distribution story and actually understood everything that was being said. Which is a good thing, because it can be very, very confusing to work your way through these contracts.
[00:23:45] April Francis: Thank you so much for saying that. I was not new to supporting emerging brands. My whole career has been dedicated to doing so, but I was new to the distribution when I started at Pod Foods in January of 2020. And yes, it shouldn't be hard. And as an emerging brand, you have so many things to think about. Fighting your distributors should not be something that you have to contend with on a monthly basis. That just shouldn't happen. So we want to make things easy, and we're going to continue to streamline and make things as easy and simple as possible. There's no sense in making it more complicated.
[00:24:20] Georgiana Dearing: Well, that's great. Thank you so much for spending some time with me.
[00:24:23] April Francis: My pleasure. Thank you so much, George.
[00:24:26] Georgiana Dearing: Thanks for listening. And if you want to learn more about how to grow your own food brand, then click on Grow My Brand at vafoodie.com. If you're a lover of local food, then be sure to follow us. We are at @vafoodie on Instagram, Facebook, and Twitter. Join the conversation and tell us about your adventures with good food, good people, and good brands.