A new start-up, Foodzie, is an online farmers market where small, artisan food producers and growers can sell their products. Foodies in Florida, say, can order raw, handcrafted pepperjack cheese from Traver, Calif., or organic, fair-trade coffee truffles from Boulder, Colo.
“You get a similar experience to a farmers market, when you get the opportunity to meet farmers, but it is much more scalable and you get a better selection,” said Rob LaFave, a Foodzie co-founder. “Ninety-seven percent of the country does not have this kind of access to artisan foodmakers.”
Foodzie was started by Mr. LaFave and two of his friends, who met during college at Virginia Tech, where they would frequent farmers markets. Last year, while living in North Carolina, one of them, Emily Olson, now 24, came up with the idea. She was working as a brand manager for a gourmet grocery chain and realized that other foodies who did not work in the business had no way to discover artisan foods outside their local farmers markets. Small farmers had no way of finding or selling to far-flung customers, either.
Mr. LaFave and the third co-founder, Nik Bauman, both 25, worked in corporate sales and software development. “With business, food and computer science backgrounds, we figured we had everything we needed,” Mr. LaFave said.
The three quit their jobs, packed up and moved to Boulder, where they joined Techstars, an incubator program for tech start-ups. They opened the site to the public in December and moved to San Francisco in January.
Foodzie is a gourmet version of Etsy, the online marketplace for handmade goods that has been hugely successful, selling $12.9 million worth of products in December. Like Etsy, sellers set up virtual storefronts on the site to post their wares and tell shoppers about themselves. On Foodzie, sellers can post their goods for free and Foodzie takes a 20 percent cut of each sale.
While a 20 percent cut is high for an e-commerce site (Etsy sellers pay 20 cents to list each item and the site takes a 3.5 percent cut), it is low in the food business, Mr. LaFave said. Food retailers typically take 50 percent of the sale price and distributors take another 10 percent.
Unlike Etsy, where buyers and sellers do the entire interaction independently, Foodzie serves as a middleman. It takes the purchase information from the buyer, processes the payment and e-mails the seller a prepaid shipping label.
One seller, Seth Ellis Chocolatier in Boulder, wanted to reach customers in other states, yet could not take on the challenges of building and operating an e-commerce site and marketing the site to national customers, Ms. Olson said. “We can give them new customers who would have never known about them.”
Foodzie is adding video and other social networking features to help shoppers get to know sellers, as they do at offline farmers markets. “There’s not a great place to talk about the food and artisans they’re buying from,” Mr. LaFave said. “It’s really important to connect these people, make it easier for people to learn the story behind the food and where it comes from.”
Foodzie raised $1 million in funding in December from angel investors, led by First Round Capital and SoftTech VC, and it is considering raising a follow-on round. Though some investors who had expressed interest in the site pulled out when the economy soured, most were impressed that Foodzie, unlike many Web businesses, had a revenue model from day one, Mr. LaFave said.
Foodzie was an attractive investment, said Jeff Clavier, managing partner at SoftTech VC, because unlike many Web 2.0 social sites, “Foodzie makes money every day as people buy products. We have learned a lot from Web 2.0 about adding the involvement of users. Services built using that technology, but focusing on generating revenue by serving a certain marketplace, will be compelling in this environment.”
The site has only been live since December, and it has had 43,000 visitors in the past month. So far, 29 sellers have opened shops and 41 are in the process of opening them. The founders recently hired a fourth employee to help Ms. Olson recruit new food producers at farmers markets and food shows. The founders will not disclose the volume of sales that have been made through the site.
Mr. LaFave is convinced that the recession will not diminish people’s interest in buying locally grown and handmade food. “There is a misconception that all these foods are more expensive than mass-produced alternatives,” he said. “People are pouring their heart and soul into these products, using the highest quality, heirloom ingredients. Buyers are really supporting the local economy and small, independent food makers and growers.”
