An online bakery is an excellent starting point for business-minded baking enthusiasts who don’t have the budget, interest, or time to open and manage a physical bake shop. It is also a logical pursuit for social media famous bakers with a huge online following or the aficionados ready to take their hobby to the next level.
With the ever-growing popularity of baked goods paired with the wonders of technology, your passion and skills can help you build a profitable empire made of cookies and cupcakes even from the comfort of your home or a small baking kitchen.
While it is generally the cheaper and more manageable option, an online bakery is not without its challenges. It still involves tremendous effort and legwork. So, where do you start?
Developing a sound business plan
Step 1: Define your brand
Maybe you already have a catchy or pun-
Find a lucrative gap or an untapped niche in the industry that plays to your strengths and one that you can take advantage of. Here are some questions that you can draw inspiration from:
- What do you think is the baking industry lacking at the moment?
- What baked product are you willing to pay good money for?
- What are the common gripes or longings of customers you always hear about?
- What baked goods can you create with confidence?
- How creative can you get with your offerings?
Acquaint yourself with the latest food trends to know the current demand and behavior of online customers, but take into account projections for the future of the industry. How solid will your concept be in the long run? Do you anticipate expansion or updating in the immediate future?
Don’t go too far and start with the population around you. Analyze demographics through objective factors like age, gender, relationship status, income, occupation, and education level.
Then dig into psychographics. Here, we’re talking about their personalities, interests, habits, and other soft information that hard data from demographics won’t give you. This is to understand how they think and how will your business fit in their lifestyle. Social media analytics is a great way to do it. If you have a sizeable following on Facebook or Twitter, do a poll.
The next step is to confirm whether or not these people are in your area using Google Analytics and U.S. Census Bureau tools, which allow you to look up demographics at the zip code level.
The secret is to strive to perfect your service to customers near you first. Shipping will generally be much smoother and keeping baked goods in excellent condition throughout the delivery process will be much easier.
There are greater chances you can make a name for yourself and your bakery in your community, which you can then leverage as you expand. Plus, if you are popular in the neighborhood, your potential customers already, which means it won’t be difficult to request for feedback and even pictures of the products to share online and get the word out.
Now that you know your customer and verified there are enough of them to keep your online bakery afloat, it will be easy to find your specialty. Perhaps you’d do well selling cookies and brownies to health enthusiasts or people with special dietary requirements who happen to have a sweet tooth. After all, this seems to be the route the market is headed towards. From there, you can develop attractive and delicious recipes that serve your concept best.
Step 2: Identify the competition
In addition to stopping by local traditional bakeries in your area, you will need to get to know your online competitors through research. Google will be your friend for this. Look up the types of products you intend to sell. For example, search keywords like “gluten-free cookies” or “guilt-free donuts.” Make sure your location is set to your region or search with the name of your city.
The search results can direct you to the specific businesses in your area that dominate this segment of the industry or if there are even people in this niche. Do the same on Facebook, Instagram, and Twitter. Put together a list and assess the following:
- What do they have on the menu?
- What is their service like?
- What is their pricing?
- What promotions and marketing techniques do they run?
- What are the reviews they are getting?
Find an aspect where you can gain an edge. Maybe their menu or service leaves a lot to be desired or you can offer a more varied selection for less, if not provide custom-made treats. Because if they can get the same products from a bakery that’s walking distance, what’s the point?
Step 3: Determine the bakery equipment you need
Although you may have all the tools at your home kitchen, you might need to upgrade or add more to effectively transition to a commercial application.
Make a list of all the bakery equipment and tools you’ll need to get your online bakery up and running. Ovens and refrigerators are a must as well as baking pans, bowls, racks, and utensils among many others.
CKitchen can help you outfit your business with the proper supplies for your operation. We have a wide selection of bakery equipment from trusted brands like Univex and Beverage Air that cater to all ranges of budgets and demands. We’ll be more than happy to assist you in finding the ideal solution for your online bake shop.
Step 4: Compute costs and projected profits
Where do you see your business in the next three years? How much profit do you intend to make and how do you intend to generate it? How much do you need to spend to get there? These are questions you’ll need to answer as you take a step closer to bringing your online bakery to life.
Calculate the costs of production to determine how much you will sell your baked goods for. Make sure you consider everything! You need startup money that will get you through the process of registering your business, acquiring permits, hiring staff, buying inventory, bakery equipment, and supplies (including packaging) before you actually start to generate revenue and be able to recoup costs.
Don’t forget to include one-time or recurring expenses from maintaining your website as well as hiring a web expert, a photographer, a graphic designer, and a social media manager.
You can raise funding for your online bakery business in several ways. Consider personal loans, equipment financing, investors, or credit card financing.
Making your online bakery legal
Step 5: Go through all the legal hoops
With a solid business plan in place, you’re ready to make your online bakery official! Register your business with the secretary of state’s office as a corporation, partnership, or limited liability company. Head to the county clerk’s office to file for sole proprietorship if you intend to keep it the business unincorporated. Get an employee identification number from the Internal Revenue Service.
Secure a food manufacturer or distributor license as well as a health certificate from the health department. You might also need other types of licenses and permits including a food dealer’s permit depending on your area.
Consult with the Food and Drugs Administration for label requirements. You will likely be asked to provide nutritional information–a detailed list of ingredients contained in your baked products by order of weight, the net quantity of each and the total weight. Remember, you can’t be too descriptive here!
Step 6: Set up your kitchen
Your business will be subject to the Cottage Food Regulations if you plan to bake goods from the comfort of your own home. Rules vary by state, so visit your local health department for more information. Some will require you to work in a separate baking facility, but most of the time, you’ll be allowed to operate out of your home kitchen.
First, you need to pass the initial inspection conducted by the health department. Expect to get a visit from them every year after that. Generally, you will be required to keep the area pet-free and to have the proper cold and dry storage.
A zoning clearance is also requested to make sure that a business operation can be run out of your home. These regulations typically set a revenue cap as well as venues and events where you can legally sell if you intend to bring your business outside of the internet.
If you intend to build a small kitchen facility into your home or cook the baked goods in a separate baking facility, it will still undergo the same licensing process.
Putting your online bakery on the map
Step 7: Get the word out about your business
Giving out freebies might not make sense to you financially, but science and statistics are both on your side here. Handing out free samples is proven to increase conversion potential by up to 30%. You’ll be impressed by the level of craving a tiny pinch of brownie or chocolate can create in the minds of customers.
Take time to test the waters and bring your online bakery business to potential customers. Hit the streets with a tray of the menu items you wish to sell and give them out for free. This way, you also put your bake shop on their radar and get the chance to collect feedback that can be useful in perfecting your concept and shaping your path for success.
You can also seek the opinion of family and friends, but choose those who can be brutally honest with you.
Step 8: Take enticing pictures of your baked goods and talk them up with winning descriptions
As an online business, your pictures and descriptions will mostly do the heavy lifting, so make sure they show your creations at their best.
With no way for your online customers to taste the pastries outside of free samples, the photos should appeal to their senses while creative descriptions should make them feel like they can almost taste the yummy treats!
Step 8: Set up your website
You’ll need an appealing website for a number of reasons: 1) you can showcase your menu, 2) you will be easy to find, and 3) you can ensure your legitimacy to skeptic online customers.
Nowadays, you won’t have to be a web expert to set one up. A lot of platforms have made it super easy for affordable monthly fees! You can simply purchase a domain name and host, and then build your websites on user-friendly platforms like Shopify or Magento, which provide pre-made templates and all the tools you need to receive and process an order and manage your inventory.
However, hiring an expert is still recommended especially for handling the technicalities involved in maintaining the website. This way, you have a more capable and knowledgeable backup on your side that can do a better job of decreasing the risks of losing potential orders or missing schedules.
Step 9: Market like crazy
Set up social media accounts where you can market and promote your baked products. Share mouth-watering photos and create YouTube videos with baking tips or instructional recipes. Take part in community events with delicious samples-a-blazing to make your existence known at your town.
Delivering on your promise
Step 10: Find the right shipping partner
Shipping is a crucial part of an online bakery. Your business relies on ensuring your baked products reach their destination in fresh and presentable condition. Look for reliable companies that offer excellent service for reasonable fees. There are delivery services that specialize in moving food around.
Carlo’s Bakery, one of the most popular and successful bakeries in the world, recommends conducting a shipping test by sending your baked goods to the farthest distributing facility of a specific company and having them send it back, where you can inspect the condition of the baked goods. Develop a list of multiple shipping companies for good measure.
For larger operations, platforms like ShipStation can get rid of any fulfillment headaches and can be integrated with eCommerce platforms like Magento and Shopify. It helps organize orders, facilitates easy tracking from both your end and the customer’s end, and finds the most affordable rates from all carriers such as UPS and DHL.
Some baked goods will be able to handle the bumps in the journey better than others. You will need a reliable shipping provider with climate-controlled delivery for perishable items that are more vulnerable to extreme temperatures during the commute and the stress of the travel.
For your part, ensure that the packaging is well-insulated. Invest in corrugated boxes, glass Mason jars, zip-lock plastic bags, and wax paper.
Place items inside a hard container and close any open spaces with paper padding or cushions to prevent the products from shaking inside during transit, so they stay in one piece and handle impacts well.
Items should be completely cooled before you bag them to avoid the possibility of the yummy treat warping into a confectionary mess when it lands on your customer’s doorstep.
We also want to remind you that shipping costs can be very high, which is enough for some customers to not add to cart. Your options to lower the cost of the delivery tend to be limited when urgency and special care are non-negotiable, which is understandable.
However, as much as possible you can always provide multiple options for the delivery time especially for less perishable items to accommodate the budget and urgency your customer is working with. Price items that can be shipped in similar packaging to encourage larger purchases. For non-delicate items, your choice of packaging can help lower the shipping costs for you and your customers.
You may also consider designating specific days of the week for shipping. For weekend and overnight deliveries, additional fees can be requested. Most customers wouldn’t mind especially if your products are too good and you take care of them through the whole process. Practice transparency when it comes to shipping costs to give your customers the chance to manage their budget.
Are you ready to live your online bakery dream?
Remember, this is just the beginning. Never stop marketing your online bakery shop. Encourage your customers to share their experience and photos on their social media. Get to know more of your customers and focus on providing excellent service.