Herb farmers’ adventures in multichannel

You don’t have to be big to go multichannel. Fredericksburg Herb Farm, a 15-year-old company with sales of less than $5 million – and with just 30 employees – is balancing the retail, wholesale, catalog, and Web channels.

Founded by husband-and-wife team Bill and Sylvia Varney, the Fredericksburg, TX-based company began in 1985 as a store at their herb farm selling lotions and bath gels. In 1987, the Varneys decided to extend their reach beyond Fredericksburg with a 24-page catalog. The book mailed to 5,000 names from the store’s mailing list. The company now mails 50,000 catalogs a year.

Fredericksburg Herb Farm has never used outside lists and mails only to people who have either purchased products or specifically requested a catalog, says Bill Varney. The catalog has maintained a consistent response rate of 30% since its first mailing, but the average order has grown steadily from an initial $20 per order to the current $35. Catalog sales now account for 35% of the company’s total revenue.

Back in 1987, the company sold products from outside vendors, but when its primary resource for merchandise got out of wholesaling, the Varneys stepped into that channel as well. Today, wholesaling accounts for 20% of the business; wholesale customers include high-profile catalogcompanies such as Neiman Marcus, Nordstom, and SelfCare.

“Having our products in other catalogs and retail locations helps us gain greater exposure, as well as attract customers to our own catalog once they discover the products,” Varney says. “Wholesale helps our cash flow and brand recognition because our presence at established stores lends validity to our name.”

The farm produces products as diverse as Peppermint Foot Lotion and Eucalyptus Bath Gel, which range in price from $3.50 to $11.99, but the company is most famous for its Edible Flowers Herbal vinegar, which Varney claims helped put Fredericksburg Herb Farm “on the map.” The specialty vinegar took first place at the National Association for Specialty Food Trade’s International Fancy Food Show in 1991. Fredericksburg Herb Farm continues to develop and add products to its merchandise line regularly, as well as seek new channels for its products.

From store to print to Web

The newest and fastest-growing channel for the herb marketer is the Internet. Fredericksburg Herb Farm launched an informational Website in 1997 and added e-commerce capability in 1998. Two years later, 15% of sales now come from the Website. The Varneys have registered their Website with popular search engines such as Yahoo! and GoTo.com to drum up traffic to the site.

Varney believes that many Web customers are tourists who have visited the farm and the store. On weekends, tourists more than double the historical town’s population of 8,000. In fact, the Fredericksburg Herb Farm itself is becoming a prime tourist destination – in part because, as if being a multichannel marketer weren’t enough, in 1990 the company added a day spa and restaurant to the farm compound.

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