littlefrog
Hop-meister
Volume, volume, volume. Perfect climate (no heating or cooling). Lots of automation and cheap labor. Illegals in the US, probably (can't prove it, but come on, people...), or overseas where you can get somebody to work harder than a Iditerod sled dog for a few dollars a day.
Even with the lowest input prices, they are still skating on very thin margins. At a profit of a few cents (let's say a dime a plant), it doesn't take much to whack your business hard. A cold snap which damages your crop will be fatal to your business even if it only sets back production by a few weeks. Hurricane? Heck, a strong hailstorm would do the trick. The fickle winds of Walmart can crush you (sorry, we are buying from the slob across the street this week, you lose). The big megastores usually insist that you buy back whatever doesn't sell. You need intense marketing and supply-chain management skills.
Selling plants directly to the consumer looks pretty good under those conditions. You need somebody to run the internet operations and fufill small orders. Relatively cheap. You insulate yourself from the walmart effect to some degree. You definitely make more per plant even at those prices by selling direct to the consumer. People aren't paying a lot, and I suspect most aren't expecting a lot, so that works well. Add in a buck or two profit per box on shipping and you are rolling in gold bullion (or at least it seems like it compared to selling wholesale).
Even with the lowest input prices, they are still skating on very thin margins. At a profit of a few cents (let's say a dime a plant), it doesn't take much to whack your business hard. A cold snap which damages your crop will be fatal to your business even if it only sets back production by a few weeks. Hurricane? Heck, a strong hailstorm would do the trick. The fickle winds of Walmart can crush you (sorry, we are buying from the slob across the street this week, you lose). The big megastores usually insist that you buy back whatever doesn't sell. You need intense marketing and supply-chain management skills.
Selling plants directly to the consumer looks pretty good under those conditions. You need somebody to run the internet operations and fufill small orders. Relatively cheap. You insulate yourself from the walmart effect to some degree. You definitely make more per plant even at those prices by selling direct to the consumer. People aren't paying a lot, and I suspect most aren't expecting a lot, so that works well. Add in a buck or two profit per box on shipping and you are rolling in gold bullion (or at least it seems like it compared to selling wholesale).
