Only time will tell, says the co-founder of Boston-based Atlas Coffee Club – which launched five months ago offering premium single origin coffee from around the world and delivering it via a monthly subscription service.
However, coffee is better-suited to the subscription model than many other food and beverage products, argues Michael Shewmake.
First, he tells FoodNavigator-USA, coffee is a relatively high ticket item; and second, it’s consumed regularly, so you can expect repeat business, provided you keep your customers happy.
“You can make one time purchases on our website, but if you were just to sell coffee by the bag online, the lifetime value isn’t nearly the same as what you get from a subscription," says Shewmake.
"Our coffee is fresh and convenient [Atlas coffee is roasted the week before it is shipped to customers], and delivered to your door. Once you get a body of customers, the demand also gets a bit more predictable, so you can get economies of scale.”
Pack your bags! You’re going to Costa Rica!
Coffee, meanwhile, can be a confusing and intimidating category to shop instore – making a curated online experience more appealing, he points out, and it’s also the kind of category - like wine and increasingly, chocolate – that you can build stories around.
Indeed, the last point has been key to the success of Atlas Coffee Club, says Shewmake, who wants to take his customers – people that love coffee, but don’t necessarily know a ton of stuff about it – on a journey to discover coffee from around the world.
“One of the most trending narratives in coffee is the country that it’s from, so we want to make that what our brand is about," says Shewmake.
"It's about telling a story: Pack your bags! You’re going to Costa Rica! And you don’t have to be a hardcore coffee enthusiast to like this. It's about finding your new favorite coffee. People also love giving coffee subscriptions as gifts.”
Retention: ‘It’s 10 times more expensive to get a new customer than keep an existing one’
The challenge once you have won new customers, of course, is keeping them happy and engaged, says Shewmake, who sources his coffee from roasters and importers that package it under the Atlas Coffee Club brand.
“Churn is super important. People always say it’s 10 times more expensive to get a new customer than keep an existing one, and it's totally true.”
But on the plus side, it’s a lot easier to have a conversation with customers online than it is instore, says Shewmake, who has a background in data science, which he previously applied to the insurance industry (“there were a lot of late nights and lots of coffee”) before launching Atlas Coffee Club.
“I figured if anyone is going to use data to make better business decisions, it’s me.”
The top priority right now is driving awareness, says Shewmake, who recently completed a cross-country road trip from New York hosting pop-up coffee shops in cities along the way, partnering with everyone from Geico to National Geographic to Gourdough's Doughnut's in Austin to drive awareness.
"The #1 question is how do we get traffic to our site? How do we let people know we exist?
"We've really bootstrapped to keep costs down, but one thing we have spent money on is on things like finding out what keywords people who come to our website used."
Starting a new business is scary and exhilarating in equal measure, says Shewmake: "Like any start-up we’ve had to build a team on equity and the promise of future success."
But he's quietly confident they are onto a winner: "Our momentum has been really good."