The COVID-19 pandemic has shifted food buying behavior from consumers to direct-to-consumer channels. Food companies and online grocers have struggled to adapt to increased demand and market opportunities.
Alli Condra, a Davis wright tremaine lawyer specializing in food regulation, explains the impact of direct sales of food to consumers on companies whose change in this direction may have been more reactive than strategic.
Here is Alli’s top 10 list of recommendations for food companies that rate their directly to the consumer models:
- Marketing and communication: The direct-to-consumer model may be accompanied by an increased focus on online advertising, including through websites and social media. If you promote your product using influencers on social media, make sure you comply with Federal Trade Commission regulations on endorsers and influencers. If any products are sold from your website, FDA food labeling regulations apply to the website. Companies should review the content of the website to make sure you understand and are comfortable with the risks associated with any health or other claims made about the products. There may be an increase in complaints from competitors regarding online advertising, so check your website and social media for any claims (express or implied) to make sure they are true, not misleading and valid.
- Club or membership model: If you decide to create a club or membership template, think about what you do with the undeliverable goods. State laws deal with what to do with unclaimed property. Consider the specific provisions of your shop policies when determining what to do if a consumer orders a product and the product is undeliverable or not collected (for example, “If the product is not deliverable, we will try to reach you once at the last known point of contact, and if we do not hear from you, we can give it”). Check your state’s escheat laws for detailed requirements.
- Shipping of perishable goods: If your food is perishable, consider how to make sure that the product stays refrigerated or frozen throughout the shipping and delivery process, including any time the package can be left outside of the home’s home. consumer. For example, how will you ensure proper delivery and handling to the buyer’s doorstep and communicate to consumers that the packaging containing the perishables has been delivered?
- Complaints: There may be an increase in complaints related to shipping products directly to consumers (eg, melted dry ice; incorrect quantity or product; broken box) that would traditionally have gone to the retailer. A good consumer complaints policy takes these types of complaints into account, meets reasonable expectations, and ensures good customer service.
- Returns and reminders: Review your return policy and decide how robust you want the return policy to be. For example, will you accept product returns for any reason? Or will you accept returns only in specified situations? Make sure the return policy is clearly communicated to consumers on your website. Review the recall policy to determine if it adequately meets the direct-to-consumer model. For example, if there is a recall, can you easily identify which consumers received the affected product?
- Taxes: If you are shipping products to consumers in other states, determine if you are subject to other state and / or local taxes on products sold and shipped in those states.
- Warehouses: If you store products and ship them yourself, you may need a state license or permit to cover additional food storage and handling activities. You may also need to register this space with the FDA as a food establishment.
- Third party logistics companies: If you contract with a third-party logistics company (3PL) to fulfill orders, make sure you have a contract that addresses issues such as consumer data protection, insurance of stored products, and shipped and brand licenses for proprietary packaging, among others. Make sure that all specific handling instructions are communicated to the third-party logistics company (eg, “this ends”, “do not stack”) to help reduce the number of consumer complaints related to product handling issues. products.
- International maritime transport: Determine if you want to ship the product to consumers in other countries. Other countries have their own labeling and safety laws and your products may not comply with the laws of those countries. Your trademarks may not be protected in these other countries and may, in fact, infringe someone else’s trademark. If you don’t want to ship to other countries, clearly let consumers know and have processes in place to ensure products are not shipped to international customers.