Coffee Subscription Services:  E-Commerce Success in Challenging Times

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By Dan Shryock

Business was good at GoCoffeeGo, a San Francisco-based online coffee sales platform. Then, the Covid-19 pandemic arrived and suddenly sales skyrocketed.

“We were doing a substantial amount of business,” owner Elise Papazian said. “But when Covid hit, people’s buying patterns changed. The volume shot up. But it wasn’t just the volume. Customers bought differently and in bulk. They went into panic mode.”

Americans became hoarders. They bought all the toilet paper they could find, and store shelves were bereft of cleaning supplies. The same was true for coffee.

“It was the same stockpiling mindset. Espresso customers who would buy four bags a month were ordering 10 pounds,” Papazian said. “It was not unusual for people to order 15 pounds of coffee in one order.”

Consumers who used to drink a cup at home before leaving for offices were now working from home. Retail shops and office coffee pots were replaced with new at-home coffee rituals. And while that shift disrupted the retail coffee sector, home delivery coffee companies reaped the benefits.

GoCoffeeGoand other e-commerce retailers saw business grow exponentially. Sales at Driftaway Coffee, a sustainability-focused subscription company, more than doubled in March 2020 over the same month last year. And the increase in new subscribers at Bean Box, another subscription service that sources coffees from multiple roasters, “is higher than we’ve ever seen,” company c.e.o. Matthew Berk told STiR.

“Their world has changed,” Papazian said. “People are at home and they want good coffee to help them stay focused and productive while working from home and managing family duties.”

Quality and quantity

Driftaway Coffee, based in New York, serves more than 15,000 mail-order customers, according to owner Suyog Mody. Subscriptions have routinely doubled year over year. But the growth curve changed in March with the arrival of Covid-19. More than 15% of existing customers increased their orders by size, frequency, or both. And, thousands more signed up as new subscribers.

“High-quality coffee provides an economical luxury and a great substitute for the frequent coffee shop visits pre-Covid,” Mody said. “For those who have been able to transition to work-from-home, good coffee at home is required. Now, instead of having one cup at home and the rest at work, they are consuming all of their coffee at home.”

Berk at Seattle-based Bean Box sees the same trend. “There’s just an ever-greater demand for in-home coffee experiences, which is a macro-trend that’s accelerated by Covid,” he said. “This dovetails with our founding idea, that demand for specialty coffee would shift to the home.”

Coffee by mail

There is a variety of coffee subscription services available in North America. Some, like Driftaway Coffee, roast their own beans and then distribute to their customers with shipments once or twice a month. Others, like Bean Box and GoCoffeeGo, have agreements with roasters.

At most companies, customer profiles track coffee preferences. “All subscriptions [at Driftaway] start with a sampler kit with coffees from around the world,” Mody said. Once customers select the coffee styles they like, that information is entered into the subscriber database for future deliveries.

Bean Box, for example, delivers practically every roast level imaginable – light, medium, dark, espresso, decaf, light/medium, and medium/dark – from more than 36 roasters. The company also offers sampler subscriptions that feature both single-origin microlots and coffee blends.

“Bean Box customers can specify their preferences when they sign up or let us curate their experience,” Berk explained. “They can change their preferences as their palate evolves, as well.”

Bean Box, which started in 2014, sources and ships between 5,000 and 25,000 pounds of fresh coffee depending on the season. About 20% of that is shipped to subscribers while the remainder is delivered as individual e-commerce purchases or gifts.

At GoCoffeeGo, many customers maintain standing orders for their favorite coffees. Others sign up for the variety offered in a coffee club subscription. Cyclone Club members, for example, receive “a swirling mix of coffee and styles,” while Back in Black Club drinkers get dark roasts. The Green Guru Club features coffees by organically certified growers. All coffees are roasted to order and delivered from 29 roasteries.

Club subscriptions help introduce coffee drinkers to different brands and flavors but are not central to the business model, Papazian said.

“Coffee clubs have definitely become more popular, but their growth doesn’t compare to what we’ve seen from the regular coffee buyer,” she said. “These customers want to pick their own coffee and frequency of delivery.”

Subscriptions as gifts

Sales also tend to spike during gift-giving times of the year, Mody said. This was true before the pandemic and it continues as more people order and send gifts during the lockdown. “People are gifting in very large numbers, too,” he said. “We’ve shipped thousands of care package gifts as a corporate gift or a Mother’s Day or Father’s Day gift this year. Everyone is missing that human and personal connection and people are using coffee to say thank you to friends and family.”

Managing during the pandemic

The Covid-19 crisis forced companies to adjust their business practices. Subscription coffee services were no exception.

“We’ve made a decision to order more [coffee] earlier from all our suppliers to meet demand,” Berk said. “As many of our suppliers also run cafes that have been impacted by Covid, we’re fortunate to be in a position to increase our wholesale orders from them.”

And, to hedge against risks along the global supply chain, Bean Box also started sourcing necessary materials such as bags and boxes earlier at larger quantities. “We’ve had some delays from suppliers who aren’t local, but otherwise no interruptions,” Berk said.

Driftaway Coffee, operating this spring during New York’s initial virus crisis, discovered delays after orders left the building. “Shipping with [the US Postal Service and UPS] has become slower and in some cases less reliable,” Mody said. “There’s a labor shortage because of Covid. Fewer people are handling more packages.”

To compensate, Driftaway encouraged its customers to consider faster shipping options.

“Customers are mostly very understanding of this,” he said, “but if you run out of coffee and have nowhere else you feel comfortable getting it from, then it’s a big problem.”

GoCoffeeGo, which Papazian founded with her late husband Scott Pritikin in 2006, leaves shipping to its partners. GoCoffeeGo makes the sales and the roasters do the rest.

“Every day the roasters sign in [to the online database] to get their orders,” Papazian said. “We work alongside the roaster, but we don’t want to interrupt their workflow. They get a summary of what has been ordered, they put it on their roast log, they print out their labels and ship.

“I don’t touch the beans and I don’t want to touch beans,” she said. “If I touch it, it won’t stay fresh.”