Rod Smith is doing something incredible. His Company, Green Polkadot Box is an online health merchant store where consumers can purchase organic and non-GMO foods at a fraction of the price that they are in local grocery store. Because of Rod, it’s quite possible that the entire grocery industry may be turned upside down in the near future.
Alan: Welcome back and unity with Rod Smith he is the founder and the CEO of Green Polkadot Box. Welcome to today's show Rod.
Alan, thank you, good to be here with you.
Alan: So that's a mouthful the name there, but tell me the inspiration behind this and then I also want to get your background.
Well I wish I had a great story for you Alan but when my wife and I sat down ten years ago to come up with the right name, all of the key words associated with organic food and clean food were taken all the URLs... So we struggled and I came down to the conclusion I said well what if we did it about our packaging. I asked her question, I said for example what do you think of when I say little blue box. She instantly recognized that was Tiffany's.
Alan: Yeah I got that one too.
I said, what if we build our brand around our packaging and any ways one thing led to another and we came up with this whimsical name, green polkadot box. We wanted it to be associated with the green movement. We wanted to be able to ship a variety of things. So hence, we came up with different color polka dots. And it's turned out to be a great decision, we violated all the traditional branding laws by choosing it, but it is memorable and we get to talk about it from time to time like this.
Alan: Okay so let's rewind a little bit, you're in the organic food industry and what did you do prior to stepping into this industry? What led you up to this place?
Well my background was in public company foundership if you will, I started another public company called Incontact, a NASDAQ company- it recently sold for about $900 million. We were in the telecommunications business. I founded that company and operated it for a number of years. This is a great departure from it, on the one hand but on the other, we're an online business just like we were with Incontact. And we've developed some very sophisticated systems. For the transportation and distribution of what we call clean foods- I think organic foods is an old name now but clean foods taking on some steam because clean foods can be organic but they can also be other high value natural foods that don't have any unclean or toxic ingredients or any harmful ingredients. So we're in the clean food business.
Alan: This is a big trend right now that the organic food but recently I had the experience of visiting with a farmer, he said that when they turned over to organic and didn’t use the chemicals and all the things that go into it, a lot of the crops died. So from the industry perspective of course there's a differential price, organic versus non-organic but you bring a unique set back to the industry and that you're actually trying to deliver more value at reasonable prices?
Yeah the price of organic foods is artificially high because it's technically t's a scarce commodity. I don't know if you're aware but only about 25 percent of the food consumed in the U. S. and I'm talking about clean food, only 25 percent is actually grown here.
It comes from outside the United States, we have all kinds of issues with growing cycles and long transportation costs, but then if you look at the way the distribution system works- from production to the retail consumer- there's an average markup that ranges from 250% to 300% So our mission as a company is to flatten that, to collapse those middle stages of cost, to actually eliminate them and deliver clean foods at the lowest prices to consumers.
Alan: So in doing this, are your customers the end user or are you wholesaling this?
Our customer is the end user.
Alan: End user
Our goal is to be able to provide the end user with discounts up to 60 percent off what they would normally pay for for clean foods.
Alan: You're taking the middle man out.
That's right, we're taking out all the middlemen and want to make clean foods as affordable as contaminated GMO food.
Alan: I'm visiting here today with Rod Smith he is the founder of Green Polkadot Box and you're delivering organic food to the industry at very reasonable prices. Rod I need to take a quick break and we'll be right back after these messages.
Alan: Welcome back I'm here today with Rod Smith, he is the founder of Green Polkadot Box and you're delivering organic food to the end user. Interesting and very unique, I want to go back in terms of when you first started opening your doors, there had to be some logistical challenges of how do you go from saying, 'okay we're gonna put things in a green polkadot box' to building your market in your community. So as founder, how did you go about that process?
There were challenges because really never before could a consumer go online just like they would at the grocery store walk go down the rows and pick item by item 'onezies' and 'twosy' and put it in their shopping cart, we created the same experience essentially for the consumer online. So we had to be able to fulfill from thousands of products a single custom picked order that would have unique products in it very different from the order before the order after. So there was a challenge in learning how to do that. More particularly when we started adding frozen and refrigerated foods into the mix along with dry goods. So now you can shop online with us and get an order that has. Frozen grass fed beef steaks. And Amy's pizzas and burritos and frozen vegetables and fruits along with your peanut butter and your cooking oil in your pasta and bread and you know all kinds of other things into one single box. So we developed it into an art form we're the only company in the country that can do that right now.
Alan: It's interesting, I came across a wire yesterday about an individual out in California, they had a Facebook group and they were sharing recipes and they decided to make some cervache or some type of- and the individual ended up getting arrested for putting something out on the market that they had produced, I want to differentiate, what you do- you're not producing your own food
Alan: You're basically an online grocery store for organic products.
Alan: Okay so how do you how did you go about building the community here getting the word out that 'hey I got a company going' was it word of mouth?
It was all word of mouth. There's a huge consumer base that's waiting for clean foods. The market size right now is about 35 billion and there about 18-19 million adult consumers in the U. S. that purchase clean food either frequently or occasionally. But what people don't know is there's another 70million adults and their families that have tried organic foods and would be repeat consumers if they could afford it. So we think that we are leading a giant couldn't consumer shift from contaminated GMO foods to clean foods and that over the next 10 years, that 70 million adults are going to shift their spending away from contaminated foods to clean foods. So the answer is, there's already a huge demand for it, and it boils down to affordability and convenience and these are the services that we offer.
Alan: Okay so you would have some type of barometer- what areas are the hottest in organic foods where the greatest demand exists? Is it for the fresh or the packaged what would you say? I'm putting you on the spot I realize-
Really you divided it up into about 3 parts, so you've got your shelf stable pantry items, the things that you keep in the pantry, they you have your frozen and refrigerated goods which include all your proteins and dairy products and things like that and then you have produce. About 30 percent of the household budget is made up of produce. The average family today spends about $700 a month or $8400 a year. And our goal is to provide all those foods for them. Right now we provide all the pantry items and all the frozen refrigerated goods, and some specialty produce items. But we have a plan to get heavy into produce in the near future.
Alan: I’m visiting here today with Rod Smith he's a founder and the CEO of Green Polkadot Box. And Rod I need to take a quick break, and we'll be right back after these messages.
Alan: Welcome back I'm here today with Rod Smith, he's the founder and CEO of Green Polkadot Box. We were talking about your your model, that of bringing organic foods at affordable prices. To the end consumer and you do this on the internet.
Alan: So when you're in the shipping- and I'll call you a logistics company how do you control the shipments? Are you in a certain geographical boundary, how large are you?
We ship all over the continental United States and we use alll the major carriers. So the order comes in online, we processed it. And ship within 24 hours.
Alan: And then how do you ensure the quality of your food product?
Well we only carry top quality proven manufactured goods- proven products, so we don't take any chances there. We want products that are what we call essential to the typical family budget, -what's for breakfast lunch and dinner. So we only work with vendors and provisioners that have those products. So quality is never really an issue, though we do have our own internal staff we have a full time registered dietitian we carefully vet every product in every ingredient to know where sourced from we don't take any chances because ultimately were in the trust business our consumers trust that we're going to deliver them clean foods that don't have any problems.
Alan: You know Rod, the organic movement has really been increasingly more popular. And also you're you're in an area where when the demands picking up I think you hit a real sweet spot there for you know getting it right in the middle because you're actually helping people save a lot of dollars. Essentially you're taking out the middle man.
Alan: So when we look at your model, with shipments how much do you ship, or how big are you right now.
Well it's a it's an interesting question and leads to kind of a story I need to tell you. We started out with the idea that we're gonna have a single online store. And we ramped out we came out of the shoot and did $4 million in sales our first year, we processed hundreds of thousands of orders. But we weren't achieving the scale- the accelerated growth and I really wanted. I believe that we have a chance to completely disrupt the current distribution system. So about 2 years into it- so this would be 2014- I came up with an idea on how we can work with not one store but thousands of stores. And I started working on a digital application. That would put market influencers together with consumers so that market influencers under their own brand could sell to their own customer bases. And for the last 2.5 years we've been developing that technology offline, now we're ready, we have 285 store so far we're going to 2000 stores by the middle of next year we already reach 45 million customers potentially when our highest customer reach was 28,000 with a single store, now we're at 45 million and we're ready to turn on. We're ready to open our stores in February, so we're gonna see our sales revenue go from a peak of about $400,000 a month under the old system to starting out at between $3 and $4 million a month. Beginning in February of next year and growing.
Alan: It's quite a volume. It's a much different dynamic logistically when you're trying to move that to move that much product around.
Yeah but we got a lot of experience we've really perfected our core competencies and in logistics fulfillment order processing customer care and even online marketing- we're one of the leading online marketing companies in America because of our experience. So for us to scale up from $400,000 to even $10 million a month in revenue, that can be done very quickly we have all the systems in place the only choke point if you will would be the acquisition and training of new labor, but all the systems are in place for growth.
Alan: So Rod, when an individual customer comes to you they're going to put their order in and then typically what should they expect for turnaround since it is a food item.
Well they're going to place place an order through their favorite health merchant's store, I referred to as these influencers and their customers. We call them health merchants, they have their own online store, we work with them to do the marketing direct to their customers. Their customers will see a promotion click on a link and you come right into the store of the health merchant. The order is processed immediately and then we ship generally within 24 hours at the latest. If we get the order at a certain time during the morning, it's out that afternoon.
Alan: What if I want to go to GreenPolkadot Box.com. Is that a possibility or is the model really designed through the health merchant period.
When we made the decision to go with the health merchant platform, we decided to close Green Polkadot Box as a store and Green Polkadot Box is going to become the champion of the clean food movement they know the leader of the clean food revolution so we will have an online presence but it will be more to promote the buying collective that we're building with millions of consumers. And consumers will be able to come to Green Polkadot Box and they'll be able to find out who the health merchant is that's closest to them. So that's our new role, we're gonna be building this massive buying collective which I think could reach over 30 million customers in the next 10 years.
Alan: Oh my gosh, well it sounds exciting and you're onto the new age it seems that as we're moving forward- and I've heard people draw this analogy, the grocery stores are built on a certain logistical supply chain, but with the baby boomers and the population shift. They're going to have a challenge maintaining that because labor forces disappearing.
Right it would be very difficult and there are disruptors like us that come along and we collapse that supply chain, we bypass all those middle men that you mentioned earlier to provide a better value with more convenience right to the consumer's door.
Alan: Okay so Rod, if a person wants to find more information about Green Polkadot Box .com- I think the best way would be to go to our page we call, GPDB which is the acronym for Green Polkadot Box, GPDB.investments and on that landing page we have a full story about the company.
Alan: Excellent, well Rod I appreciate you being at today's show. I've been visiting here today with Rod Smith, he is the founder and the CEO of Green Polkadot Box, and we'll be right back after these messages.