Unable to compete against the likes of Coles and Woolworths on prices, Costa Arvanitopoulos, the co-founder of Sydney-based Barker St, made the markup worth it for his customers.
Together with his wife Effie’s experience in retail, Arvanitopoulos tells SmartCompany he leveraged the contacts and coffee knowledge he has amassed over his 12 years as a cafe owner and at roasteries to create an online coffee marketplace — or what he calls, “the Trivago of coffee”.
The strategy has drawn the attention of roasters around the world, with the business boasting double-digit monthly growth — all within its first year.
A gap in the market
Arvanitopoulos has been in the coffee business for over a decade, spending much of his workweeks behind the counter at Sydney coffee shop The Brewery Espresso Bar or at different roasteries.
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However, he was in his kitchen as a “keen home brewer” when he was struck by the need for an online coffee marketplace.
“When I was purchasing coffee, I kept on having tabs open going, ‘what does this roaster have, what does this roaster have, what does this roaster have?’”
A quick Google search for a more convenient way to browse specialty coffee beans came up empty. It was a similar outcome when he went back to work on Monday and asked his customers if they knew anything like what he was describing.
Speaking to “hundreds a day”, Arvanitopoulos says although he didn’t find what he was looking for, his casual verbal survey drummed up enthusiasm for the idea.
“If you think something is going to work, persist,” Arvanitopoulos says.
“I thought there was a gap in the market, and born was Barker St four-to-six months later.”
What coffee lovers want
Although there was interest in his idea, Arvanitopoulos admits one of his major challenges was changing the buying behaviour of coffee enthusiasts.
Ironically, this challenge likely stemmed from the same reason there was a gap in the market: customers typically return to the same places for their coffee, whether that be at a cafe, grocer or supermarket.
“Purchasing coffee online just isn’t the way it’s done — that’s the reality of it and we knew that,” Arvanitopoulos says.
Without the large-scale budget of his supermarket competitors, Arvanitopoulos says Barker St instead moved away from offering lower prices.
The first point of difference he knew Barker St could offer was a large range of products.
“People like variety, people like to choose different things, people like to taste different things,” he says.
“That was one of the main things we really had to get right — even in the way we present our coffees online, to give our customers the easiest options possible.”
On a practical level, this meant paying attention to the accessibility of the website’s menus and navigation based on how a coffee drinker might browse intuitively through the range of options.
For example, people consider flavours first, and then think about the equipment they use to brew their coffee, he says.
Changing customer values
However, making a real change in customer buying habits meant Arvanitopoulos had to prove to them it was worth spending more money on their morning brew.
To first ensure he had his customers’ trust, Arvanitopoulos began to freely dispense his know-how via a blog on the Barker St website.
The thinking behind this was the blog would set him up as an industry expert, which it accomplished. The cherry on top was it also boosted the website’s SEO, and Google is now one of the main traffic drivers to the Barker St marketplace.
As the customers learnt more about the industry, their demand for quality beans drew demand away from the available selections on supermarket shelves and towards the specialty roasters’ on the marketplace, Arvanitopoulos explains.
For example, Arvanitopoulos spreads the gospel of drinking coffee within weeks of the roast date rather than before a used-by date — something supermarket coffee consumers are typically unaware of because roast dates are not stamped on mass-produced coffee packaging.
Another reason Arvanitopoulos won’t match supermarket pricing is because of his allegiance to coffee farmers.
“We want to make sure they’ve got enough money on the table,” he says.
“Without the farmers, we don’t have the coffee.”
Arvanitopoulos’ background in cafes and roasteries didn’t just offer him insight, it also gave him a thriving network.
Barker St only partners with “individually selected” suppliers, and while Arvanitopoulos needed to reach out to some, the majority are established connections.
Coffee enthusiasts visiting cafes and roasteries are also the clientele Barker St looks for.
“I was leading the charge because I had access to the people that we were going to target,” he says.
“The number of people that we serve … they do all different things. There’s nothing wrong with striking up a conversation, and you never know where that might lead.”
While his co-founder Effie’s detail-oriented nature is instrumental to organising the spreadsheet side of things, Arvanitopoulos struck gold when he found a business mentor in KPMG customer, brand and marketing partner, Lisa Bora, whose office is above one of his cafes.
“She was a really great customer and I thought I’d get her input on things,” he says.
“Now … we meet up whenever I need some help and sit down to go through everything.
“She’s pretty much my go-to person when I need a bit of help.”