For the past two years, entrepreneur Fred Miggins has been studying every nook and cranny of the muffin business. A seasoned marketer, he knew exactly what he wanted his 100 percent natural, no-sugar-added muffins to look, taste, and feel like. He developed a unique concept, came up with a name, designed appetizing packaging, and after months and months of testing and tasting and working with commercial bakers, he perfected his recipes for wild blueberry, banana walnut, lemon poppy, and pumpkin spice muffins. Then he crisscrossed the East Coast doing demos and persuading retailers to carry his unique baked goods.

To date, Miggins' Maplewood Bake Company has signed deals with a number of retailers to feature Fred's Incredible Muffins. But there were still many holes in his distribution network.

This August the Maplewood Bake Company exhibited at the American Diabetes Association Expo in Pittsburgh. Diabetics are the perfect audience for Fred's Incredible Muffins, and the company even got a write-up in the local paper. Just one problem: the muffins were not available anywhere in the Pittsburgh area — and people were calling to find out where they could get them. That's when Miggins made the decision to sell his fresh-baked muffins online.

Miggins' story is not unique — and isn't as simple as it seems. To give you the goods on what it takes to sell perishable food online, ECommerce-Guide.com talked to several established online food retailers. Following is their recipe for success.

Before You Go Live with Your E-Commerce Site

1. Establish a brand or name for your product(s) — and know who your customer is
D'Artagnan, named for the fourth musketeer in Alexandre Dumas' novel The Three Musketeers, was already "the leading purveyor of foie gras, pâtés, sausages, smoked delicacies, organic game and poultry in the nation" when it decided to go online in 2001. With a thriving wholesale business, D'Artagnan was being bombarded by hungry restaurant goers, gourmands, and chefs who wanted to order their duck, poussin (baby chicken), and pâtés direct, and were willing to pay for next-day shipping.

Zingerman's, which Inc. magazine dubbed "the coolest small company in America" in 2003, began life in 1982 as a little red-brick deli in Ann Arbor, Michigan, the home of the University of Michigan. Since then it has morphed into a gourmet powerhouse, selling unique and hard-to-find food items through its successful mail order business, which includes its e-commerce site, as well as at its original retail store. With a cult following of "foodies" on both coasts and points in between, particularly Chicago (no doubt the result of tens of thousands of hungry University of Michigan alums), Zingerman's was a natural for adding a mail order component — which it did in 1992 — and then going online in 1999.

Similarly, New York's Little Pie Company, which, like D'Artagnan opened shop in 1985, quickly became an institution in its Theater District location, attracting hungry actors, directors, producers, musicians, and theatergoers with its mouth-watering pies. As these denizens of the stage moved West, they still craved the Little Pie Company's signature sour cream apple walnut pie (as well as the other eight pies the company now sells online) and would call the shop asking if they could, please, ship one or two to them. Eventually, as demand swelled, Little Pie Company launched an e-commerce site in 2001.

Zingerman's began as a small deli in Ann Arbor, Michigan. It's now a favorite of online "foodies."

So what's the secret to these niche companies' success?

"We don't really market to everyone that we can," explains Brad Hedeman, the resident marketing and purchasing expert at Zingerman's Mail Order. "We market to foodies. And the foodie out there likes hard-to-find things. There's a lot of exclusivity for our products. We direct import a great many of our oils, a great many of our cheeses. We have a lot of great relationships with very small producers. And that's our focus."

Exclusivity is a large part of why these companies have and are succeeding. Already successful businesses, they have used the Web to extend an already successful brand that was unique, hard-to-find, and/or appealed to a specific demographic.

2. Make sure you have proper permits, storage facilities, and staff
"First of all, if you have an at-home business, get in touch with the Department of Health, because you can't ship out of your house without permits," explains Little Pie Company President Michael Deraney. "So go to your local Department of Health and register as a baker or bakery or food supplier and make sure you comply legally with everything you have to, because they will come into your location and make sure that it meets their standards."

Another important piece of advice: "Get a freezer, and get a big one," says Zingerman's Hedeman. "You're going to have to freeze a lot of things, even if it's just all your ice packs. Big freezer space is important."

If, however, you cannot fit a large freezer onsite, see if there is a local freezer facility that has some space, which is what Maplewood Bake Company did.

Hedeman also recommends, for businesses with a retail presence, having a staff dedicated solely to the online business.

"You do not want to have the same people that are helping customers on the floor be the ones answering phones or packing," he says. "You really want to have a dedicated staff on the phones [or handling online orders] as well as in fulfillment, preferably people who have experience."

All the experts say you should be prepared to hire additional staff for the busy Thanksgiving — Christmas season, to make sure those orders get out the door.

3. Invest in packaging
To say that Little Pie Company President Michael Deraney is obsessed with packaging may be a bit of an overstatement. But just a bit.

"When people pay $30 or $40 to have [a pie] sent, you have to make sure the product is desirable on the other end," says Deraney.

So you have to have packaging that will protect your perishable item from damage, be it rough handling, changes in temperature, or tampering.

Little Pie Company gets its popular baked goods into customers' hands within a day or two of baking - a key ingredient in customer satisfaction.

"We developed our own shipping carton," explains Deraney. "We did our own testing, based on temperature. We looked on the Web and talked to people in the gel pack, refrigeration, and dry ice business. We met with courier services. We got information from them. They have testing facilities as well, so they participated with us. We looked at options in terms of different packaging, from foam to Styrofoam. We looked at information regarding shipping food products to other states, legal issues. We hired extra people. We set up a little department within our company that's just responsible for shipping. We got a toll-free number put in. We set up an area within our business [to handle fulfillment]. We bought a shrink-wrap machine. And we did our own testing with throwing product around, shipping it to family and friends, to see if it worked out, making adjustments and changes along the way."

Even though Deraney finally found packaging that fit the bill, he is constantly revisiting the issue, in order to make sure that his product arrives undamaged and just as fresh and tasty as the moment it came out of the oven (or shortly thereafter).

4. Work closely with shippers to get the best deal
When you are shipping perishable food, you can't afford to waste a minute. All the companies mentioned here ship either next day or second day, depending on the nature of what is being shipped.

"We usually have about a 24-hour turnaround time before an order goes out," explains Zingerman Mail Order's Hedeman. "If you're talking about Amazon, which doesn't sell perishable foods, they can send out as much as they want on a Thursday or a Friday, and if it gets there next week, nothing's gotten spoiled or gone bad. But when you are dealing with cheese, bread, pastries, timeliness is very, very important. For us, we've found that the guaranteed two-day delivery system, be it UPS or FedEx, is really the best way to go. It's fast enough and cheap enough. A lot of things, especially in the summer, we need to send overnight. Like if we're sending any kind of meat, we need to ship that overnight. And there's a charge for that — that's made very clear. But for us, two days is about as long as you'd want a cheese out there."

D'Artagnan also has a typically 24-hour turnaround, though often they ship orders out same day, "Because we have something in the boxes very often that is raw, we cannot afford to go second day," she says.

Little Pie Company also gets its product into customers' hands within a day or two of baking.

With a thriving wholesale business, D'Artagnan was being bombarded by hungry customers who wanted to order their duck, pâtés and other specialties direct. Its e-commerce site satisifed those cravings.

While we live in an age where overnight delivery is commonplace, that service still does not come cheap. In fact, shipping is typically one of the most expensive parts of any online food store — and a cost you will have to pass along to your customers if you are to make any money. That's why it pays to work with carriers to come up with the best deal. Of course, second-day is cheaper than overnight, and the more volume you do, the lower the overall rate. But it definitely pays to shop around. All of the major carriers — FedEx, UPS, DHL, even the U.S. Postal Service — will work with you.

Maplewood Bake Company got a discount with FedEx because it was a USAA member (see http://www.mysmallbizcenter.com/rawdoc.asp?docid=20044 for more information about FedEx and small business).

But no matter which shipper you decide to go with, make sure the company understands your product and will handle it accordingly.

5. Your e-commerce site doesn't have to be fancy. Just make sure it's easy to use and explains all terms — especially shipping costs and your return policy.

When D'Artagnan first ventured into the consumer mail order business, the result of customers calling them in search of product, all it had was a typewritten price list. Finally, in 2001, the company launched a Web site.

At first, "it was just a description of D'Artagnan," explains D'Artagnan President Daguin. "Then we put a little money into it. Not much. I think our initial investment was $7,000. And we added the shopping cart and some products. And it went really, really well right away, even though it was not user friendly at all. Now we're making more investment in it, and as we are making more investment in it, it is becoming more user friendly. The design is becoming better. And we're systematically adding photos every time we have a new product. Things like that."

Similarly, the Little Pie Company's Web site doesn't have the bells and whistles of some food sites, but it has a charming homegrown look and allows users to view each pie, get the information they need, and order online.

Maplewood Bake Company, which has its own Web site, though it's not an e-commerce site yet, decided to use a partner's existing e-commerce site for its initial online rollout.

You, too, can decide to cross-market your product, using someone else's ecommerce site. You can also use a service like Monstercommerce.com to help turn an existing Web site into an e-commerce site. Or you can open a store on eBay or Yahoo!

No matter which e-commerce route you take, though, make sure customers understand exactly what they are paying for, i.e., product plus overnight or second-day shipping, how to store your product once it arrives at the customer's home, and what your return policy is. You should also include contact information, preferably a phone number and an email contact. Lastly, all of this information should be readily and easily available on your Web site before the customer places or confirms her order.

6. Don't forget about customer service
"The most important thing for us is to have a satisfied — and curious — customer, because this is the customer who is going to be your customer next month, and the month after that, and the month after that," says D'Artagnan's Daguin.

Some ways Daguin satisfies her epicurious customers is by including recipes and tips with each shipment, writing a monthly newsletter, and sending subscribers, called Musketeers, a different special every month.

But equally, if not more important, says Daguin, is "to have great service, especially when something goes wrong with the freight or something is backordered.

"When people call D'Artagnan and push '0,' they get a real person. When the system is overwhelmed you get a machine, but we make it 99 percent of the time. The second thing is we have one person dedicated to the Web site. And when people ask a question, in just one email they have his name, his extension, and his direct line. It's all about nurturing the customer. That is the key. It's very important to maintain the faithfulness of the group of people you have already, because to go and find new people [is much more difficult]. It's very important to nurture your active customers."

At Zingerman's, explains Brad Hedeman, "we have three bottom lines: great finance [i.e., pricing], great food, great service. You need all three to have a successful business."

Jennifer Lonoff Schiff (www.schiffandschiff.com) is a regular contributor to ECommerce-Guide.com.

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