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For frozen food startups, direct-to-consumer is a difficult channel to make work. But for M\u00ecL\u00e0, which makes food products like Chinese soup dumplings and noodles, being able to ship directly to customers is a core part of its business strategy.<\/p>\n
\u201cDTC is very important to us because we do have a direct connection to our customers,\u201d said Jennifer Liao, co-founder and president of M\u00ecL\u00e0. She joined this week\u2019s Modern Retail Podcast to talk about the brand\u2019s growth.<\/p>\n
M\u00ecL\u00e0 began as a Chinese food restaurant but transformed into an online food business when the pandemic first began. Using a Google Form and messaging apps like WeChat, in 2020 Liao and her husband would take soup dumpling orders and locally deliver them throughout Washington. But the dumplings became more and more popular, and so the couple decided to expand its domain.<\/p>\n
First, it started shipping to more areas. Then, the company brought on a 3PL to ship frozen dumplings across the country. Today, M\u00ecL\u00e0 has expanded its facilities, employs over 100 people and has grown its product line beyond just dumplings. It\u2019s also expanded sales channels with a recent launch in a Bay Area Costco with plans to sell in Central Market in Texas and Wegman\u2019s on the East Coast.<\/p>\n
The company has also caught the eyes of celebrities \u2014 actor Simu Liu recently joined M\u00ecL\u00e0 as chief content officer.<\/p>\n
Even with the growth, Liao said the brand has remained consistent with its recipe. \u201cWe haven\u2019t changed the quality of the ingredients,\u201d she said. \u201cWe haven\u2019t changed the way that we do it, but we have obviously scaled much more efficiently.\u201d<\/p>\n
But figuring that out comes with growing pains. For example, when M\u00ecL\u00e0 first began shipping nationwide, it offered a \u201cmelt-free guarantee.\u201d That is, the dumplings were supposed to arrive at people\u2019s doorsteps still in their frozen state. But the brand ran into issues in 2020 with supply chains backed up and deliveries bottlenecked.<\/p>\n
\u201cWe had actually about 20% failure rate for our soup dumplings, where they would arrive melted,\u201d Liao said. After some trial and error, as well as tweaking its fulfillment strategy, M\u00ecL\u00e0 was able to overcome this issue.<\/p>\n
And even though DTC presents issues like this \u2014 Liao is insistent that the company will continue to use it as a sales channel. While grocers are increasingly interested \u2014 and the it\u2019s easier to ship frozen food to grocery aisles than it is to individual customers \u2014 the brand has a direct line with its biggest fans, and that\u2019s helped M\u00ecL\u00e0 grow.<\/p>\n
\u201cI don\u2019t think we would stop DTC,\u201d Liao said. \u201cI think we would try to figure out what is the right ratio of distribution.\u201d<\/p>\n
Here are a few highlights from the conversation, which have been lightly edited for clarity.<\/p>\n
The difficulties shipping frozen food in 2020<\/strong> On testing out Costco as a sales channel<\/strong> Why M\u00ecL\u00e0 will continue to offer DTC<\/strong>
\u201cOur first year, we had worked with a single shipping provider who had three different warehouses that we could utilize\u2026 And we had actually about 20% failure rate for our soup dumplings, where they would arrive melted. And that was obviously very painful because we established pretty early on a melt-free guarantee. That way, people could actually have the product as intended, since you can\u2019t really return a melted dumpling and then have it replaced. So we had a melt-free guarantee [where] we would reship it. But the 20% failure rate was just very painful. And it wasn\u2019t necessarily all from the warehouses \u2014 it was also because UPS and FedEx were just slammed during 2020 since they were set up for more commercial deliveries and not everyone was residential. And so they had to build out their networks for that. But then guaranteed on time deliveries, they took that away during that time period. So we had to just really really hustle in terms of putting together the right supply chain for it to arrive not melted.\u201d<\/p>\n
\u201cWe have beat [Costco\u2019s] estimates by about 40% already. So I think that\u2019s going well as our first rollout right now. And it is very different \u2014 they do have a much larger freezer section than some of the other grocery stores. So that works [to] our benefit. I think a lot of shoppers also go to Costco for frozen items versus some of the other grocery stores. It kind of just depends on how other grocery stores have positioned themselves, how large the section is. Maybe it\u2019s a little bit of a chicken and egg problem as well in terms of what\u2019s available and interesting to shoppers. But for Costco, I think that\u2019s worked out well for us.\u201d<\/p>\n
\u201cI don\u2019t think we would stop DTC. I think we would try to figure out what is the right ratio of distribution. But I think DTC is very important to us because we do have a direct connection to our customers. And we\u2019re able to ask them direct questions. Like, we do email surveys to ask what kind of product they\u2019re interested in, [have them sign] up for beta tests, [have] qualitative field interviews with them. Also, [there are] quantitative surveys that we\u2019re sending out to them. So I think it is very important to maintain that line and then test out different products.\u201d<\/p>\n<\/div>\n