guest column: E-commerce brings value to Maine lobster

First published in Landings, June, 2017

The year is 1990. An obscure politician and Arkansas governor named Bill Clinton announces that he will seek the Presidency. The Chicago Bulls win their first NBA championship. Neither Microsoft nor Apple is part of the Fortune 500 largest companies in the country.

The most significant event of 1990 was the introduction of the Internet. No one really knew what it could become. Today, social media platforms are commonplace. Facebook has more than 2 billion active users worldwide and 79% of all adults in the U.S. use the site. Instagram and Twitter combined host more than 1 billion worldwide users, including nearly 60% of adults in the U.S.

As a result of these platforms and others, e-commerce has become a dominant retail force. Last year in the U.S., e-commerce grew 16% to more than $395 billion in sales. This shift has had a profound effect on every part of our lives and many businesses continue to struggle to keep up.

Here in Maine, things never seem to change. But looks can be deceiving. For the Maine lobster industry, the single biggest change has been the growth in landings. Since 1990, we have produced a 330% increase in lobster landings in our state. Lobstermen now catch 100 million more pounds per year than they did in 1990.

This growth has challenged every level of the supply chain, from lobstermen hauling more on their boats to docks having more to sort and sell. Our dealers and processors have had to create more capacity in their facilities — more trucks, more tanks, more refrigeration units, more people to move the catch. The list goes on. The complexity of our industry has grown along with the volume

and customers willing to pay for all these lobsters. Traditionally the customer channels for Maine lobster have been well defined. Supermarket chains have always been reliable, but over time many have removed live lobster tanks from their stores. That market is more challenging now. Cruise lines have also been good customers, but price is always their largest concern. Mass-market restaurant chains have also seen growth, as well as intense competition. Price drives their buying decisions more than any other factor. At every level of the supply chain, from food distribution companies like Sysco and PFG to restaurant chains like Applebee’s and McDonalds, competition among the players is fierce and consequently the price pressure on our dealers and processors is relentless.

Our marketing efforts are focused on understanding what consumers and chefs are willing to pay a premium price to get. As we compete with other proteins like fish, chicken, beef, and pork for a place on menus and plates, we look for ways to establish Maine lobster as a premium product, trying to provide some resistance to the price pressure that engulfs the food industry worldwide.

We have found that high-end chefs are “taste makers” and can influence every level of the consumer market. We know that these chefs value sustainability, the “boat-to-table” story of Maine lobstermen, the seasonality of our New-Shell lobster, and the culinary versatility of lobster that allows them to make many different dishes with it as an ingredient.

Their influence goes beyond just their own restaurants and others that copy them. Consumers follow these trends in magazines, on television and via social media. The “foodie” culture drives new and different culinary experiences to their kitchens.

When you combine this new demand for lobster and the growth of the Internet and e-commerce, you wind up with a whole new sales channel that did not exist in 1990. And while there is an enormous and growing e-commerce market, the techniques and sales tactics to reach it are different from what we have used in the past.

Think about our traditional supply chain process: the fishermen’s co-op has a relationship with a dealer or two; the dealer or processor has contacts with Sysco, PFG or their competitors, as well as supermarkets, steamship lines and large-volume restaurant chains. They are all big-volume accounts and have price as their primary motivator. Volume is what these large customers require, plus a lower price and on-time delivery. These are well-established and important customers to our industry. They exert significant downward price pressure, however, and are indifferent to our story.

Internet customers are different. They are looking for the same experience as the chef “taste makers.” They want to know our story and they are willing to pay for it. One of our leading e-commerce sellers, Mark Murrell of www. GetMaineLobster, is riding this wave successfully. He has developed a predictive algorithm that can tell him why his customers buy lobster and what stimulates their interest in buying more. These e-commerce players are using the video and photo content produced by the Lobster Marketing Collaborative on-line. Mark’s company and others are using sophisticated Internet targeting practices to acquire more customers and sell more Maine lobster. Last year the e-commerce Maine lobster sales channels had sales estimated at more than $25 million.

None of this even existed in 1990! As we catch more lobster, we are going to need more sales channels to distribute our product. Thank goodness that entrepreneurs like Mark Murrell have risen to the challenge.