The Power of One Buying Collective | Rod Smith

 

About Rod Smith

Rod is the founder and CEO of Green Polkadot Box, a the nation’s first and currently the only “Health Merchant” network. His Company’s mission is empower professions to become Health Merchants in order “To help all people, young and old, learn about and understand true principles and practices that foster healthy dietary lifestyles and eradicate disease; to eliminate the distribution of foods made with harmful ingredients, including genetically modified organisms (GMO) by giving consumers better alternatives; providing all consumers with access to “CLEAN” foods at the lowest possible prices, including free home delivery.”

Prior to founding Green Polkadot Box, Rod founded and ran InContact, a telecommunications company that recently sold for $900 million.

Rod served a mission for the Church of Jesus Christ of Latter-day Saints in Japan. Currently he resides with his Family in Utah.

 

Interview Transcript:

Alan
Welcome back and hit it here with Rod Smith is the founder and the CEO of green, poke it Up Box. Welcome to today’s show, Rod.

Rod
Alan. Thank you Good to be here with you.

Alan
So what? That that’s a mouthful that the name there. But tell me the inspiration behind this. And then I also want to get your background.

Rod
Well, I wish I had a great story for you, Alan. But when my wife and I sat down 10 years ago to come up with the right name, you know, all of the all of the keywords associated with organic food and clean food, we’re taking all the URLs. So we struggled and, you know, I came down to the conclusion, I said, Well, what if we did it about our packaging? And I asked her a question. I said, for example, what do you think of when I say little blue box? And she instantly recognized that was Tiffany’s? Yeah, I got that one, too. Yeah. So I said, What if we build our brand around our packaging. And anyway, one thing led to another and we came up with this whimsical name, green polka dot 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 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?

Rod
Well, my background was in public company foundership, if you will, I started another public company called in contact to NASDAQ company that recently sold for about $900 million. We were in the telecommunications business. But 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 We’re an online business, just like we were within contact. And we’ve developed some very sophisticated systems for the transportation and distribution of what we call clean foods. Not I think organic foods is an old name now, but clean foods is 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
You know this, this is a big trend right now that the organic food but I also understand, you know, I have experienced a recently visited with a farmer, he says 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 in so from the industry perspective, of course, there’s a difference on price, organic versus non organic, but you bring a unique, a unique set back to the industry and that you’re actually trying to deliver more value at reasonable prices.

Rod
Yeah, the price of organic foods is artificially high. Because it’s technically it’s a scarce commodity. I don’t know if you’re aware, but only about 25% of the food consumed in the US. And I’m talking about clean foods. Only 25% has actually grown here. Really? Yeah, wow 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 out to collapse. Those middle stages of cost actually eliminate them and deliver clean foods at the lowest prices to consumers.

Alan
So in doing this is your your customers at the end user? Are you whole sailing this?

Rod
Customer is the end user and user our goal is to be able to provide the end user with discounts up to 60% off what they would normally pay for for clean foods. In other words.

Alan
Oh my gosh, you’re taking the middleman out.

Rod
We’re taking out all the middlemen. We want to make clean foods as affordable as contaminated GMO.

Alan
I visit here today with Rod Smith. He’s the founder of green poke it out box and you’re delivering organic food in the industry at very reasonable prices and why they 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 pre poke it out box. And in your you’re delivering organic food to the end user. It’s interesting what very unique. But I want to go back in terms of when when you first started opening your doors, there had to be some logistical challenges of how do you go from saying, Okay, we’re going to put things in a green polka dot box to, you know, building your market in your community. So as a founder, what well about that process.

Rod
There were challenges because really never before could a consumer go online, just like they would at the grocery store and walk, go down the rows and pick item by item, onesies and twosies and put them in their shopping cart, we created the same experience, essentially, for a consumer online. So we had to be able to fulfill from 1000s of products, a single custom picked order that would have unique products in it very different from the order before or 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 pizza, and burritos and frozen vegetables and fruits, along with your peanut butter and your cooking oil and 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.

Alan
Right now. And so you know, it’s interesting I read on came across the wire this last day about yesterday about an individual out in the California they had a Facebook group, and they were sharing recipes. And they decided to make some sort of Archie or some type of and the individual ended up getting arrested for putting something out on the market that they have produced. So when you differentiate what you do, you’re not producing your own food. No, you’re you’re you’re basically an online grocery store for organic products. Yes. Okay. So yeah. So now how do you how did you go about building the community here getting the word out that, hey, I got a company going and word of mouth

Rod
Was all word of mouth. There’s huge, a huge consumer base that’s waiting for clean foods. You know, the market size right now is about 35 billion. And there are about 18 to 19 million adult consumers in the US that purchase clean foods either frequently or occasionally. But what people don’t know is there’s another 70 million 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 consumer shift from contaminated GMO foods to clean foods and that over the next 10 years, that 70 million adults is going to shift their spending away from contaminated foods to clean foods. So the answer is, there’s already huge demand for that 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 on what areas are the hottest in organic foods where the greatest demand exist? Is it all fresh and packaged? Or what way what would you say? I’m putting you on the spot.

Rod
Really divided up into about three parts. Okay, well, you’ve got, you’ve got your shelf stable pantry items, the things that you keep in the pantry. Then 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% of the household budget is made up of protein. The average family today spends about $700 A month or $8,400 a year and our goal is to provide all those foods for you. Right now we provide all the pantry items and all the frozen refrigerated goods and some specialty produce items. So we have a plan to get heavy into produce in the near future.

Alan
I’m visiting here today with Rod Smith. He’s the founder and CEO of green polka dot 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 crocodile box. And Matt, you know, we were talking about your your model of bringing organic foods at affordable prices to the end consumer and you do this on the internet, is that right? So when you’re when you’re in the shipping, you know, and basically I call your logistics company because you’re basically. But how do you? How do you control the shipments? Are you in a certain geographical boundary or word? How large are you?

Rod
We ship all over the continental United States, and we use all the care all the major carriers. So the order comes in online, we process it, and ship within 24 hours?

Alan
And then how do you ensure the quality of your your food product?

Rod
Well, we only carry top quality, proven manufactured goods, proven products. So we don’t take any chances there. You know, we want products that are what we call essential to the typical family budget. You know 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. We have our own internal staff, we have a full time registered dietitian, we carefully vet every product and every ingredient to know where it’s sourced from. We don’t take any chances. Because ultimately, we’re 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 when the organic movement has really been increasingly more popular. Yeah. And also you’re you’re in an area where when the demand is picking up, I think you hit a real sweet spot there for you know, getting in right in the middle because you’re actually helping people save a lot of dollars. That’s right, you’re taking out the middleman. That’s right. So so when we look at when we look at your model, with shipments, how much do you ship a week? Or how big are you right now?

Rod
Well, Alan, it’s it’s an interesting question then leads to kind of a story I need to tell you Sure. We started out with the idea that we were going to have a single online store. And we ramped out we came out of the chute did $4 million in sales, our first year we processed hundreds of 1000s of orders. But we weren’t achieving the scale, the accelerated growth that I really wanted, you know, I believe that we have a chance to completely disrupt the current distribution system. So about two years into it. So this would be 2014, I came up with an idea on how we could work with not one store, but 1000s 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 two and a half years, we’ve been developing that technology offline. Now we’re ready. We have 285 stores. So far, we’re going to 2000 stores by the middle of next year, we already reached 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 three and 4 million a month, beginning in February of next year. That’s quite a volume roll.

Alan
It’s a much different dynamic. And when you logistically trying to move that much product around?

Rod
Yeah, but we’ve got a lot of experience, we’ve really perfected our core competencies 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 you know, 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 when an individual customer comes to you they’re gonna put their order in and then typically what did they expect for turnaround since is a food item.

Rod
While they’re going to place an order through their favorite health merchants store? The I referred to are these influencers and their customers. We call them health merchants. They have their own online store. We work with them to do the market indirect to their customers, their customers will see a promotion, click on a link and come right into the store of the health merchant, the orders 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 it’s out that afternoon.

Alan
What if I want to get a green poke it out? box.com Is that a possibility? Or? Well, I really designed through the help merchant period.

Rod
We when we made the decision to go with the health merchant platform, we decided to close green polka dot box as a store. green polka dot 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 polka dot box and they’ll be able to find out who the health merchant is that’s closest to them. And so that’s our new role. We’re going to be building this massive buying collective, which I think could reach over 30 million customers in the next 10 years.

Alan
Oh my gosh, that’s a lot. It sounds exciting in Iran to Iran to the new age, it seems that the you know, as we’re moving forward, and I’ve heard people draw this analogy that you know, that the grocery stores are built on a certain logistical supply chain, right, that with the baby boomers and the population shift, they’re gonna have a challenge maintaining them because labor force is disappearing.

Rod
Right. So it can be very difficult and yeah, and there are disruptors like us that come along and we collapse that supply chain, we bypass all those middlemen that you mentioned earlier, to provide a better value with more convenience right to the consumers door.

Alan
Right a person that wants to find more information about green polka dot box that

Rod
I think the best way would be to go to our our page we call up vv, which is the acronym for green polka dot box GPD v dot investments. And on that landing page, we have a full story about the company.

Alan
Excellent. All right. I appreciate you being on today’s show. And bear with me here today with Rod Smith. He’s the founder and the CEO. Again, open up talks. And we’ll be right back after these messages.

 

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This transcript was generated by software and may not accurately reflect exactly what was said.

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Rod Smith on Alan Olsen's American Dreams Radio
Rod Smith

Rod is the founder and CEO of Green Polkadot Box, a the nation’s first and currently the only “Health Merchant” network. His Company’s mission is empower professions to become Health Merchants in order “To help all people, young and old, learn about and understand true principles and practices that foster healthy dietary lifestyles and eradicate disease; to eliminate the distribution of foods made with harmful ingredients, including genetically modified organisms (GMO) by giving consumers better alternatives; providing all consumers with access to “CLEAN” foods at the lowest possible prices, including free home delivery.”

Prior to founding Green Polkadot Box, Rod founded and ran InContact, a telecommunications company that recently sold for $900 million.

Rod served a mission for the Church of Jesus Christ of Latter-day Saints in Japan. Currently he resides with his Family in Utah.

Alan Olsen on Alan Olsen's American Dreams Radio
Alan Olsen

Alan is managing partner at Greenstein, Rogoff, Olsen & Co., LLP, (GROCO) and is a respected leader in his field. He is also the radio show host to American Dreams. Alan’s CPA firm resides in the San Francisco Bay Area and serves some of the most influential Venture Capitalist in the world. GROCO’s affluent CPA core competency is advising High Net Worth individual clients in tax and financial strategies. Alan is a current member of the Stanford Institute for Economic Policy Research (S.I.E.P.R.) SIEPR’s goal is to improve long-term economic policy. Alan has more than 25 years of experience in public accounting and develops innovative financial strategies for business enterprises. Alan also serves on President Kim Clark’s BYU-Idaho Advancement council. (President Clark lead the Harvard Business School programs for 30 years prior to joining BYU-idaho. As a specialist in income tax, Alan frequently lectures and writes articles about tax issues for professional organizations and community groups. He also teaches accounting as a member of the adjunct faculty at Ohlone College.

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