When Thomas Hong, owner and founder of Vegky, started out, he didn’t intend to become a serial entrepreneur. He also didn’t want to be in the food business because he knew profit margins can be low.
“And you’ve got to do a large volume of sales to make it work,” says Hong, whose New Jersey company sells five flavors of shelf-stable, non-GMO shiitake mushroom jerky. “The only way to make money is to get into national big box retailers and go to distributors that can give you huge volumes where you can make some money.”
To build brand awareness, Hong began selling Vegky on Etsy, eBay, Tastermonial, FakeMeats.com and RangeMe, as well as Amazon and Walmart.com.
“I went on whatever channel I could find online,” Hong (left) says. “Selling online is pretty much advertising because big box retailers take a lot of fees and you’re left with very little at the end. But at the end of the day, it gets your product into the hands of new customers.”
Hong’s philosophy: It might take 1,000 or 10,000 sales to get his vegan jerky into the hands of the right person, but the journey is worth it.
After starting his career as a structural engineer and buying real estate, Hong began selling luxury home goods—including colorful toilets—before transitioning into the natural food business.
“I kept telling myself I didn’t want to be in the food business because it’s too competitive,” says Hong. “Lo and behold, here I am.”
Hong, who holds a degree in civil engineering from Rutgers University-New Brunswick, knew he wasn’t a “desk person.” He credits reading the book “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money That the Poor And Middle Class Do Not” with helping to start his entrepreneurial path.
Hong, who is a vegan, was already passionate about being meatless.
“I was at a party where there was this girl, who’s now a friend of mine, and she told other people, ‘How can you be an animal lover if you eat animals? You’re just a pet lover,’” says Hong who immigrated from Taiwan to the United States when he was 4 years old. “That’s really stuck with me to this day and prompted me to take action.”
Hong turned that passion into a business after visiting Taiwan more than two years ago. He wanted to bring back vegan options that weren’t available in the United States. When Hong returned, he launched Vegky in April 2019 with the hope meat lovers might try his plant-based jerky option.
“I’m not trying to guilt people for eating meat,” Hong says. “But I want to show people you can do one vegan or vegetarian meal a week and that can help reduce our dependency on animals for food.”
Read on to learn how Hong scaled his business on Walmart and Amazon and other online platforms.
How did you start selling in Walmart?
Thomas Hong: I started out on Walmart.com with a seller account; it was picking up traction. I was contacted by one of the regional buyers who wanted to carry some of my products regionally inside of a few Walmart stores. I’m now in five stores. They’re taking my three top Vegky products: original, spicy and pepper flavors. Walmart is easy to work with and I have no complaints. They pay Net 30 which is great.
What were the steps you had to take to get everything up and running?
TH: It was within a month or two that I had to have enough liability insurance on my food business to meet Walmart’s qualifications. I had to get $2 million in insurance. That was the biggest hurdle for me.
If you’re a food business you can go to FLIP—which stands for Food Liability Insurance Program on Fliprogram.com to get your food liability insurance. You max out at $2 million, so if you need anything above that you may have to contact one of their brokers.
Walmart also asked for workman’s comp and auto insurance, if we were going to be delivering products to them. I got the auto insurance waived because I don’t deliver it myself. I get everything shipped from my warehouse directly to them.
What suggestions do you have for other entrepreneurs to make sure they’re ready to scale when going from DTC to selling on Amazon or with Walmart?
TH: You just need to have a product that sells well and retailers will come to you. They took on a smaller vendor because they saw I was selling well online.
But when you get in, you’ve got to perform. The main thing is to deliver to them when they send you a purchase order. Don’t keep them waiting because they don’t want their shelves to be empty. They want to keep them fully stocked, otherwise they’re losing money if you can’t keep up.
How did you start selling on Walmart.com?
TH: Create a seller account. You join Walmart Marketplace. Fill out an application. This requires a company to use a U.S. Business Tax ID, not a Social Security number. They take a 15% commission. A vendor also needs to have a W9, W8 or EIN Verification Letter from the Department of Treasury that verifies a company’s U.S. business address or physical operations, as well as planned integration method for the business’ product catalog and related information such as total SKUs that will be sold on Walmart.com with verified UPC information.
When you launched into selling online, what was your initial strategy?
TH: I just launched everywhere at once. There was really no strategy. It was just get up and start selling and get exposed to as many people as you can.
Have you been selling food on eBay?
TH: I’ve had an account for over two years. You just start an account and take pictures of the item and provide a description. It’s the easiest way to sell because it virtually has no barriers to entry.
How did you decide what to do with regard to packaging?
TH: I approached designing our packaging as if I were the customer. When you go to the supermarket, no one has time to read all the print on the package. I look at the package and within the first half-second I decide if I want to buy.
Read the front package. Look at the picture and the price. Put yourself in the consumer’s place. Are you going to make it wordy? No. Are you going to have a design that stands out? Yes. But nothing too eccentric. Should it be somewhat trendy, flashy and catchy, so you can read it in less than a second? Yes. Those are key factors.
What are the some things you wish you had known before selling to Walmart and Amazon?
TH: I started selling on Fulfillment by Amazon (FBA) in the past year. It’s great because they take care of all the shipping. Amazon Prime is easier for the customer, especially if you’re doing marginal volume so you don’t have to ship out each item on your own.
My advice is to ship more in the beginning, maybe around a couple hundred pouches. I’m very risk adverse and I only shipped small qualities. I wish I had shipped in larger quantities. Not astronomical amounts, but larger quantities, perhaps 200 bags of each flavor.
We’d run out and it would take Amazon a month or two to process it. I assumed if I shipped to them they would process everything in a couple of days, but sometimes they do and sometimes they don’t. Because of this, I’ve lost four months of selling time.
If you want to ship large quantities but you’re afraid it’s not going to sell, you can always lower the price. I wish I would have shipped more because I can’t get back those months wasted of not being able to sell.
What has selling on via Fulfillment by Amazon been like for you?
TH: The minimum is 25 bags because they take the product and scatter them through different fulfillment facilities across the country since someone from California buys on Amazon Prime and it needs to get there in two days. So they take the inventory and spread them out across the country.
I send 50 bags of each flavor product. You don’t have to send an astronomical amount. Because they only have so many warehouse space and there are so many vendors trying to get in. They want a huge amount that moves quickly and if the product is sitting Amazon will charge storage fees. Still, you want to send as much as you can, so you don’t run out of stock in their facilities.
What the best way to get started on Amazon?
TH: The easiest way to get started on Amazon is doing seller fulfilled products. You have to get a UPC code for each item that you’re selling. But you can buy UPC codes online on SpeedyBarcodes.com. Then list the product with nice photos on a white background with a proper description. If it doesn’t fit the criteria they’ll let you know.
What tips do you have for newcomers?
TH: Simply, you want to get your product into as many hands as you can when trying to make it in the food business.