A Long Island, N.Y.-based grocery e-tailer has registered its stock for a potential public offering.
Tal Consolidated is the parent of the Tal Depot e-commerce site, which in a stock registration statement filed with the Securities and Exchange Commission this week said it had nearly $24 million in annual sales for the fiscal year ended Dec. 31, 2016, and $18.5 million in sales through the first nine months of 2017.
The vast majority of those sales – 77.7% this year, and 83.6% in 2016, according to Tal Depot’s account – came as a third-party provider (TPP) through web sites, primarily Amazon, and the narrative in the statement is interesting mainly as a comment on the perils of that business, which Tal Depot simultaneously depends on but competes against.
“Tal Depot’s primary focus is generating as many direct sales as possible, which is one of its greatest challenges,” the company said while discussing its strategy in the filing. “Direct sales have increased from year to year, and continuing that trend remains our goal. The availability of TPPs is what has enabled Tal Depot to build up its brand and its business to what it is today, and position itself to concentrate on continued growth of direct sales.
“Indeed, TPPs are becoming increasingly more difficult to sell on due to the fees they charge and difficult benchmarks placed on third party sellers, thereby restricting them from freely making use of TPPs,” the narrative continued. “By taking advantage of the TPP market over the past five years, Tal Depot has leveraged that market to its advantage, and its business model going forward is to continue to increase its direct sales, making them its primary revenue source.”
Tal Depot was founded in 2012 in Cederhurst, N.Y., and sells mainly nonperishable foods. One of its directors, Israel Friedman, oversees sales of BFY Brands’ PopCorners snacks to Costco.
The company describes being at the mercy of having its authorization to sell revoked by its partners, which they may do if Tal Depot cannot meet any number of performance metrics including limiting defects, late shipments, cancellations and customer interactions. Tal Depot was particular affected by the aftermath of a fire at its warehouse in 2016 that disrupted its operations and, the company said, was a factor in an eight-week suspension of its ability to sell through Amazon early in 2017.
Amazon charges the company a flat fee of 15% of the sales price of items sold through its site, which the company said cuts into its profits.
Tal Depot reported a net loss of $3.1 million in 2016 and has lost $2.3 million through the first nine months of 2017. The company is seeking to raise funds to pay down debt and expand operations including additional warehouses elsewhere in the country.