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Steep climb for online tea sales

Entrepreneurs capitalize on a growing consumer trend
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Tea Sparrow owner Michael Menashy, who runs his business out of his Vancouver home, with a teapot and cup he designed: “we're literally scouring the earth. We're not intimidated by any borders and we're finding the best”

Michael Menashy's parents had such a superlative collection of teapots, the Royal Ontario Museum once wanted to showcase them.

Menashy adopted his parents' love for ceramics and, until recently, focused on creating and selling them. When his doctor told him he shouldn't drink coffee, he began to explore teas.

Soon enamoured by tea's variety and subtleties, and noticing its popularity, he decided to start an online business.

Menashy launched Tea Sparrow in January 2012, after a year of market research and building a website that could carry the business.

"I spent that time learning about what people are drinking, why they're drinking it, what are they getting out of it, what's their motivation," said Menashy.

Using market surveys, he determined his target customers were women, 25 to 40, who were usually university educated and preferred chai, Earl Grey and jasmine teas.

He built his business on a promise to source only the best from around the world.

"We're literally scouring the earth," he said. "We're not intimidated by any borders and we're finding the best."

By selling a premium product, he said, he believes he's creating connoisseurs in his buyers, resulting in customer retention.

"Every single person who has signed up for a membership, except for one, has renewed [it]."

In the first couple of months he saw exponential growth. In January, he made nearly $5,000, and by February he had made an additional $10,000.

Kathryn Britnell hasn't quite reached Menashy's stage in developing her own tea business, but she's well on the way. So far, she's invested about $10,000 into building Tealiatea.com. Her business model of in-home tea socials is similar to that of Tupperware and Saladmaster.

"It's independent sales consultants who sell our products explicitly through our company," said Britnell, whose "day job" is at Reliance Insurance. "The decision to move ahead with Tealia Tea was to provide employment opportunities for homemakers wanting to supplement their income, including my sister in Ontario, while at the same time creating passive income for our family," said Britnell. "We are also giving back by supporting fair trade and organic tea gardens."

She believes there's a strong desire for her service, mainly because in her view, drinking tea is marketable as a social event.

Still others remain committed to brick and mortar shops to sell their loose leaf. Based in Chilliwack, Aromatica, a retail store owned by Kim Self and his wife, opened in 2005.

He imports, blends and sells both retail and wholesale, and is also Western Canada's distributor for a large German tea company.

His business' diversification may be part of the reason he saw it achieve double-digit growth each year for the first four years of operations.

In Self's view, tea buyers like to sample the teas, to see them and to smell them. There's a very personalized process involved, he's found, and he believes that's a cornerstone of his business.

It's also the reason he doesn't think online sales will go very far.

"I don't really see that [online sales] will ever be the dominant force in our market," he said, noting that his business only does about 7% of its sales through its website.

"What we find with our website is more often than not, people will go there first, build a checklist, and then come in and want to see it, smell it, taste it. Tea is an expression of nuance and personality, and so it's quite a personal thing."

He doesn't believe the Internet facilitates the intimacy that seems to embody the tea-drinking experience.

Menashy, however, is banking on the belief that excitement about superlative quality, rather than the intimacy of a retail experience, will make his business successful.

If his customer testimonials are any indication, he said, he has good reason to.

"Many of them tell me that the highlight of their month is the three-day window when they know they will be getting their tea."•