advertisement
advertisement
advertisement

These next-generation small businesses only exist on Instagram

These scrappy entrepreneurs let customers order bread, furniture, and much more, all through DMs.

These next-generation small businesses only exist on Instagram

Max Blachman-Gentile started selling bread on Instagram in 2017: sourdough. An everything boule. Ancient grain. Porridge loaf. Each its own perfect rounded shape, crisp on the outside with perfect bubbling within. Slide into his DMs, and two days later you could find yourself with a loaf in hand.

advertisement
advertisement

Blachman-Gentile is part of a subset of Instagram users who use the platform as a digital storefront for their offline businesses. It is where new products launch and get sold–fast. Instagram says there are 25 million business accounts on its platform. Yet only 2 million of them actually advertise on Instagram, according to the company. Instead, many entrepreneurs are using a variety of scrappy tactics to build their brands to create wildly successful small companies.

Instagram has long been home to unregulated businesses. Since the beginning, people have used it to sell drugs or nude photos. Over the years, a cottage industry of more benign small businesses, ones that take orders over direct message and conduct transactions via Venmo or PayPal, have thrived here. Instagram may not seem like a bustling marketplace outside of its ad business, but it’s become fertile territory for turning side hustles into full-fledged business.


This story is part of our series The Instagram Economy. Read the rest of the stories as they’re published this week here.


For Blachman-Gentile’s baking career, Instagram was indispensable. His bread business emerged in the slow lull of summer. He was working at the north Brooklyn bar and restaurant Torst, whose head chef, Daniel Burns, had recently left, giving Blachman-Gentile an opportunity to refresh and expand the menu. The restaurant, Torst, is dark with wood paneled walls, making it alluring in winter but quiet in the summer. When the restaurant started to slow, he used his free time to work on his loaves. During this period of casual experimentation, Food Curated blogger Liza de Guia happened into Torst for dinner, and was sitting at the chef’s counter happily munching on his bread. After chatting with Blachman-Gentile, she asked to do a video about the bread for Food Curated–and he decided he would start selling the bread through Instagram. When the video went live that fall, she posted a picture of his sweet corn wheat loaf, calling it “the best dang bread in NYC” and linking to his Instagram handle for orders.

After that, the orders started to pour into his DMs. On his busiest days, he was producing 40 loaves plus whatever the restaurant needed for dinner service. During the week he averaged closer to 5 to 10 loaves per day. Buyers were told to pick up their bread from Torst, which was happy to let Blachman-Gentile use the oven for his independent bread business, so long as it was bringing customers into the restaurant.

advertisement

On Instagram, Blachman-Gentile marketed his side hustle by posting beautiful photos of his bread, showing perfect cross sections of boules and long striated French loaves. There was no real indication or proof that he was operating out of a professional kitchen—and sometimes, he wasn’t. At the end of January, he left Torst to bake bread full time. While he searched for a professional bread oven where he could bake in greater bulk, he baked out of his home oven.

“I could only do four loaves a day, and that is almost not worth the amount of time, because it’s a two-day process for every loaf and if you’re selling it for $7 or $8 dollars,” he says. “That’s $28 you made that day.” Instagram had given his baking a devoted customer base. But with that base came the production demands of a much larger business.

The DM Economy

Blanchman-Gentile’s story is not unique; a range of other craftspeople and artisans have found a niche under the hazy Instagram entrepreneur umbrella. Helen Levi, a Brooklyn-based ceramicist with over 175,000 followers, describes the platform as her primary business driver. She doesn’t usually conduct business via DMs, as she makes more product than would be feasible to list, but it’s the main way she garners sales interest. “It’s for sure the biggest driver,” she says.

Russell Boyle closed his Brooklyn-based vintage furniture shop Repop in August, opting instead to sell his midcentury consoles, chairs, and slat benches online. Though he participates in the occasional pop-up, Boyle says 80% of his sales take place on Instagram. His Instagram grid is a pristine matrix of rose wood, teak, and walnut pieces, captioned with extensive descriptions written in a reserved tone. A declarative “SOLD” caps most posts.

Another vintage furniture shop, Dobbin Street Co-op, also moves a chunk of its inventory through Instagram. After Courtney Wagner and a few other sellers decided open a retail location together in Brooklyn, she started posting items to Instagram. “I don’t think the goal was necessarily to sell things on Instagram as it was to get people into the store,” she says. “But it didn’t take long to realize–like, it’s cold out outside and maybe people don’t want to come to the store.”

advertisement

On Dobbin Street Co-op’s Instagram page, Wagner and her colleagues stage cute home scenes and photograph them for the grid. You’ll see an orange velvetine couch crowning a needlepoint tiger rug. A porcelain collie and gold side table with a white marble face sit attentively nearby. In the caption is a list of each item with the price and, in the most crushing of cases, a simple “sold.” The collie and tiger rug are snatched up very quickly. In the comments, customers show their dismay with teary-eyed emojis. “Devastated about this rug!!!” one cries. Meanwhile, others jockey for the remainder of the loot. “Couch price?” writes @emotionhiphop. “How much for the entire hutch?” asks @ojinnia. You can identify a newbie by their failure to read the captions, “Would you be willing to ship that rug to LA?” writes @mworam.

Though merchandise seems to get scooped up at a rapid rate, Wagner says that probably only 10% of sales happen in DMs directly. She often encourages people to come into the store, particularly if there’s any kind of condition issue.

“Especially sofas, I’m surprised how many people buy a sofa without sitting on it, because you don’t know if you’re gonna like it,” she quips. Even so, she says that Instagram is a huge part of the business. She makes ample use of trendy design hashtags as a way to nudge Instagram to recommend her account to potential new customers. The posts on Stories and the grid drive a lot of traffic into the store, she says, including people from the suburbs or neighboring states.

“We do almost exclusively all of our customer interactions on Instagram,” she says. The shop doesn’t have a phone line, only a Google Voice number. So questions about furniture or space measurements all get answered here. “If you need to reach us DM us.”

advertisement

While most of the sales do happen in person, Wagner says that when she first started taking orders over the Instagram account, some of the other members of the co-op were nervous. “They were like, ‘Uncle Sam is gonna get pissed,'” she says. But she wasn’t so concerned. The volume of sales is very small, she says, and there are loopholes that let customers off the hook for sales tax when they buy online. “Someone would really have to get in there and really regulate it, and there’s way too much,” she says.

E-Commerce Goes To Court

The loophole Wagner refers to is a Supreme Court decision from 1992, Quill Corporation vs. North Dakota. The Quill Corporation was a mail order office supply seller. As a catalog company, Quill sold furniture all over the United States. In 1987, North Dakota created a rule that required any person that bought three or more advertisements per year in the state to pay a tax on anything it sold (it was actually an amendment to a prior statute, that simply stated retailers with a presence in North Dakota have to collect a sales tax).

Quill Corporation said North Dakota couldn’t force it to charge its North Dakotan customers a tax, because of an earlier ruling barring state regulators from taxing businesses that don’t have a physical footprint inside the state. All of Quill’s merchandise was supplied from warehouses elsewhere. Still, the North Dakota Supreme Court countered that mail order businesses were getting way too big to not pay sales tax. Also around that time, computers were making it infinitely easier to track sales and comply with state laws. The concern for North Dakota was not just that it wanted its tax money, but that not requiring Quill Corporation to collect tax handed it an advantage over local competitors. Ultimately the court decided against North Dakota, because it found that Quill didn’t have a substantial-enough relationship to the state and because such a ruling would open the door for states to tax other interstate commerce, which might suppress sales.

Fast-forward to June 2018. E-commerce now represents 9% of total U.S. retail sales. The biggest of them, Amazon, collected sales of over $100 billion in the first half of 2018 alone. Meanwhile state budgets are struggling. In November, South Dakota started collecting a sales tax from remote sellers when they made more than 200 sales in the state or their sales exceeded $100,000. After the tax went into effect, South Dakota sued Wayfair, Overstock.com, and Newegg, all popular marketplaces with heavy discounts, and took the matter to court. While the lower courts upheld the Quill decision, the U.S. Supreme court ruled in favor of South Dakota–suggesting that states could levy more taxes against e-commerce retailers.

Since the decision is so recent, it’s hard to tell what the outcome will be for large and small e-commerce businesses alike. That will depend heavily on how regulators decide to enforce the ruling in the coming years. For big companies like Wayfair, which already collect taxes in some jurisdictions, the change may not have a big impact. But smaller companies and independent sellers, like Dobbin Street Co-op, may have more difficulty tracking and remitting individual state taxes, discouraging them from selling out of state.

Risks and Rewards

Regardless of the regulatory environment, plenty of Instagram accounts are leveraging their online profiles into full-fledged businesses. Jim Challenger, a retired software entrepreneur with a thick Midwestern accent living outside of Chicago, enjoys a good loaf of naturally leavened bread. Three years ago he decided to become a better sourdough baker, and turned to Instagram to learn the ropes.

advertisement

Sourdough Instagram is a vast and yeasty world, one into which Challenger dove head first. He followed myriad accounts–many of which had their own DM-based sales enterprises–and began commenting on their posts. This blossomed into dozens of online friendships and a geographically expansive community of bread novices and professionals. Over the years, Challenger became an amateur bread baking authority in his own right, learning from people like Trevor Jay Wilson, a popular Vermont-based baker on Instagram who wrote an e-book he markets predominately on the platform.

Unlike many within his bread circle, Challenger has never sold his own bread or starter via Instagram, though he has given hundreds of loaves to people he’s met online and helped facilitate meetups with his online circle of flour-lovers. Instead, over the last year and a half, he’s taken on a new project: designing and selling his own bread pan. Through his connections on Instagram, the project has spiraled into a startup.

The pan began as a frustration with the dearth of tools for sourdough bakers. Challenger decided to fix his own problem, and after sketching out a few designs, he drove north to Wisconsin to meet up with an artisan coppersmith named Sara Dahmen–whom he, of course, found on Instagram. She introduced him to a product designer and foundry who could help him build the pans. “Because I met this artisan, the dream I had in my head was able to become a reality,” he says.

At first, Challenger thought he would make a few dozen pans and sell them individually to the people in his bread-centric social network. It would be a modest enterprise, similar to the bakers selling individual loaves through direct messages. But Challenger wanted to make sure his product was good enough, so he had four of his close bread confidantes try it out. They tested the first model and critiqued the design, all the while posting Instagram pictures of the pan. Suddenly, demand for the pan reached a new level. “The interest has grown phenomenally,” he says.

Now, Challenger and his wife, Lisa, are in the process of scaling what was supposed to be a small project for their online friends into a business. They launched a website for the pan, and Challenger is now trying to figure out business logistics. One recent morning he took a call with a warehouse in Singapore to talk about a potential partnership. “I’ve got several Instagram friends who are in Malaysia,” he says, and they want to buy the pan, too. He also realized that the pizza oven he installed in his backyard–where he intended to season each of the cast iron pans–is not nearly big enough to meet the current demand. What started out as a design project has quickly consumed his life. “I barely sleep at night,” he says, because he’s too busy thinking about either bread or bread pans or both.

advertisement

Challenger hasn’t decided on the final price-point for his product, nor has an exact date for its release been announced, beyond “early 2019.” But the plan is to have the enterprise up and running in the coming months.

For him, this business begins and ends with Instagram. “If I hadn’t found Instagram,” he says, “I would not be baking.” It started as an outlet, which transformed into a social circle, which has snowballed into an inadvertent online brand. For the last decade, he’s led a quiet life–living at home and raising his children. Now, he can’t stop looking at his phone. “It’s seriously the most exciting thing that’s happened to me in years,” Challenger says.

Planning for Life after Instagram

While Instagram can be a powerful tool for small brands looking to build a following, many entrepreneurs are still wary of depending on it too much. “Obviously, I use Instagram to sell,” says ceramicist Levi, “but I don’t want my entire business in Instagram because that’s scary to me.” When the platform changes, Levi says she feels the effects. When it implemented a new algorithm, “my experience went downhill,” she says. While Instagram is the primary driver of traffic for her business, she fears what future changes could do.

Many businesses have seen their followers and engagement dwindle after Facebook tweaked its various content-serving algorithms. In February, fem-focused digital publisher Little Things shut down operations, accusing Facebook’s algorithm changes of slowing traffic to the company’s site by 75%, according to the Wall Street Journal. The death of Little Things, which had amassed its following on the social network, is something of a cautionary tale, not just for media sites, but for retailers as well. Brands have also been feeling the pinch of Facebook’s algorithm, which has significantly decreased their ability to reach shoppers organically. The same rules of course apply to Instagram, which is owned by Facebook, though changes to the platform’s algorithm have received far less publicity.

Blachman–Gentile is no longer selling bread on Instagram, though not because of his fear of the platform’s ever changing rules. His business has simply gotten too big. His small-time bread operation landed him a job at the Standard Hotel’s Narcissa restaurant as the chef de cuisine, where he designed the menu and the bread program. Not only will he be making bread for the restaurant and the Standard Hotel East Village, he’ll also be selling his bread retail, just like he used to on Instagram. Because the program is owned by the Standard Hotel Group, all sales will be run through the Standard Hotel site and its point of sale system.

advertisement

But, Blachman-Gentile says wistfully, “I can’t see myself saying no to someone if they ordered through Instagram.”

advertisement
advertisement