06/08/2020

Dear Scouts, parents and Scout leaders,

I’m writing to update you on some changes to the 2020 Scout Popcorn Sale that we believe will address some of the unique challenges that councils may face this fall.

I think you will agree that never has a popcorn sale faced as many uncertainties and challenges as this year. None of us knows what the COVID-19 pandemic will look like this fall, but in an effort to Be Prepared, we are recommending several changes that we think will address some of the potential risks that we may face.   

This letter (apologies for its length) discusses the challenges we face and offers a number of solutions. It highlights changes we need to make for the safety of your Scouts and their families, volunteers, and council staff and to reduce our shared financial risks. Topics include:

• How to maximize profit for your Council and Units while adhering to local safety guidelines;
• How to transition your popcorn sale from a traditional storefront and door-to-door sale to a new Online Direct sale that teaches Scouts the principles of e-Commerce Entrepreneurship while keeping Scouts, parents, leaders and staff safe;
• How to reduce the risk of having unsold product at the end of this year’s sale;
• Changes in fiscal arrangements, including credit limits, payment terms, and early pay discounts;
• Product changes and promotions for 2020.
• Additional Scout Incentives (TE Rewards) and new Leader Trainings via Webinars and Facebook groups;

First, let me share a little background information on what has been happening in the popcorn industry in America this year.

Background

It should be of no surprise to any of us that COVID-19 is causing food manufacturers in America to change how they operate. Production rates have slowed to accommodate social distancing and to keep employees safe and plants open. I’m proud to say that Weaver quickly implemented these changes and has kept our employees safe and our production lines operating.

While production rates have slowed, we’re also seeing huge increases in demand for microwave popcorn, which is up 60% over just the last 4 weeks. This increase in demand for microwave, coupled with reduced production rates due to COVID-19, has led to demand exceeding the industry’s and Weaver’s current capacity. Weaver’s 1 billion-pouch production (50% of US market and single largest producer) will be increased, but not until 2021 due to the complexity and lead times of the expansion. These projected shortfalls have led Trail’s End to provide Unbelievable Butter microwave for Online Direct only; however, we are adding an Unbelievable Butter ready-to-eat product as an alternative. 

Demand for ready-to-eat popcorn has also grown over the last couple months and, like microwave, is experiencing slowed production rates and increased costs. Fortunately, Weaver’s capacity for ready-to-eat popcorn exceeds current demand, thanks to a $1.4 million state of the art expansion being put into operation on July 1, 2020. This expanded capacity will enable Weaver to respond to seasonal (like Scouting) and sudden surges.

I share all this to help you understand why it is important for us to understand when and where councils need product, as well as the importance of emphasizing an Online Direct sale this fall.


The Impact of COVID-19 on the Sale

As I’m sure you know, Girl Scout cookie sales came to an abrupt stop in March due to the sudden surge of COVID-19 cases. In many states, girls were not permitted to sell in front of storefronts, and many parents did not want their daughters going door-to-door. As a result, Girl Scout councils and units found themselves sitting on a large inventory of unsold cookies. The same situation could face Scouting if there is a resurgence of COVID-19 this fall. 

Also, there are concerns over whether units and Scout families will have the same commitment to sell this fall and whether retail stores will permit sales at their stores.

COVID-19 could also impact our traditional way of distributing product this fall. Warehouses may be reluctant to have volunteers accessing their property, and many of our District and Unit Scouters and staff may be hesitant to work at distribution sites while handling cardboard boxes and interacting with the public.

Given these potential challenges, we feel that 2020 may be the best time for the Scout Popcorn Sale to move from a predominantly storefront and door-to-door sale to one that emphasizes an Online Direct Sale that ships product directly to consumers, reducing the risk of health concerns as well as the risk of handling large quantities of inventory. 

The best way to address these uncertainties is to build a plan that addresses the specific needs and conditions of each council. We know the same plan will not work for all councils. As such, your sales manager will work with you to develop the plan that is best for your council, makes the needed changes and achieves your sale goals. 


Online Direct Sale Improvements

The single, safest way for a Scout to sell popcorn in 2020 is through the Online Direct Sale method. This method eliminates any face-to-face contact with the general public, as well as the risk of handling product or cash. 

The Online Direct sale is also the safest and easiest method for councils, in that there is no handling of product, since popcorn is shipped directly to consumers, and payment for popcorn is received by credit or debit card at the time of the order. E-commerce in the United States grew by 49% in April vs. March, 2020, and more people are utilizing online purchases shipped to their homes as their preferred way to purchase household items.

We fully realize that moving towards an Online Direct sale represents a change in how Scouts and units have sold popcorn in the past. To help encourage the Online Direct sale we are making the following improvements for this year’s sale:

• Scouts will receive DOUBLE Trail’s End Rewards for Online Direct sales;
• Scouts can record online sales in the TE App in addition to their online fundraising store;
• The Online Direct sale will feature the same products sold in the traditional sale at traditional retail prices, plus additional Online Direct products;
• Shipping will be paid by the customer at $7.99 for first item, plus only $0.99 for each additional item;
  • Our market research this year has revealed the most customers prefer seeing the same prices for Online Direct sales as they would see in the traditional sale, and are willing to pay for shipping of Scout popcorn to their home;
• Scouts can still use the Online Direct sale if going door-to-door;
  • To keep socially distanced, Scouts can take an Online Direct order on the TE app, then text the populated cart to the consumer so they can finish the payment on their phone;
• Products can be popped fresh to order and delivered in 21 – 28 days.
• To promote the early adoption of the Online Direct sale, Units will earn a 5% bonus (in an Amazon.com gift card) for Online Direct sales during July 1 – August 15.
  • Units must be registered in the Unit Commitment Tracker (UCT) by August 1 to qualify.    
• Free shipping from July 3 – July 5. Happy Birthday, America! 
• Return to Scouting is increased to 65% effective July 1, 2020 (excluding shipping charges).
• Launches July 1 with orders shipping August 3 and orders with chocolate products shipped after October 5.

Trail’s End Rewards Improvements

Based on research with Scouts and their parents, TE Rewards is switching to a preferred points-based system. To incentivize Scouts to sell online and to encourage them to ask for payment by credit/debit card rather than cash, Scouts will earn: 

• 2 points for each $1.00 of Online Direct sales;
• 1.5 points for each $1.00 of credit/debit card sales;
• 1 point for each $1.00 of cash sales. 

• These point changes will launch on July 1, 2020.
• You can view the new 2020 TE Rewards flyer
• Although the increased points for Online Direct and credit/debit card sales will increase the cost of TE Rewards significantly, council’s cost will remain at 1.5% of retail value of product ordered by the council and 1.5% of Online Direct sales.

Promotions

To support Online Direct sales, the following improvements are being made:

• Scouts who sold $1,000 - $3,499 in 2019 will receive a Square reader (headphone or lightning);
• Scouts who sold $3,500 in 2019 will receive a contactless Bluetooth reader;
• Storefront banners and Square readers will not be shipped directly to units;
  • Banners and readers ordered by councils through the printed material process will ship to councils and be billed at the same cost outlined in the executive summary. 

Traditional Distribution Sites

Initial contacts with council delivery locations indicate that a large number of locations are unwilling to commit to hosting unit distributions until circumstances surrounding COVID-19 are better understood for this fall. As such, it is essential that councils communicate frequently with their delivery locations to know their willingness to host unit delivery and distributions and, if so, if changes in procedures are required. If not, replacements need to be found. We at Trail’s End stand ready to help with this if desired.

Unsold Inventory

One of the financial risks that units, councils and Trail’s End face this year is unsold inventory. If units order the same amount of popcorn that they sold last year, and then experience a decrease in the sale, these units will be left holding a large amount of unsold inventory. Neither councils nor Trail's End want that to happen.
To reduce the risk of unsold inventory, we are suggesting you adopt one or more of the following best practices:

• Promoting and increasing online sales where there is no inventory risk;
• Promoting and increasing usage of the Trail's End App to cover 90% of sales (it was 74% in 2019), which provides visibility of real time sales and units’ unsold inventory;
• Holding the take order and Online Sales first, before the show and sell;
• Only order a certain percentage of last year’s sale to begin with – likely 50% - and only order additional product as that product is sold;
• Reducing products for a simpler sale and more effective forecasting, production and inventory planning;
• Increasing order lead times so production is tied more to demand (and improves freshness);
• Adopting a council policy that allows no returns from units, or a maximum of 10% returns and full cases only. By doing so, unit leaders are encouraged to order what they’re confident they can sell. By adopting some or all of these strategies, councils and units can reduce the risk of ending the sale with unsold inventory.

Reducing Accounts Receivables from Units

Related to the risk of unsold inventory is the risk that units may not be able to pay the council for all of the popcorn they ordered. Since our goal is to help units and councils raise more money, the following best practices will reduce this risk:

• Promoting and increasing online sales where there is no collection risk;
• Promoting and increasing credit/debit card sales to 50% of the sale (it was 21% in 2019), for storefront and door- to-door selling;
  • Credit sales represent an estimated 80% of retail sales in the US;
  • In 2019, consumers’ orders using credit/debit cards were 27% higher than cash;
• Reducing the size of first orders to units and councils and controlling replenishment orders;
• Holding the take order sale first, before the show and sell;
• Collecting from units more frequently (e.g., at replenishments) for cash sales.

Credit Limits

Like many businesses, Trail’s End has purchased credit insurance to insure the value of the popcorn that we provide to councils and units. This credit insurance covers the risk of outstanding receivables not being collected.

Due to the number of uncertainties in Scouting and the economy, insurance companies are currently refusing credit insurance for this fall’s popcorn sale. Without credit insurance, we feel it is prudent for Trail’s End to establish a credit limit for each council to reduce our shared risk.

Your sales manager will reach out to you to determine your council’s credit limit and the best way to make your sale successful. Your council’s commitment to implementing the best practices listed above is important to your council’s credit limit.   We’re confident your council’s credit limit will have no effect on the success of your sale as long as the best practices are implemented. In fact, we believe that implementing these best practices will add to your success.

Ordering and Pricing Changes

With the uncertainty of how many Scouts and consumers will participate in the sale, the risk of having the usual amount of unsold product in the field poses a challenge to units, councils and Trail’s End. To address this concern, we are recommending that the size of units’ and councils’ first orders be reviewed carefully and reduced vs 2019 (guideline is 50%).

Your sales manager will work with you on a plan specific to your council to reduce your first order and to ensure you have product for unit replenishments.

• Here’s what we’re doing and what we need from you to help:
  • We recommend that councils focus first on their largest selling units – those who have sold more than $7,500 last year. These top-selling units make up 75% of the sale nationwide;
  • Ensure that your top-selling units complete a Unit Commitment Tracker (UCT);
    • Review what their 2020 sales goal is, as well as the number of Scouts selling vs 2019.
    • Ensure that their initial order reflects any change in their goal or the number of Scouts vs. last year.
• Trail’s End App and replenishments
  • Trail’s End will be tracking daily sales by unit (and comparing to 2019) and unsold inventory by unit to determine where replenishments are needed for your top-selling units;
  • Councils should promote use of the App to assist in this analysis to help determine where replenishments are needed.
• To facilitate replenishments and minimize the impact on pricing to the councils for ordering in smaller volumes, the price difference between tiers will be decreased by 50%. 
  • Example: A case previously costing $1.00 more between tiers will be reduced to $0.50 per case difference between tiers. 
  • 2,000 case full pallet and <400 case tiers are unchanged.

Webinars

Over 200 webinars will be offered this summer and fall for councils, units and Scout parents to learn about the sale. Over 50 webinars are already sold out and we anticipate leaders from over 10,000 units will participate.

Highly successful unit leaders ($50,000 and multiple years as leaders) and Scout parents will lead these interactive webinars where every question will be answered. Units participating in webinars in 2019 grew 11.2%!

A $20 Amazon.com gift card will be given to the first 5,000 top-selling units (who sold $7,500 in 2019) who register and participate in a Webinar.


Facebook
 
Facebook support is being enhanced in 2020 through the help of 15 successful unit leaders and parents serving as moderators and influencers. Last year, over 18,000 unit leaders and Scout parents utilized the Scout Popcorn Facebook support, and a significant increase in participation is expected this year.


Product Changes

In order to meet the demands of the sale and execute on production and deliveries, the following product changes are needed to simplify availability and to prevent left over inventory:

• Ready-to-eat Unbelievable Butter will be offered at $15 retail for traditional and Online Direct;
• Microwave Unbelievable Butter 12pk will be offered on Online Direct only;
• Chocolatey Caramel Crunch and Chocolate Lover’s will be offered Online Direct only;
• Ready-to-eat Kettle Corn will not be introduced in 2020;
• The Military Donation is now the American Heroes Donation to include US military, first responders and healthcare workers;
  • All donations sold in the TE app will be invoiced to units and councils to eliminate confusion about this item needing to be delivered, ordered to unit or council.

Payment Terms

An additional early pay discount (2%) is being added for councils’ payments made by September 1.

Payment terms are:

• Sep 1 – 2% discount for ACH payment(s) received by TE no later than Sep 1, 2020.
• Oct 1 – 1% discount for ACH payment(s) received by TE no later than Oct 1, 2020.
• Nov 1 - 0.5% discount for ACH payment(s) received by TE no later than Nov 1, 2020.
• Dec 1, 2020 – Payment due on all invoices dated Jul 1, 2020 through Nov 30, 2020.
• Invoices dated before Jul 1, 2020 or after Dec 1, 2020 are due Net 15 days.

Trail’s End will continue research with units and Scouts to understand their changing popcorn sale needs this fall. Never has it been more important to understand their changing needs and, together, to meet them. While it may change, the schedule of emails through July to units and Scouts is updated at https://council.trails-end.com.

Again, in spite of the uncertainties and challenges facing us, together we can and will make the necessary changes to overcome them and to meet your council’s, units’ and Scout families’ popcorn sale needs and goals. We thank you for that opportunity and for all you are doing for our kids through Scouting.

Sincerely,

Mitch Manders
Trail’s End Popcorn Company


Resources:

• Trail’s End Webinars.
• Join us on Facebook and ask your questions anytime.
• For Units: How to fund your Scouting Program (Social Distancing) 
• For Scouts: How to sell $1,000 (Social Distancing)