Market research experts agree that bakery and snack food businesses shouldn’t view e-commerce as an unfamiliar field that follows its own rules of marketing, loyalty, and sales. Instead, they should treat it as just one more channel in their overall marketing strategy. Many of the same rules apply, and with a little creativity, businesses can take advantage of the momentum for growth.
Sam Gagliardi, senior vice president of e-commerce, consumer and buyer marketing for Information Resources, Inc., a Chicago-based market research company, pointed out that most of the decisions people make in the marketplace today’s world start online. IRI data shows that 77% of all consumer packaged goods (CPG) purchasing decisions started online. However, in food at least, most real purchases are still made in physical stores.
“In this world, it’s less about what you own and more about where you build your brand’s presence,” said Mr. Gagliardi.
Creating a strategy that simultaneously supports retail and e-commerce is a winning strategy in today’s digital world.
In e-commerce, there are two channels that food businesses should be aware of. The pure-play channel includes Amazon and other sites where consumers can purchase products directly through a third-party seller. Omnichannel is different in that the seller is an online and in-store retailer like Walmart or Target. Each chain grows in different ways, and Mr. Gagliardi said bakers and snack makers need to be aware of each.
“You have to do both,” Mr. Gagliardi said. “You really don’t have the luxury of choosing. You need to do both and understand the benefits and the risks in the future. “
So how can brands stay ahead of consumers?
“The online space is driven by search algorithms and list building,” Mr. Gagliardi said. “When you win, you improve a search algorithm. When you get on a list, you increase your sales.
In the world of algorithms, companies need to research and target online shoppers, then offer them specific supports that build brand awareness and loyalty.
“It’s all about the traffic, something Amazon knows, and that’s why it got into food retail,” Gagliardi said.
In 2017, Amazon purchased Whole Foods, Austin, Texas, to create a physical presence in food retail. In early 2017, NPD Group reported that only 6% of U.S. consumers shop online. In June 2018, that number rose to 16%, or more than 52 million people. These consumers used either delivery models or click-and-collect models. The growth of fast, click-and-collect delivery options launched by Amazon and other large grocery chains has broadened the appeal of online shopping to a wider population, said Darren Seifer, industry analyst food and beverage, NPD Group.
“The past year has been a one-size-fits-all game among the big grocery chains,” said Mr. Seifer.
According to Nielsen data, major retail players like Walmart, Kroger and Target have grown their online customer base by at least 90% more than Amazon in the past two years. But, because of Amazon’s appeal as a pure option and its broad reach, it has 10 times the reach of buyers than any other merchant.
The advantages and disadvantages of pure play compared to omnichannel are still being studied. To be successful in e-commerce, brands must have strategies for both.
Nielsen estimates that since 2017, the share of click-and-collect sales has increased from 4% to 11% for all CPG e-commerce sales. The grocery and gourmet food industries have a compound annual growth rate of nearly 50% over the past three years, according to Nielsen. This growth is fueled by the increasing availability and convenience of click-and-collect models and omnichannel experiences.
Where categories such as electronics, health and beauty fare much better in outright e-commerce channels, Mr Gagliardi said food fares far better in omnichannel retail channels. Sales data shows why.
According to IRI, only 4% of omnichannel snack sales occur online. However, there is a 35% growth in the category. And that’s despite 98% of all CPG snack purchases happen at brick and mortar stores. Mr Gagliardi said this was because consumers are still tied to this model in the store, even if they make their purchasing decisions online first.
“It’s all about traffic, something Amazon knows, and that’s why it got into food retail. “
Sam Gagliardi, Information Resources, Inc.
Mr Gagliardi said it was imperative for brands and retailers to create a seamless experience between online channels and in-store experiences, as the two feed off each other. A positive in-store experience can lead to an online delivery purchase through a local grocery store, which can then be renewed automatically, driving sales.
With most of the large physical grocery stores announcing click-and-collect and various delivery options, Mr Seifer said the line between physical and online shopping is blurring and, as a result, consumers are getting the best of everything. two worlds.
“There is also a place for pure e-commerce grocery shopping, but it seems like from now on consumers want a seamless experience between brick and mortar and e-commerce,” he concluded. .
Bakery and snacks still have a lot of room to develop online. According to Innova Market Insights, for the United States, only 1.9% of respondents in 2018 said they purchased baked goods online. That’s up from 80% who said they still buy these products from mass retailers.
So how can bakers and snack makers create the growth they are looking for online? Mr. Gagliardi said brands should follow a “build, drive, win” strategy.
First, build an online presence. Today’s shoppers often fill their baskets or carts with the snacks and foods they purchased the week before. Mr Gagliardi said it was imperative to become their first choice. Then, he said that companies need to bring consumers to their products by shortening the path to purchase. Businesses need to create their organic and paid search terms and work with e-merchants to create a retargeting strategy that branches out into social media and other online channels.
Finally, agrifood companies must earn the notoriety, consideration and loyalty of their consumers.
“You have to explore and find your best place to earn online,” Mr. Gagliardi said.