How brands will win in grocery’s eCommerce boom
On June 9, Amazon announced the launch of its AmazonFresh online supermarket in London, with the likelihood of rolling out this same-day delivery across other major UK cities. It’s the first international launch of the service, which is already available in six US cities, and provides confirmation of something shopper marketers have known for a while: the next explosion in eCommerce growth will come from groceries and other FMCG categories. When spending on those items shifts online at scale, it will add up to the biggest disruption yet driven by digital shopping – and one for which many brands are less prepared than they would like.
Why FMCG needs a different digital strategy
Up to now, the categories dominating eCommerce have involved consumers actively investing effort in journeys towards purchases that are either expensive, important or personal. Think of someone booking a holiday, seeking out a drop-dead new handbag, hearing about a book they want to buy there and then, or evaluating the newest mobile phones. In each case, these consumer journeys enable brands to map, identify and directly influence ‘moments of truth’. As marketers, we can identify when people are likely to be inspired to buy, we can detect when they seem to be researching items, and we have lots of options for how we reach and engage them during these moments before the decision is made. Shopper marketing has largely cracked the eCommerce purchase journey in these high-involvement categories.
FMCG is different – because the key moments of truth along the path to purchase are often very subtle and can’t easily be separated from other choices a shopper is making. In FMCG, the choice of retailer channel often takes priority, immediately defining the mission and context in which shoppers choose the categories and products to fit their needs. And within retailer websites, brands have limited freedom in how they can engage and influence consumers. In that sense, things aren’t so different from offline shopper marketing.
Shopper marketing’s digital blind spot
In the offline environment, successful FMCG brands have highly effective shopper marketing strategies that help retailers speed up shopping and avoid shopper frustration, encouraging shoppers to spend more. Helping shoppers find what they are looking for and make intuitive choices within bricks and mortar stores produces a win-win of increased category sales for the retailer and the opportunity to grow brands’ own market share. However, even brands that excel at this in the offline space are struggling to apply the same principles to online retail.
Up to now, this hasn't been too damaging. After all, even in the UK, one of the world’s leading eCommerce markets, only 7.1% of grocery purchases take place online according to Kantar Worldpanel research*. However, when FMCG spending shifts to digital platforms, the capability gap between offline and online shopper marketing could quickly overturn the established brand order. Amazon’s move could well be the tipping point.
A warning for established FMCG brands
In China, established multinational brands were able to lean on their experience and knowledge of merchandising and shopper behaviour to build their brands and claim market share in offline retail channels. Over the last few years however, they’ve seen that share rapidly eroded by small, upstart brands that play the online merchandising game better, and leverage branding opportunities such as those within Alibaba’s T-Mall storefront to level the playing field. Warnings such as this signal to smart FMCG marketers that, in order to protect share, they need to find a strategy for online shopping that is as effective as their offline approaches have been in the past. But where do they look?
Can you reinvent the shopper journey?
It’s tempting to try to circumvent the online retailer environment altogether and seek to construct an alternative shopper journey similar to those of high-involvement eCommerce purchases: build a compelling eCommerce site for your FMCG brand, target the moments when a shopper might be thinking of your category and claim the touchpoints on those shopper journeys as your own. There’s only one problem with this approach: it doesn't reflect the way online FMCG shoppers actually shop. When was the last time you searched for kitchen foil on Google – or spent time exploring the unique qualities of different yogurts on their brand websites? Purchase decisions for these items are made in very different ways. Working with shopper behaviour, rather than fighting it, is a much better digital shopper strategy.
Shoppers will be shoppers
Our research shows that online grocery shoppers share the same fundamental motivations as their offline counterparts. They are, consciously and unconsciously, interested in saving time, money and energy. The way they balance these different shopper currencies varies according to the type of shopping mission they are on and the occasion they are buying for. What’s the best way to save time, money and energy when you need to buy a lot of different groceries? Going to a store that lets you to make all of those choices in one place.
Buying FMCG categories independently, by searching for and interacting with each individual brand online, rarely fits this shopper agenda. Rather, shoppers first choose a retailer they like, where they can choose according to their priorities. The more that online shopping environment divorces the pleasant experiences of finding and choosing from the frustrating ones of searching for items, the more shoppers will spend. That’s the real opportunity for both retailers and FMCG brands.
Making eCommerce touchpoints work for your brand
According to eCommerce consultancy Salmon, there are at least eight specific ways a brand can speak to shoppers on a retailer website – and the way shoppers respond to these depends on their priorities for the category and their trip mission. We know, for instance, that the offers page is the first destination of shoppers focused on saving money, while time-conscious shoppers browse it only sometimes. Favourites lists are used in very different ways by shoppers: those prioritising energy tend to consult it at the end of their shop, just to check they haven’t missed anything; those with no time to spare use it rigorously to guide their shopping experience from the start. And of course a touchpoint such as the search functionality is used very differently for each brand and category. Add in ratings and reviews, product detail pages, checkout summaries and more – and brands have a wealth of different touchpoints to play with to curate a more satisfying shopper experience while achieving brand and category growth. Tim Reay, Head of Online Grocery at Salmon tells us “Manufacturers must take advantage of every touchpoint with the customer, deepening their relationships and maximising digital revenues. It’s not about innovation for innovation’s sake but rather creating the perfect blend to facilitate an excellent customer experience.”
The time is now to build a better online shopping experience
The arrival of AmazonFresh is just the start of the next big opportunity in eCommerce. Many things will change when grocery shopping moves online – but the fundamentals of how shoppers behave will remain the same. To navigate an online future for FMCG, brands must find a way to strike the right balance between the essential shopper currencies of time, money and energy. The most effective way to do so is to work product by product, category by category, retailer by retailer – just as shopper marketing has always done. Whether online or offline, the brands that make it easy for shoppers to buy will be the brands that prosper.
*Source: Kantar Worldpanel data - Grocery (FMCG) spend in the UK is online (12 weeks to 22 May 2016).
Lee Smith is the Global Head of Shopper at TNS and has been studying shoppers since 1994. She works with a range of clients across global FMCG organisations and her past experience includes apparel, accessories, luxury, food and furniture retailers.