The digital shopping revolution is here. E-commerce in grocery is finally taking off, with global sales predicted to grow by 47% by 2016 , and mobile and digital technology is making shopping a more engaging and convenient experience. This more personalised and connected way of shopping is considered the most important innovation since the launch of internet shopping 20 years ago.
However, many FMCGs have taken a while to embrace this growing channel, with grocery sales typically below 10% online compared to around 30% for health and beauty and at least 70% for electronics. Concerns are often cited that online cannibalises in-store sales and encourages brand switching. However, according to our research, a multi-channel shopper (who shops both in-store and online) spends two to three times as much per year on soft drinks as an in-store only shopper. Online shopping makes it easier to remember to stock up on your favourite brands. Whilst online makes it easier to manage to a budget and compare prices, our research shows that switching between brands is actually lower online than in-store, and so loyalty to retailers and brands is higher. Shoppers get used to a retailer‘s online experience and often shop efficiently from their ‘favourites‘ list, which encourages habit.
So how should brands and retailers seize this opportunity and embrace this digital revolution to accelerate sales growth?
Keys to success
Firstly, understand how the shopper behaves online and in-store for each category. There are fundamental differences, even by market – for example, in France, most online shopping is click & collect (order online and pick up in or nearby the store), which limits the range of products more than in Great Britain, where the full store range is usually available and the main model is home delivery.
Secondly, fix the basics – ensure your products are easy to find online, clearly displayed and marketed in relevant ways. For soft drinks, typing in the search bar accounts for around 30-40% of sales, and we have worked with major retailers to improve the accuracy of search results. We‘ve also introduced ‘virtual multipacks‘ to give shoppers the flexibility to choose their own product combinations – something much easier to execute online than in-store.
Next, innovate and optimise – the great thing about e-commerce is that it‘s relatively easy to test, measure results and then scale up what works. This requires understanding all the touch points that can capture a shopper‘s imagination. During the last few months, we leveraged Coca-Cola‘s sponsorship of the World Cup to help families and friends connect more during the matches. We created a dynamic match schedule, with mobile calendar invites, country-themed recipes, Spotify music and family games, to help people host memorable match events. The feedback was really positive and we learnt a lot about when and how best to inspire shoppers.
There is no doubt that the future of retail is omni-channel, with a seamless user experience across online and physical channels, enabled by mobile technology. Although FMCGs have historically been slower to embrace the online channel, there is now potential for an accelerated shift, driven by retailer technology, data and new habits in shopping behaviour.
A debate I often hear is about a trade-off in investment between digital and physical channels. For sure there needs to be a step-up in digital investment, but the debate is misleading – it shouldn‘t be ‘either-or‘, it needs to be ‘both‘. Digital enhances the physical experience and vice-versa. A recent study showed that around 45-50% of in-store sales are now digitally influenced. Click & Collect is a great merger of both worlds, and using a mobile phone to navigate the store or receive tailored offers all helps to make the shopping experience better.
It is hard