The five pillars to a successful e-commerce strategy
Search rankings and product content are two key areas for manufacturers, Profitero argues
To win online, packaged food manufacturers must put in place specific strategies to suit the channel. Keith Anderson, vice president of strategy and insights at e-commerce consultants Profitero, sets out what companies should do to build a thriving business in the growing digital sphere.
In my previous column, I discussed the growing importance of the e-commerce channel to the growth of consumer packaged goods makers in the US, a trend that is of course being replicated in a number of markets around the world.
My arguments have been underscored in a new report from The Boston Consulting Group and The Grocery Manufacturers Association, the trade body for packaged goods companies in the US.
The report, The Winner-Take-All Digital World for CPG, warns today's CPG companies are facing a landscape in which about half the sales growth is expected to come from digital channels. CPG companies that simply replicate brick-and-mortar strategies without tailored and effective digital capabilities face stagnation and market share decline.
At the digital shelf, there are some direct analogues to the brick-and-mortar world – some of the things that are measured and managed offline translate directly online.
However, there are important distinctions. At the digital shelf, product content is your product's packaging. And where you are placed within a category taxonomy (an online retailer's menu) or where you rank for search terms relating to your brand or category has a huge impact on placement and how easy to find your products are for shoppers.
Winning in the digital channel is about optimising performance and continuous improvement. CPG brands need to continually understand, measure and optimise their product and assortment strategy, pricing and promotion, product content and search category ranking.
Conducting an initial assessment of your e-commerce performance is essential to understand where you benchmark against leading practices and specific competitors. From there, the focus can then shift to setting targets for continuous improvement.
We believe there are five key pillars to success for every CPG brand in the e-commerce channel.
Discoverability in search and category rankings
Can a shopper easily find your product? Online retailers are increasingly the research platforms of choice for shoppers. For example, 44% of US online shoppers now start their product search on Amazon, and just 30% of searchers click past page one, according to research from Millward Brown.
For CPG brand manufacturers, being present on Amazon and other online retailers - and more importantly being seen by potential shoppers - is paramount to e-commerce success. Identifying key search terms for your product and category, monitoring where your product appears in the search term rankings, and optimising content and promotional strategies to improve your brands' position is essential to being discovered on a consumer's digital path to purchase. For CPG brands online, out of sight means out of mind.
Accurate and optimal product content
Shoppers are starved for time so your products need to stand out with images and titles that are informative and eye-catching.
Once a potential shopper lands on your product page, is your product's information accurately displayed to increase the likelihood of purchase?
Product images and titles are the most frequently viewed information when deciding which products to select.
The best primary images should present an at-a-glance view, quickly conveying to shoppers important product details. And they should display eye-catching visuals, further attracting a shopper's attention and driving more clicks
The best product titles must feed the retailer's search algorithm, ensuring products are well-positioned for relevant search queries - and give shoppers complete, at-a-glance information on search and category pages to help them quickly find and buy what they're looking for
Good content attracts and converts shoppers. Be sure to follow each retailer's specifications and follow leading practices.
If your product is out-of-stock, shoppers simply cannot buy. A joint study from the Grocery Manufacturers Association and the Food Marketing Institute from 2015 (not focused explicitly on e-commerce) reveals the first time a shopper encounters an out-of-stock product, 70% substitute a different product; the third time this happens, 70% switch stores. On-shelf availability is fundamental in the e-commerce sphere, just as in brick-and-mortar retailing. Prioritise solving supply chain issues by focusing on your highest-velocity items at your most strategic online retailers.
Activating brand loyalists
Once a shopper has bought your product, you have the opportunity to create brand advocates by encouraging them to rate your product and write a product review – helping you to drive more customers. According to Bazaarvoice, 61% of customers read online reviews before making a purchase decision.
No matter the stage of a product or brand in its lifecycle, ratings and reviews can help reassure shoppers they are making a smart choice. Not only do they provide a relatively low-cost marketing vehicle with which to activate brand advocates and amplify their loyalty, they are also shown to improve conversion rates.
Reviews produce an average 18% uplift in sales and, as shown in our monthly Amazon FastMovers reports, we see a direct correlation between the best-selling brands on Amazon and the number of reviews.
Closing the loop: measuring actual sales and category share
In e-commerce, reliable data on the size and growth of categories, as well as on the category share of individual brands, is challenging to acquire on the market level. For many retailers, new approaches like our Amazon Sales & Share estimates are helping CPG companies measure their e-commerce performance through familiar metrics. By connecting data on business drivers at the digital shelf, like a product's search ranking or the number of ratings and reviews, analytics can be developed to help manufacturers increase performance and win market share.
In sum, CPG companies that succeed in e-commerce get in early, have strategies and campaigns designed for digital, and are not afraid to continuously re-invest.
The longer CPG brands wait to break into the e-commerce market, the harder it is to compete.
As The Boston Consulting Group concludes, the competition is as quick and nimble as traditional players are deliberate. Though it's hard for big organisations to change quickly, speed is an ally; hesitation means risking falling behind.
Until 31 March, you can get 15 months of access to just-food.com for the price of 12 - and, along with giving you three months for free, you will also receive two exclusive research reports. Full details can be found here.
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