Millions of people live and work abroad, and it is often their favourite food and drink brands they miss the most. Manufacturers attempt halfheartedly to reach them by selling from their websites, but as Bernice Hurst reveals, dedicated expat shopping sites are doing the most to reach this lucrative new market.
“There are large pockets where supply simply doesn’t meet demand“
There are reputed to be 13.5 million British citizens living outside their homeland. No matter how immersed they may become in the diet of their adopted lands, there is much anecdotal evidence that they still crave the brands familiar to them from home.
Unfortunately, not all expatriates live within easy reach of shops where they can purchase their favourite brands. No matter how successful manufacturers may be at finding agents and distributors worldwide, there are still large pockets where supply simply doesn’t meet demand.
With the impetus of the Internet, however, individual customers no longer have to rely on their local shops to enjoy a taste of home. There are hundreds of individual suppliers offering specialist items, but websites dedicated to expatriates list up to 1500 different name brands along with seasonal favourites such as Christmas puddings and Easter eggs. Although there is inevitably some increase at holiday times, trade is generally steady throughout the year. There is no right or wrong time to eat crisps or breakfast cereal. Deliveries can be sent to more than 200 countries.
Manufacturers need to sell in bulk for profitability
Well known manufacturers tend to use their websites to build awareness and develop loyalty, offering recipes to tantalise the taste buds, but don’t often provide transactional services. Few actively target individual consumers.
launched in 1999
One exception is www.heinz-direct.co.uk, launched in 1999 and designed for those missing their baby food, baked beans, soup and Weight Watchers products. The downside to a site like heinz-direct is the shipping costs. Calculated entirely on weight, tins and jars inevitably make the parcel heavy. Added to which, customers must purchase by the case to compensate for the low price of individual items. Sending a hamper of favourite products, or even a couple of cases, can cost as much or more than the products themselves.
This is where consolidators dedicated to literally feeding expats enter the equation, satisfying customer demand while providing an extra revenue stream for major brands. In addition to export agents, wholesalers and worldwide distributors, products can now be sold directly over the net to end-users. While manufacturers may try to make small sales profitable by jazzing them up in fancy baskets (www.nabiscogifts.com) or selling cases and hampers only (Heinz), customers may prefer to order several brands with a single order, paying a single carriage charge and receiving a single delivery.
Sites vary in size from www.expatshopping.com, “the UK supermarket on the web,” to www.britsworldwide.co.uk, “the family store.” Literally a Ma and Pa corner shop, britsworldwide proprietor Jane Turner gets her husband, parents, in-laws, aunts and uncles to help with packing as occasion demands.
Holding stock vs just-in-time at higher unit cost
Simon Aldrich and Richard Finch of expatshopping.com launched in a big way in April 2000, investing some £250,000 in a fully automated 6000 sq ft secure warehouse. Products are purchased in bulk directly from manufacturers. “Thanks to lots of early press coverage,” Mr Aldrich claims, “we haven’t had to do a lot of advertising although we have used some publications dedicated to expats. During our first year, we achieved a 3% conversion rate with 70% of our customers re-ordering. Largely due to the prevalence of Internet usage in those countries, we send 40% of our orders to the US, 30% to Europe and 30% to the rest of the world.”
Turner operates on a smaller scale and purchases from wholesalers. Although she maintains that her prices are more competitive than other expat sites, she is starting from a base of buying from a middleman. britsworldwide also offers discounts to groups placing joint orders to reduce prices further still. “We’re building gradually,” she says. “We select products based on those that friends living abroad miss most. We were regularly sending parcels to them privately and realised that there were plenty of other people who would love it if we could offer the service to them.”
Liz Hardy, of www.britsabroad.co.uk, goes one step further to list most of the major brands that people could possibly want. “We only hold stock of products that are about to become discontinued or come from manufacturers who primarily supply small independent retailers. For most of our products, I simply buy them from the supermarket as and when necessary.”
With supermarkets struggling to deliver to customers’ homes within tight geographic areas, having an expat site promote them, officially or not, is the only way that those favourite biscuits and cakes are going to be available for quite a while to come. As a Sainsbury‘s spokesperson says, “We are concentrating on the UK for home delivery though we might at some time in the future look at overseas customers. There is no current policy as regards selling our own label products to expat sites but we look at all opportunities and would consider each case on its merits.”
Both women have found manufacturers reluctant to sell to them without having much of a pedigree to offer, or enough guarantees of regular, large orders. Liz Hardy says, “This was particularly difficult when we started in 1998. britsabroad was the first site selling British food products to expats and we had no track record. Now, other companies have started up and several have ceased trading already but we are still in there and are probably the first site that customers find when they start looking. This is making the major manufacturers a bit more amenable because they can see that we will be reliable customers even if we don’t order as frequently or in as large quantity as a supermarket might.”
Competitors selling the same products are a minor irritation but not a major problem. “Having competition,” she maintains, “makes us try harder to be better.”
Supplementing b2c with b2b
There are b2b angles to be exploited as well. Firstly, most expat sites encourage group sales or wholesale orders in the destination country. Simon Aldrich explains, “expatshopping.com has exclusive arrangements with high commissions and consulates to supply their shops and commissaries as well as consolidating products for orders placed through smaller embassies on behalf of staff and expats. We are also designing new software for trade customers wanting to order a large enough quantity to fill a container.” britsabroad has a separate area dedicated to wholesale customers.
Nearly all the sites are looking at ways of targeting distributors, shops and restaurants in other countries. Both order size and margin improve when dealing with trade customers. Supplementing consumer orders with trade orders is one path to profit being investigated almost unanimously.
Secondly, most sales are incremental. There is no additional cost to the manufacturer, but regardless of whether consolidators buy directly, through wholesalers or supermarkets, and no matter how many list the same products, having someone tackle those 13.5 million potential customers via a new route cannot do manufacturers’ bottom line any harm at all.
By Bernice Hurst, just-food.com correspondent
For more information on e-shopping in the food industry take a look at:
Online Grocery in the US 2001 – Profitability at the virtual checkout
Retail Revolution 2000-05: eRetailing global consolidation and supplier implications