In one corner we have physical stores and the other we have the fringe contender challenger eCommerce. Will they roll with the punches? Just like Conor McGregor, will the battle for the digital shelf be a technical knockout?
The battle for digital shelf space is also present throughout your omnichannel experience. The physical shelf has space for about 200 SKUs, while the digital shelf only has space for about 12 SKUs. Then we become even more limited for space in the mobile shelf, which features approximately 3 SKUs. Finally, the vocal shelf, as brought to us by products such as Alexa, only features 1 SKU. Where does this leave your brand? It’s time to start asking yourself about your online strategy to win this fight.
The reality is that eCommerce is ramping up quickly. Although brick and mortar stores are not going anywhere anytime soon, the strongest brands are adapting and innovating to eCommerce. In just 4 years 25% of all global CPG (Consumer Packaged Goods) retail is estimated to be online. This doesn’t even account for the in-store sales that will be influenced by having an online presence. It’s crucial for brands to understand consumer purchasing habits. CPG items usually struggle to be the lead item in a transaction, instead, brands should be focusing on building baskets.
Looking to win the digital shelf? Keep reading and you may find yourself saved by the bell.
Hard Hitting Questions You Should Be Asking
Are you afraid of promoting price and promotions?
It’s a common challenge that brands in the consumer goods industry struggle to be the lead item in online conversion. Instead of giving up on the eCommerce underdog, place your bets on CPG items. CPG is the backbone of building baskets and you need a retailer such asAmazon orWalmart that will help you build those baskets. Attributes such as Amazon’s add an item feature only helps to sweeten the deal.
At times, offering flexibility to how consumers receive items can be a big factor. Explore how BOPUS (Buy Online Pick Up Instore) and Express Shipping can benefit your brand. There is no better Call To Action than savings and convenience. Consumers are ordering online to streamline their shopping. You should be a resource for them.
Consider using strategic deal structures to help yield stronger results. Using deals such as dollar threshold deals, quantity threshold deals and first time order deals. You can also use bundle offers or cause offers can be the incentive that shoppers were waiting for to ordering your product.
Target utilises their subscription services to offer discounts to shoppers by offering a 5% discount off alongside free shipping on qualifying orders. To make the deal a total knockout, Target offers another 5% off to those with theREDcard loyalty program. This not only incentivises consumers to make an initial purchase of CPG goods, but also to continue with a subscription over a period of time.
Is your retailer tied to familiarity and trust?
In the fight that is eCommerce, brands that are not afraid to adapt their content strategy are the winners. So what shift needs to be made? Brands should start to use click through rate and conversion rates in various performance KPI’s as part of the media spend. Doing so will facilitate learning and living with these new media budgets that brands need to be using today to build familiarity and trust.
Furthermore, brands need to consider their relationship with retailers to understand the benefits of partnering with them. With the use of Where to Buy technology, brands are not only just promoting the price point online, but they’re also able to promote a larger format of the items.
In the example above, shoppers are able to buy an 8 pound bag of Quaker Breakfast Cereal on Amazon, while Walmart is offering two 64 ounce bags of Quaker Old Fashioned Oats. The availability of larger formats is so effective because consumers behave differently online as they do in store. Think of the difference between the user who goes in store to pick up an item compared to the user who wants to purchase something online. When shopping online, users aren’t interested in a single item. They want that product to have usage for a longer period of time before they need to reorder the items.
Integrating familiarity with retail partners such as Amazon and Walmart, who are two of the biggest pure players, but they also offer good convenience and trust within the sector. Through the use of Where to Buy technology, Quaker is trying to achieve trust in the user before migrating through and losing the user in the depths of Amazon and Walmart. When it comes to creating a distraction free eCommerce environment for your brand, the less friction and steps in the process, the better.
Are you afraid to adapt your content strategy for online?
Quaker Oats is not afraid to adapt their content strategy differently for online and offline conversion. By looking at the habits of consumers they understand that in store shoppers are more inclined to pick up smaller or single item CPG goods. In contrast, online Quaker highlights the benefits of multi packs and bulk product variants inside their strategy. They are aware of the need to differentiate the needs of consumers in the digital journey versus the physical journey.
One of the key pieces to call out for brands who are experiencing challenges today is to understand that need to differentiate the user experience from both physical and online stores. Omnichannel is a big buzz word that has been used a lot over the last five years, but it’s important to see the traction points from online and offline.
What does this mean for the customer shopping experience? It’s time to rethink the customer journey to ensure that your brand is capturing the attention of these shoppers. Identifying logistical barriers online can help streamline the online shopping process, build bigger baskets and increase conversion.
Utilise Channel Specific Price Pack Architecture Designed for Ecommerce
Implementing PPA (Price Pack Architecture) is an effective way to overcome the challenges of the digital shelf. Of course, smaller and single unit CPG goods will always be available in store but what about bulk stores such as Costco and online? As mentioned before, it’s integral to understand the behaviour of online shoppers in order to win at eCommerce. Shoppers are not looking for single unit transactions online, but rather formats that will last them sometime before they have to reorder and replenish their pantry.
Bai, part of the Dr Pepper Group, is an excellent example of this. Online, Bai offers packs of 12 on Amazon and Walmart. Meanwhile, larger boxes are available at stores such as Cotsco. By providing unique packs for all retailers, and specialty packs for members of Costco help introduce new products into the eCommerce ecosystem.
Protect Your Brand with Strategic Deal Structures
Retailers have no conflict of interest to promote a low price point. Brands, on the other hand, can be reluctant to use price as a call to action for consumers. This reluctance on behalf of brands can be due to a variety of reasons ranging from competitors law or contractual obligations.
Creating strategic deal structures can protect your brand and help you increase conversion. There are so many ways to utilise strategic deal structures to benefit your brand, and it goes far beyond dollar threshold deals and quantity threshold deals. You can incite consumers to buy with first time order offers or increase units per transaction with bundle offers. You can encourage future traffic by including cash back offers to be used at a later date. There is even the extremely successful cause-based offers, which gives a certain portion of profits to charity. Cause based offers can see a 10% to 15% lift in sales without decreasing the price of the product itself.
By thoughtfully encouraging threshold deals and promotions, as mentioned above, you give shoppers the opportunity to build a basket for better value. This also stops retailers from matching the price on a single item and protects your profitability.
Leverage Partnerships and Occasions to Drive Seamless Experiences
You should also be leveraging triggers and occasions to drive seamless experiences. Major life changes such as having a baby, experiencing an illness or ageing can all affect purchase intent. So can changing schedules such as changing a job or school. Location-based changes like moving from an urban setting into a rural place could mean a lack of transport or options. Special events such as holidays, product launches and weddings can also help leverage occasions and partnerships to drive seamless experiences.
Brands have an opportunity to be marketing themselves both internally and in collaborating with other brands and retailers. Guiding shoppers to new online shopping behaviours begin with major life changes. You’ll be thinking differently if you relocate to a more rural area, or if you’ve just become a new parent. Creating bundles such as snacks for back to school or even new baby packages could help retailers build bigger baskets. ECommerce enables this exciting capacity to leverage partnerships and occasions to drive this seamless engagement.
What should brands do to prepare for the future?
Let’s look at Amazon, Target and Walmart, as they have gained trust, authority and a strong user base. AtChannelSight we’ve seen that pure players have gained trust and authority. AVI (Average Order Value) is reducing in line with delivery subscriptions which offer both discounts and conveniences. All three retailers listed above offer offers for subscription services. Whatever may be said about millennials, like their parents, they are motivated by the price and discount offered on items.
Winning the digital shelf involves answering some hard hitting questions. By identifying the challenges that brands you’re working with are experiencing online, then you’re able to create a strategy to improve their shopping experience and learn what you can do best to prepare for the future.