2020 was a significant turning point for FMCG and consumer goods brands when it came to digital. With eCommerce booming and the deprecation of the cookie pending – the rapidly evolving market has meant brands now more than ever are being forced to re-think their approach to digital.
Unilever is one consumer goods company that has actively pivoted its strategy to take advantage of shifting customer preferences and behaviours in order to fuel growth. eCommerce now represents 9% of total sales for Unilever and in the past year they experienced 61% growth in eCommerce alone. Their success, however isn’t simply attributed to their ability to provide consumers with a new channel to buy (distribution). Unilever is combining product innovation with new eCommerce distribution channels to drive growth and uptake. For example, during the lockdown last year the company “rapidly pivoted” resources to suit in-home consumption of food. It launched ideas such as Ben & Jerry’s Netflix & Chilll’d variant, to support its ‘Ice cream now’ home delivery service, helping its online ice cream business double in 2020 and offsetting the 20% decline seen in out-of-home sales.
But whilst leaders like Unilever are actively driving a step change – many are yet to grasp the true value of adapting to meet changing consumer needs. And the wave of change is creating a host of new challenges for consumer brands who have not been at the forefront of digital transformation.
Why is digital leadership no longer an option for FMCG brands?
The true opportunity and impact of eCommerce
We all know eCommerce has seen rapid growth over the past 12 - 18 months. In the US alone categories like online grocery grew 54.0% in 2020 to reach $95.82 billion. That propelled grocery to 12.0% share of total US ecommerce sales and 7.4% of all grocery sales. Locally the trend is similar with growth in online food and liquor sales increasing by 50%.
Often brands in the consumer goods space believe that when it comes to eCommerce, the only option is to go direct to consumer. But tapping into the eCommerce opportunity isn’t simply about building a direct-to-consumer channel. In fact, depending on the type of goods you sell, a standalone direct to consumer channel might not be the best solution. Savvy brands are determining the best go to market approach based on their business capabilities and product range and are actively considering the role marketplaces and vertical eCommerce players play to increase distribution of products as part of their broader strategy.
For example, research in the US has shown 75 per cent of repeat online shoppers start their journey in their previous basket, known as basket “stickiness”. FMCG brands who are prioritising the eCommerce opportunity by actively working with channel partners like retailers are able to better capitalise on these moments that matter and drive incremental sales and loyalty.
The evolving buyer journey and the rising importance of visibility and discoverability online
Whilst eCommerce sales are still dwarfed by their store counterparts, the influence of online can’t be ignored. As the number of the online and omni-channel shoppers accelerates – visibility and discoverability online becomes increasingly paramount. While Google has historically been the gateway for discovery increasingly consumers are turning to online marketplaces, retail sites and brand sites to undertake research and inform their purchase decisions not just transact.
Research undertaken by Valassis and Kantar (which delved into five core categories including cleaning, skincare, grocery, electronics, and restaurants) found 60 percent of people research products online before making a purchase, and 62 percent read a product’s label carefully before buying it.
This has several ramifications for FMCG brands looking to engage with consumers online and influence their path to purchase. Without direct relationships with consumers, FMCG brands have historically focused on traditional media activities (to drive reach) combined with in-store activation through retailers to influence consumption and purchase. But in a world where digital is driving discovery and consideration, FMCG brands must place greater focus on their online presence – not only on their online digital owned properties but within the online retail buying ecosystem (marketplaces, grocery sites etc).
FMCGs need to consider how their products show up online which means they must turn attention to key hygiene factors like product content and imagery to be discovered and deliver on consumers thirst for information.
The changing media and data landscape
Not only has the rise of online eCommerce left FMCG brands scrambling, but the pending deprecation of the cookie also means that FMCG brands must adapt their advertising approach in order to remain relevant. FMCG organisations have historically been challenged by their ability to capture 1st party data given that much of the direct 1:1 relationships occur through retailers. This has created an over-reliance on leveraging 3rd party data sources to target and reach relevant consumers, online. In order to continue to deliver on consumer expectations like personalisation and relevancy and deliver efficiency and effectiveness, FMCG brands need to re-think how they partner with publishers and retailers to share data, target consumers and also how they build their own first party data assets to leverage to fuel their strategy.
If you are an FMCG brand looking to accelerate your digital transformation efforts we may be able to help. Find out more here.