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Winning on the Digital Shelf: A Guide to out-manoeuver your Competition

20 years ago, retailers, CPG and FMCG brands alike oriented all of their thinking around the physical store. From ranging and navigation to placement on shelf, more retailers and their suppliers have become brilliant at delivering on the basics and honing their instore experiences to meet customer needs.


But digital has changed all of that. Fast forward 20 years and delivering the best experience on the digital shelf has become paramount for retailers and their suppliers alike - but the rule book isn’t necessarily the same. Whilst eCommerce and the omni-channel customer are not new, many retailers and consumer brands are yet to make the mindset shift and re-write the playbook to effectively to maximise their performance on the digital shelf.




 

Why is the digital shelf so important?


According to Forrester, in 2021, in the US 59% of all retail sales were influenced by digital. This was determined on the basis of analysis across 29 different categories. By 2026, however, it is estimated that 70% of all retail sales will be digitally influenced. Of particular note is that 50% of sales will be digitally influenced – meaning that online research, reviews and content and other interactions will influence what is bought in store. It is for that reason that retailers and FMCG brands need to re-write their playbook to ensure they are able to win in a world where the digital shelf matters as much as the physical shelf.


But if that isn’t reason enough, locally we see that today 18.1% of all retail sales now occur online (higher than eCommerce penetrating in markets like the US) and by 2033 it is anticipated that eCommerce penetration will account for one in 3 sales – providing further reasons for the need to win on the digital shelf.


 

Re-writing the playbook to maximise digital shelf performance


Accessibility, findability, display execution, value proposition and service & reputation are fundamental aspects of delivering great digital and instore experiences. But do we need to think differently about these when managing and optimising the digital shelf?


the customer journey - instore vs digital


1. Availability


In a physical world, on-shelf availability is critical to maximise stock turn and deliver consistent customer experiences. In a digital world, “in-stock” is the online equivalent that needs to be effectively managed. Availability on shelf or online is critically important to minimise brand defection - however, in a digital world it is heightened in importance for suppliers for one simple reason: many online shoppers start their next shop by adding items from their previous basket.


According to a 2023 study from Chicory, 84% of Millennials are either very likely or likely to repurchase products from a previous online order. The same goes for 75% of Gen Z. 


Once products have entered the basket, this data is utilised to drive future recommendations. This means if your competitor's product makes it into the basket as a supplier, then the likelihood of losing a customer over time grows.


For retailers, online availability and in-stock has different implications. With many shoppers these days checking stock online before heading into store – an out of stock item can result in loss of not only that sale, but a bigger instore purchase.



2. Findability


In a physical store, findability within the store and on shelf is paramount. Effective planning through planograms to determine placement of retail products in the store and on-shelf, as well as in-store navigation, are some of the many aspects considered to maximise sales from a customer. For suppliers and retailers alike, retail promotions play a critical role in amplifying findability in store. But driving findability (or discoverability) online is a different ball game.


When it comes to findability online, it is vital for both retailer brands and consumer brands (including FMCG) alike to understand where their audiences shop. Two thirds of all retail revenue globally today comes from marketplaces, and with the rise of quick commerce, social commerce and even conversational commerce – consumers are buying in more places and platforms than ever before.  Therefore, brands must first consider where they need to play across an array of channels to ensure they are discoverable based on where the customer is at. However, knowing where to play is only the tip of the iceberg. 


To win in an online world, brands need to intimately understand the platforms that enable experiences in order to drive findability. If you have an FMCG brand that is stocked in Woolies and Coles, that means you need to understand:

  • how the grocery sites are structured;

  • how products are categorised;

  • what personalisation features exist for consumers, e.g: bought before, personalised online specials and how the search algorithm works and consumers search;

in order to effectively build pricing promotions, optimise content and drive findability for your products. 


The same is true if you are seeking to drive findability on marketplaces, quick commerce platforms and more. The challenge, however, is that all of these platforms are different - which means a one size fits all approach isn’t the solution. For retailers, findability is also paramount to maximise basket size and value from customers. This requires a deep understanding of customer behaviour in order to design experiences that enable the ability to surface the right product through search or navigation, and provide support along the way when the customer is unable to find what it is they are looking for (through services like live chat).   


Retail media also plays a key role in driving findability for suppliers – but like the platforms themselves, each retail media networks offering is slightly different. Understanding if your brand is getting its fair share online is an important metric to determine if you are successful in driving findability, and can help to guide retail media investment.



3. Shelf execution


In an online environment many of our senses are taken away. The ability to pick up an item, hold it, smell it (if relevant) is removed - and that means that we need to think very differently about how to execute on shelf. Whilst in the physical store, packaging and displays all play a role in delivering a superior on-shelf experience – the digital shelf has less tangibility. When we look at consumer research, it is easy to see why product content is so important to win on the digital shelf. 


According to a Salsify study in 2023, 55% of consumers wouldn’t buy a product online due to bad product content and 54% would return a product if the fit, size or dimensions weren’t right. 39% also return products because the product didn’t match the image.




For retailers and suppliers alike, the cost of getting of getting product content wrong is high – both in terms of lower sales outcomes and increased cost of doing business.


To execute digital shelf well, brands (both retailer and consumer brands) need to understand what types of product content matters and then establish how to effectively maintain strong content overtime, as it is not a one-and-done exercise.

 

Whilst what content is important differs from category to category, a recent study from Salsify helped to shed light on what product content elements matter to consumers to help decide what to buy. Product descriptions and consumer reviews top the list, followed by product images. All of which aid consumers to make informed decisions. However, over time, what product page features matter will continue to evolve as customers expect more video, 360 degree views and other mechanism to make the right decision the first time.


For retailers and consumer brands, managing product content presents unique challenges. For retailers with large volumes of SKUs, uniformity and the ability to deliver minimum product content standards across an ever-changing and evolving range is difficult. Educating and reinforcing the role and value of content to suppliers and internally is vital if brands are to be successful in delivering great digital shelf experiences 365 days of the year. Whilst for consumer brands, being able to manage product content across an increasingly more complex ecosystem of platforms is creating new challenges, which is where technology becomes vital.   



4. Value proposition


When it comes to the digital shelf, retailers and brands also need to think differently about the value proposition.


Firstly, for consumer brands, assuming your product offering is and should be consistent across all of the platforms and channels that you leverage is the first error that brands can make. Buyer behaviour does differ across channels. For instance, on marketplaces, consumers are more likely to buy in bulk or buy a bundled offering which is relevant for food and non-food grocery items. Equally, on marketplaces like Amazon, consumers can now buy many items on subscription and save by doing so. Whilst in the quick commerce space, consumers are looking to fulfil an urgent need - so thinking about missions/occasions and the range needed to serve those missions is vital, some of which might be a solution vs a single SKU.   

This is why it is important to have what we call product: platform fit – delivering the right propositions to meet the needs of the consumer based on where they are at on the digital shelf.  For retailers, the same is also true – online affords opportunities to think beyond a single line SKU and provide different solutions and bundles that better meet needs. 



5. Brand & Reputation


Finally, what the digital shelf has done has really changed the way consumers make choices about products. Whilst on the physical shelf the equity in a brand has a significant influence on choice, on the digital shelf, brands have to work harder to be selected - even if they are a household name. 


As we have seen earlier, ratings and reviews are one of the most important product attributes that consumers use to make decisions. Those ratings and reviews provide the trust cues for consumers to make informed decisions, which levels up the playing field – particularly during times where consumers are far more open to downgrading. Consumer brands shouldn’t be a passenger when it comes to ratings and reviews. Instead, they should play an active role in soliciting reviews and syndicating them (platform dependant) to their retail partners to support their on-shelf presence. For retailers, rating and reviews are now considered hygiene and simply expected by consumers given their pervasiveness in the market.



 

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