It was a fairly predictable scene when I was last gearing up towards a category review; spreadsheets everywhere, multiple tabs open and the strategies we put together with the retailers all laid out in front of us. It was crunch time.
Regardless of the company type, in my four years in FMCG there is one thing that nearly every manufacturer has in common; eCommerce is treated as an afterthought once the whole strategy and execution has been mapped out for in-store, promotions and sales. I’ve often found this frustrating because previously as a Category Manager, I could see first hand just how much revenue online shopping could bring due to a number of factors. The issue had always been integrating it into pretty much everything else; then convincing the wider teams to deliver it.
In-store is easier to influence because it’s tangible and tried and tested; in theory as soon as you step through the door, everyone is on page one. It’s when you want to start making waves online that it become more difficult and the challenges are a lot more obscure; there’s more that goes into it, there's a lot more of the shoppers voice and supplier symbiosis that needs to happen together to make eCommerce really work.
The senior management decision makers have decades of experience between them in in-store sales but eCommerce is new to them. When developing the company growth strategy they cannot ignore the figures showing the increasing prevalence of eCommerce in retail. For example, the Christmas period is a key time for online sales; in December 2007 online sales made up only 4.2% of all UK retail sales, whereas a decade later in December 2017 online sales made 17.9% of all UK retail sales. However, eCommerce is still in its infancy compared to brick & mortar. Companies are still working out how to apply their in-store expertise to eCommerce. Too many opportunities are lost due to not paying attention to the activation basics that would be second-nature to Category managers in an in-store environment.
Regardless of what stage you’re at in your eCommerce journey, from experience these are the five key points that are really effective when it comes to driving online category strategy:
Moment of Truth (MOT) was introduced by P&G referring to the precise moment a customer interacts with a brand and their impression towards it changes. Traditionally the first MOT is when you find a product you like on a shelf in a store and purchase it, and the second is the experience that the product delivers. But the online channel has introduced the zero moment of truth - the stage where consumers research before they find a product they like. Not surprisingly considering that digital platforms are seamlessly becoming integrated into our lives, it’s become increasingly difficult to map out exactly when, where and how these MOTs pan out. At the end of 2015, 51% of purchases online were made on a mobile device and accounted for 64% of traffic to retail websites. As evidenced by every person you see on a train or even walking down the street looking at their phones, we are living in a digital world. Shoppers are influenced to buy products by brand messages or social proof at any time of the day and in any location. It is no longer just in-store while they are walking down the correct aisle that you need to attract the customer's attention, it is all the time.
Findability is the first step towards being a consideration in the ZMOT state. If your product can’t be found, it can’t be considered! If you're on page 2 of a search term then you've lost. Research in Online Behavior by van Deursen & van Dijk claims that 91% of searchers do not go past page 1 of the search results and over 50% do not go even consider any options below the first 3 results on the first page. It is therefore vital to make sure you are winning in search and taxonomy on the retailer’s site.
The other crucial piece is to make sure the content on your product page is correct and moving the customer to the first MOT. Reviewing each SKU to make sure all bases are covered and marrying this up to give the shopper the best opportunity to see your product and understand what it is.
With in-store positioning you have fixed constraints, the product has to fit on the shelf and only a limited volume of stock will fit. Plus every supplier is fighting for the optimum space for their products. While also baring in mind the flow of the category on the shelves and down the aisle. All of this gets reviewed once a year to continually progress and ultimately grow the category. The difficulty today is that ranges are being shrunk to offer shoppers a less complicated and overcrowded mix of products in store. This presents a significant obstacle to category growth trough NPD, as retailers now want to make space for your newly developed product by swapping out an existing SKU.
This is where Online has a huge advantage but is often overlooked due to the complexities involved in digital platforms. Granted it is much easier to concentrate on in-store strategies, but the next stage of innovation and growth is in eCommerce.
Currently, most suppliers will “Fix the basics” not knowing where to progress to next. For retail eCommerce, they need to put the same amount of effort into product listings online that they do offline. There is far greater space in online product listings to “highlight the benefits”.
Whereas physical shelves only had space for a branded label or an expensive printed CDU, digital product listings online can have their own pages with multiple photos of the product and lifestyle imagery as well as potential for video adverts. The potential of point-of-sale collateral that is possible online to convince the shopper to commit to the purchase are limited only by your creativity.
In-store products and fixtures don’t fluctuate often and when they do, it’s tangible and measurable. Online changes occur frequently, rapidly and often go unnoticed. It takes more resource, more time and a shift in mindset to maintain your positioning. You will require strategic ways to keep optimising and will require a complete category perspective to be aware of your competition.
Online shopping is currently often set up to be functional and can be clinical in comparison to the in-store experience where the product presentation has some theatre behind it. This does not have to be the case. Innovation in this area can catapult a brand head and shoulders above the dull competition, as seen in the surging sales on Alibaba’s Taobao eCommerce site in China, incorporating live streaming to add personal interaction and Q&A to product listings. Taobao claimed to have 333,000 live streaming videos in a single popular day racking up over 3 billion views, and a sky-high conversion rate of 32%.
Innovation like this makes the intangible tangible again. It allows customers to connect on an emotional level while making sure it remains easy to purchase. An example of a less content-heavy version that can be achieved for online grocery sales, is a meal for tonight section that allows you to browse easy cook recipes to create inspiration. The ingredients are all added to the cart when the customer decides which recipe they want to try. This can go a step further to suggest other recipes the customer can make with what they’ve added to their basket. This is a value-added service that customers would appreciate but could open up possibilities for add on sales, through suggesting the missing products that could be combined with what they have already added to the basket to make something additional and can increase the volume of products sold if customers buy several of the same ingredients to enable them to make the multiple suggested meals.
Brands need to consider how they can work strategically with retailers to engage with shoppers. All the data is there; the benefits stem from how it is then used to present back to the shopper to create engaging and developing experiences.
Traditionally the category review is analysed, reviewed and delivered by the category manager. It is typically a meeting with the buyer that starts by talking about what is happening followed by this is what we recommend you do. It’s one person's input mostly around data, so a lot of charts, tables and figures. When it comes to eCommerce, suppliers tend to have internal teams or an eCommerce specialist who is the hub between functions. It’s important that these become external facing teams as well and lend a hand to the category reviews. Involving the internal eCommerce team in dialogue about category growth online shows the buyer that you take online sales seriously and are geared up for expansion.
There are also many new perspectives and insights that can be shared between departments of different mindsets and areas of expertise. Consider shopper marketing functions for example; they are all already very good at in-store activation; promotional support and activations, hence why suppliers always fall back on the tried and tested strategy. More recently there has been a transition by suppliers and retailers with more creative content around inspiring shoppers with recipe and meal solutions. They are spending a lot of cash on integral chiller units, signage, FSDUs and TV advertising. However, their journey shouldn’t stop there and it should be streamlined when it is being activated online. In reality, retailers have all the virtual space in the world to add content, products and develop the shopper experience. Retailers really can play in the ZMOT but have yet to realise the untapped potential. If a page doesn’t exist then you can create it.
The internal POS experts can offer their expertise in MOT and shopper psychology, the eCommerce specialists can create innovative customer interactions, to contribute to the category manager’s growth strategy, which will impress the buyer with the whole team’s commitment to succeeding on the retailer’s online shop.
Ultimately it is the narrative around your category and brands that interacts with customers to persuade them to buy. They buy into the story, to include it in their life, to achieve aspirations associated with it. The products in your category, the marketing and branding behind each of them individually and as complimentary cross-promotion, and the POS activation should together weave an enticing narrative for the potential customers. Keep the story going throughout the journey. If the journey gets broken it becomes functional which is boring for customers who will be enticed to shop elsewhere that provides a more enjoyable shopping experience. This is especially crucial for eCommerce transactions on mobile devices, where online shopping is akin to a game in terms of interactive on the move entertainment of browsing and engaging with attractive products. Customers do not have to physically travel to a different store if your product listings are not good enough, they will just click off the page and buy from your competitor instead if a more engaging customer journey is offered or the benefits of that product were more clearly exhibited.
In order to map out effective customer’s journey, you need to map out internal relationships between teams; collate the insights needed for each touch point, build the online story at the back of this and then take it to the Buyer to present it to the public.
If you don’t think like the Buyer how can you expect to influence them? We all tend to think the Buyer is interested in the cost. However, new school Buyers are leaning towards strategy and ultimately shaking things up to interrupt the shopper. In simple terms shoppers are key to the success of a category; the more they buy the more the category will grow. If you take the previous 4 points and bring them together you are ultimately building a consumer/shopper strategy plan. However, the challenge is making sure you speak the buyers language and still discuss what’s important to them. This way you can build great range reviews and solid recommendations that also encompass eCommerce strategies. Just remember to remain category focused while sharing exciting ideas!
Mark out the key drivers that you see in the market, outline the target audience, explain how it will work and then most crucially of all, link it back to their strategy and objectives.
Want to be the first brand in your category to benefit from opportunities online? Be the first to innovate online. You have to challenge the functional mentality otherwise we will never get beyond compliance and price, which is where the most of the eCommerce industry is stuck. Make the product listings in your category engaging and offer value to your customers more than just the lowest price.
The retailers want to increase their overall revenue as much as you want to increase your category sales. Show them the work you and your team are willing to do to properly take advantage of the growing possibilities of eCommerce. You want your products to be the most visible in the category, to make the best use of innovative new forms of POS on the digital shelf, to create the most engaging customer journey.
What are the buyers goals and what do they want to achieve - and how can we help them get there? The Buyers care about the best customer experience driving the most sales. If you follow all 5 steps above then you have made their life a lot easier, you will grow your category and may even end up looking forward to celebrating your success and expanding on to new ideas at your next category review with a very happy Buyer.