Since the onset of the Covid-19 pandemic, ecommerce demand and activity have been elevated – something that comes as no news to anyone working in the retail or digital marketing industries.

CBRE Group’s Global E-commerce Outlook Update report, published in June 2022, found that 20% of global retail sales were carried out online in 2021, compared with 9% in 2016 – representing an increase of 133% in five years, and an increase of 46% in the first two years of the pandemic alone. The report calculates that the value of the global ecommerce market totalled US $3.1 trillion in 2021, up from $1.3 trillion in 2016.

While not all of the astronomical spikes seen in 2020 and 2021 have been sustained, and a certain amount of shopping activity has gravitated back towards stores, there’s no denying that Covid-19’s impact on the retail landscape has been long-lasting.

But elevated online demand is only beneficial to retailers and brands if they can successfully capture and convert it – and position themselves as shoppers’ preferred option instead of their competitors. In the Fast-Moving Consumer Goods (FMCG) sector, this presents an additional challenge as many FMCG brands do not own the relationship with their customers, and have historically invested primarily in top-of-the-funnel marketing and advertising to build their brand rather than lower-funnel activity aimed at conversions.

In the wake of Covid-19, this is changing significantly. In this article, I’ll look at three key areas in which FMCG brands are adapting their strategies to capture and convert online demand:

For each, I’ll include examples of FMCG brands that have found success by adapting their strategies or innovating in this area.

Training

Econsultancy offers training for FMCGs including our new elearning course, Driving Sales Performance for Omnichannel Retailers.

Optimising for the digital shelf

In brick and mortar retail stores, FMCG brands have traditionally used certain techniques to stand out on the shelf: eye-grabbing packaging, strategic placement, end cap displays, attractive promotions and so on.

The ‘digital shelf’ in ecommerce is a rather different phenomenon, due to the myriad ways that products can be discovered online: through web search, through site search (both for third-party retailers and first-party brand stores), through browsing the site, through featured advertising, and more. Here are just a selection of ways that brands can better their chances of standing out on the digital shelf and closing the sale with consumers.

Product presentation

Eye-catching product imagery is the digital equivalent of attractive packaging in the offline world. High-quality packshots and product photography will grab the customer’s attention and give them visual information about the product they’re searching for, in many cases helping to confirm that they’re choosing the correct item.

It’s recommended that FMCG brands use multiple images to display the product from all angles; uploading images of multi-pack versus single listings, or different colour and size variants, also gives the customer more information about their potential purchase. Without a physical product on the shelf to pick up and examine, product imagery has to do the heavy lifting, in order to ensure that the customer won’t be disappointed when their purchase arrives. 360° rotating imagery is another addition that brings the digital shelf one step closer to resembling the physical one.

FMCG brands selling online also need to bear different devices in mind, such as mobile and tablet devices. Research by Kantar found that smartphone usage for shopping grew by 13% between 2019 and 2022, with 58% of online shopping ‘trips’ taking place on mobile in 2022, compared with 40% on a PC. A customer shopping at work or at home on a desktop computer will have a very different screen real estate to a customer shopping using a smartphone, and product imagery needs to be simplified so that key details will show up clearly on a smaller screen.

For this reason, the mobile-optimised ‘hero image’ has found favour over traditional packshots: hero images are a zoomed-in product image that give a sense of the packaging while also clearly displaying key information, as opposed to a packshot that tries to capture the whole product. While a zoomed-in shot can’t encompass every detail, additional details like sizing can be displayed alongside the image in an easily readable format.

While this information is also typically featured in the product title, Unilever’s Global Ecommerce Experience Design Director, Oli Bradley, discovered that customers frequently added the wrong size to baskets due to not reading the product title. “It was clear from eye tracking that smartphone shoppers scroll fast, don’t read the product title and were struggling to see the detail,” Bradley told the OmniShopper International Conference in 2018. The FMCG giant took steps to standardise the way that it displayed product sizing information in mobile hero images accordingly, using a standard typeface instead of varying the font by brand, and using sentence case instead of caps for easier readability.

Product results in the Boots mobile app show the benefits of mobile-optimised hero imagery: the Mitchum product image does not have a clear size displayed, and the product title is truncated and unable to show the information. By contrast, the Sure hero image displays the size clearly. Image credit: Boots.com

Customer reviews

Star ratings from customer reviews are frequently displayed beneath products on ecommerce sites such as online supermarkets and Amazon, adding an element of social proof to FMCG purchases – one that isn’t present in a bricks and mortar sales environment.

These ratings can consciously or unconsciously sway customers in their purchase decisions, and could be the deciding factor between a consumer choosing between one brand and a competitor product. Therefore, it’s important to have a proactive strategy for approaching customer reviews: encouraging customers to leave feedback, acknowledging positive reviews, and addressing negative feedback are all steps that can help brands to keep on top of their online reputation and steer it in the right direction.

Brands may be reluctant to encourage customer reviews for fear of negative feedback, but the reality is that customers who want to be vocal about a negative experience will do so no matter what; however, a proactive reviews strategy will also encourage satisfied customers to express their thoughts. Additionally, reviews provide additional customer insight that can be helpful in informing future products and varieties, particularly if there are marked patterns.

Pot Noodle even went so far as to turn negative feedback into marketing material in a recent campaign for its ‘Lost the Pot’ block format. Initially launched in 2020, the ‘Lost the Pot’ flavours received a slew of negative feedback (with one customer simply writing “Yuck”). This backlash led the team to “go back to the drawing board” in July 2021, finally unveiling an improved product in July 2022.

The campaign launched with the tagline “Now with flavour”, with other marketing straplines including, “They sucked. Now they don’t.” Pot Noodle also used the text of negative customer reviews to create Twitter images, commemoratively ‘framing’ one and offering it to the ‘Museum of Failure’ account on Twitter.

A reviews strategy can be beneficial even when brands sell direct to consumer through their own website. Studies have shown that consumers find online reviews helpful in making purchase decisions, so including a customer review plugin that enables customers to feed back on their purchases and displays star ratings for products will encourage purchases from future customers. Tea, coffee and hot chocolate brand Whittard of Chelsea displays these throughout its site and uses email marketing to encourage reviews, making it simple by enabling customers to review their purchase directly from an email.

Whittard of Chelsea encourages customer reviews across its site by sending reminder emails to customers who have recently purchased a product that allow products to be reviewed directly within the email. Image: email from Whittard of Chelsea

Ratings and Reviews Best Practice Guide

Promotions and pricing

Promotions play a key role in helping goods stand out online, particularly in retail stores where they need to attract consumer attention alongside many similar items. The screencap below from Sainsbury’s shows how goods on promotion are often visually highlighted, serving to draw the eye of a browsing customer:

Goods on promotion are often visually highlighted, such as with these red ‘Offer’ flags used by Sainsbury’s, helping them to stand out on the digital shelf. Image credit: sainsburys.co.uk

Promotions and pricing strategy have gained increasing importance in the midst of prolonged economic uncertainty, and many FMCG brands are investing in revenue management as a result. John Nudi, group president of North America retail at General Mills, described the company’s approach to revenue management at an investors’ conference in June.

“[S]omething that we’re really proud of is our SRM, our strategic revenue management capability that we built over the last five years. we’ve got much more sophisticated in terms of the way that we look at our pricing,” he said. “We have tools now that are very technical and models that really help us figure out the best way to take pricing.

“… our goal is to keep our products as affordable as possible for consumers. That’s something that we strive to do. But, at the same time, with the inflation that we’ve seen, we believe that we’ve taken some pricing in a smart way and work with our retail partners in a way that makes sense for them as well.”

Retail media networks and ad placement

The rise of retail media networks – ad networks owned by retailers and powered by their first-party data insights – has opened up new opportunities for FMCG brands to invest in advertising lower down the funnel, and in ad placements that put their brand front and centre as consumers are making purchase decisions.

Advertising on retail media networks allows FMCG brands to “close the loop” on sales in a way that was previously impossible offline, by understanding in granular detail how customers behave on retail websites and understand the events that lead them to convert. Speaking to Econsultancy in March 2021, Digital Marketing Transformation consultant Julian Smith observed, “That was always the challenge for FMCG advertising … there was a disconnect between investment in media and the ultimate conversion in a physical store. Now – more than ever with the rise of online grocery – [FMCG brands] can connect their investment in media to that conversion in a digital store. But it’s reliant on a retail data partnership.

“Furthermore, with retailer data partnerships, they can then better prospect and retarget – particularly on social channels like Facebook. It makes the investment so much more measurable.”

Fortunately for FMCG brands, retail media networks are proliferating, with everyone from retail giants like Walmart and Target to beauty retailers like Ulta Beauty to delivery startups like Instacart and Doordash courting brands with access to first-party data insights and attractive advertising spots. Retail media networks also give brands the opportunity to join up offline and online insights, such as through loyalty card purchase data, and even influence sales in-store when stores have digital signage.

One example of this is Wisconsin-based sausage company Johnsonville, which partnered with Roundel, Target’s retail media network, to target brand loyalists and strengthen its ‘Made in the USA’ national campaign. Per the case study write-up published by Roundel, Johnsonville was able to target the top quarter of brand buyers using Roundel’s custom audience data and display advertising, reaching audiences such as light buyers and lapsed shoppers, and luring brand loyalists in with a special 10% offer available to Target Circle loyalty program members. As a result, the brand saw a 7.9% lift in in-store sales, a 4.4% lift in online sales, and a 23.9% increase in add-to-cart.

Digital Transformation Monthly: The Rise of Retail Media Networks

Adapting their ecommerce proposition

Direct-to-consumer (D2C)

Prior to the Covid-19 pandemic, selling direct to consumer (D2C) was already gaining attention in the FMCG sector as a means of building closer customer relationships and getting access to all-important first-party data. High-profile acquisitions of D2C start-ups like Dollar Shave Club by Unilever in 2016 and Harry’s Razors by Edgewell Personal Care in 2019 (though the latter was ultimately blocked by the Federal Trade Commission) further shone a spotlight on the attractiveness of D2C.

However, D2C arguably came into its own during the Covid-19 pandemic as consumer shopping overwhelmingly shifted online and brands sought to capitalise on the opportunity, as well as to get their products to consumers at a time when retailers were experiencing widespread supply issues and shortages of many FMCG products.

Some formerly B2B companies pivoted to D2C, such as food wholesale brands who were unable to supply to shuttered restaurants; Brakes Foodservice, LWC Drinks, meat wholesaler Fairfax Meadow and sausage retailer The Sausage Man are just a few examples, and some of them have maintained their D2C businesses to this day.

Another often-cited example of D2C success is Heinz, which in the UK launched its first online shop, Heinz to Home, in less than three weeks, opening its virtual doors on 9th April 2020. From its initial purpose of selling bundles of cupboard staples to consumers, Heinz to Home diversified into products unique to its online store, such as personalised sauces for Father’s Day and a Christmas range that included a ‘Beanz Meanz Crimbo’ Christmas jumper. (The jumper has just made a return on Heinz to Home in time for Christmas 2022). The company also offers its bundles on subscription, with bundles available to be delivered every 1-8 weeks for regular buyers.

Heinz has continued selling its store cupboard staple bundles direct to consumer, and now makes them available for regular delivery as a subscription product. Image credit. Heinztohome.co.uk

While D2C might not be the right move for every FMCG brand, for those brands that do branch out into direct-to-consumer, it presents additional opportunities for brands to capture digital demand on a channel they own, to build up customer relationships, and to offer additional purchase options to potential customers. Goya Foods, the largest Hispanic-owned food company in the United States, launched its first fully-fledged D2C offering last September to coincide with Hispanic Heritage Month, ensuring that its full range would be available to customers even if the products weren’t stocked in their local grocery store.

“Consumers located in North Dakota, for example, may not be able to easily find their favourite Goya products in their local grocery store,” Rebecca James, Senior National Sales Manager at Goya Foods, told Consumer Goods Technology. “Those consumers who grew up with the brand and can’t find the sazon seasoning that their Abuela used to cook with can buy directly from Goya and have it delivered fast to their front door.” The brand also has plans to expand into offering merchandise through its online store in future months.

Direct-to-Consumer (DTC) Best Practice Guide

Products tailored for ecommerce

Opening up a D2C presence often goes hand-in-hand with offering unique products to customers that are only available – or only available in certain quantities, or for a certain price – online, as brands look for ways to incentivise customers to buy from them directly. Nestlé India, for instance, recently launched its first D2C arm, MyNestlé, which will offer “curated product bundles, personalised gifting, subscriptions, discounts and much more”, according to the company’s Q3 2022 earnings report. In addition, the site will host gourmet recipes and provide consumers with “free nutrition counselling”.

Some FMCG companies have also been tailoring their products for ecommerce not as a D2C incentive, but simply to provide online buyers with a better experience. Colgate-Palmolive, for example, created the Colgate Whitening Pen as a product that would debut on ecommerce channels, and Colgate’s Global Director of New Product Innovation, Bruce Cummings, told Packworld that the product packaging was designed in such a way as to offer a pleasant “unboxing” experience for buyers:

“Early on, we considered a carton into a corrugated box, but by launch we’d come up with the red mailer, which is lighter and has that easy-open tear strip. Then comes the Colgate-Red sleeve, out of which the inner foam tray smoothly slides out. Compact and compelling, it’s an experience that resembles an elegant process of unboxing.”

Packaging has long been important for FMCG brands, playing an important role in standing out on the shelf, communicating information, and preserving products for the customer to enjoy. Small wonder, then, that in an age of increased ecommerce demand, ecommerce is increasingly factored into FMCG packaging and product presentation, ensuring that products are protected and well-presented when they are delivered to customers at home.

How FMCG brands are adapting products in response to the shift to ecommerce

Availability and fulfilment

An overriding theme of the early Covid-19 pandemic was one of shortages of basic products and necessities – cupboard staples, groceries, hand wash and sanitiser, toilet paper – as supply chains came under strain due to surges in demand and a certain amount of panic-buying. Ecommerce fulfilment networks also struggled to adapt to the overwhelming shift to online shopping, with supermarket delivery slots overwhelmingly booked up and ecommerce giants like Amazon suspending orders of non-essential goods in order to prioritise essentials.

Retailers and FMCG brands alike have adapted their processes as a result, ensuring that they could handle any subsequent surges in demand (which tended to reoccur when particular regions went back into lockdown) and that their supply chains were optimised for increased levels of ecommerce demand.

Environmentally-conscious toilet paper brand Who Gives a Crap, which sells direct to consumer, experienced a 1100% increase in product demand in the first half of March 2020 and sold out of its products globally; the team subsequently worked their way through a waiting list of half a million people, breaking up 48-roll boxes into 24-roll boxes in order to ship out more products. In August 2021, founder Simon Griffiths told the Daily Mail that the company had since “learned how to deal [with the spikes in demand]”, and was able to redirect stock to different regions depending on lockdowns.

The pandemic also accelerated trends such as the growth of rapid delivery, which has led FMCG brands to rethink the way that they approach fulfilment, becoming more agile and capitalising on the opportunities presented by moments of impulse-buying. Unilever’s ‘Ice Cream Now’ (ICNOW) initiative, which offers rapid delivery of its ice cream brands such as Walls and Ben & Jerry’s, has led the company to partner with firms such as Grab in Southeast Asia, Food Panda in Singapore, and Robomart in the United States to enable customers to order ice cream rapidly to their door.

ICNOW has experienced great success by taking advantage of the rapid delivery infrastructure established by q-commerce retailers, and also through identifying potential marketing moments and audiences suited to the product. In Spain, Unilever partnered with League of Legends tournament SuperLiga and streaming platform Twitch, as well as Spanish q-commerce startup Glovo, to promote rapid delivery of Magnum Pints to gamers competing in the tournament. Following a successful campaign, ICNOW created gaming-related campaigns in Sweden, Turkey, Russia, the UK and China, and experienced an average 60% sales uplift from the campaigns.

Micro-fulfilment centres – smaller fulfilment centres that can be located in more densely populated areas due to their smaller footprint, and that have a high level of automation – have been finding increasing favour due to their lower operating costs, improved efficiency, and more rapid picking, which is particularly important to facilitate the faster delivery time that has been normalised through ecommerce.

Typically, major retailers – especially online-first retailers like Amazon and Ocado, but also omnichannel retailers like Walmart and Target – are the ones investing in micro-fulfilment centres, but they are also an option available to FMCG companies that have the resources to invest in their own fulfilment infrastructure. In November 2020, PepsiCo became one of the first FMCG companies to launch a micro-fulfilment centre, located in Illinois in the United States, in order to support increased retail and ecommerce demand driven by the pandemic.

Vince Jones, Head of Ecommerce at PepsiCo, said in a statement that the centre “solidifies our commitment to making the necessary investments to continue to stay ahead of the growing online consumer demand. Through collaboration with our retail partners, we are creating an end-to-end solution that empowers us collectively to enhance our operations with applied insights.”

Conclusion

There’s so much to say on this subject that multiple articles could be written on each section. However, hopefully this offers a flavour of the changing FMCG landscape and how ecommerce is impacting the opportunities available to brands, as well as what brands are doing to adapt.

Bricks and mortar still dominates as a retail channel, and the strategies that FMCGs use to stand out offline are still critical to driving sales. However, at the same time, it would be short-sighted to ignore the increasing share that ecommerce is taking of retail – even grocery retail, an area in which ecommerce has historically had lower penetration – in the wake of the Covid-19 pandemic, and the different consumer habits that accompany it.

FMCG brands that want to remain on the cutting edge need to be aware of how ecommerce has changed the way that consumers are browsing for, researching, and engaging with FMCG and what that means for how they convert. They also need to be cognisant of the ways that the traditional supply chain and fulfilment process are changing to support the different demands of ecommerce and omnichannel, and of what that means for them.

Brands need to be available (meaning not just present, but discoverable and in-stock) on new online channels in order to be considered by consumers who are shopping in these new ways, but availability is only part of the battle: they also need to optimise for them in order to grab consumer attention, and they need to understand them just as well as – if not better than – their competitors, in order to steal a march on rival brands.

Additional resources for further reading:

 

For more on ecommerce, see our ecommerce hub, Ecommerce Deep Dive courses and Ecommerce Best Practice Guide Bundle.