Vol. 127 - NO. 39

Blog Startup CPG

SINCE 2019

Getting Smart
About eCommerce

Christie Lee is Founder of Nourishing Food Marketing, an action-oriented brand marketing consultancy. As a Harvard MBA, former food founder, and classically trained Big Food brand marketer, she works exclusively with emerging food and beverage brands.

There’s been a lot of advice and discussion over the past few months about brands dedicating more effort to selling their products on-line. Here are a few statistics that can help paint the picture:

  • Only 3% of food and beverage sales were online in 2019 – but this is growing quickly at 15% compared to flat sales in-store. (Source: DigitalCommerce360 and Edge by Ascential)
  • In March 2020, online grocery sales increased 100%. (Source: DigitalCommerce360)
  • Since March, digital marketing spend is down, leading to 20-50% decreases in Cost Per Click (CPC), depending on category

But online channels are just as different as brick & mortar stores. They have different value propositions, target customers, and business models. The biggest and most common e-commerce channels – Amazon, Walmart, and Direct to Consumer (DTC) – each have their own strengths and weaknesses.
Each e-commerce channel that you enter will dramatically increase the time and money resources you need to manage your e-commerce business. I’m here to help you think about how to strategically approach your e-commerce business and set yourself up for success.

Decide on Your Strategy and Objectives

First, as you think about changing your business’ strategy, let’s talk about how to make important business decisions. I recommend thinking through your:

  • Business Objectives: What is your ultimate goal? Is it to increase revenue or profit?
  • Marketing Objectives: What is the Marketing Objective that will help you achieve your Business Objective? Is it to drive trial of products on Amazon or increase your Average Order Size (AOS) on your DTC channel?
  • Marketing Key Results: What are the Marketing Key Results that you need to achieve? Are you aiming for $3000/mo in Amazon revenue or a $40 average order size?

It’s important to get clear on your objectives and key results so you know what you’re working on and if you’re red, yellow, or green on your goals.
For more on this strategic framework and a step-by-step guide on how to build an effective and efficient Marketing Strategy with clear explanations and lots of examples, read my Definitive Guide to Creating a Marketing Plan for Food and Beverage Brands.

Choosing an Ecommerce Channel

Once you decide on your strategy and objectives, here are the top three channels that you should consider:

  • Amazon SellerCentral: a manufacturer-led portal that gives you complete control over your pricing, merchandising, and promotions. Plus, access to millions of Amazon Prime customers.
  • Walmart.com: in 2019, Walmart surpassed Amazon in online grocery sales. Walmart.com Ship to Home is a great option for shelf stable products with both first-party (a Category Specialist authorizes your product) and third-party (online application similar to Amazon SellerCentral) selling options.
  • Direct to Consumer (D2C): Selling on your own website is very complex and can be very expensive, but gives you ownership over the consumer relationship, with the ability to ask for feedback, conduct research, and understand purchasing behaviors.

For a further deep dive into how Amazon, Walmart, and Direct to Consumer work and the tradeoffs of each channel, plus optimization strategy recommendations for each channel, check out my in-depth Getting Started with Ecommerce webinar.

 

Success in Ecommerce

Now that you’ve figured out the best path forward for getting onto e-commerce, here are my top 5 tips for succeeding in any ecommerce channel:

  • Make ecommerce a business priority and commit to being in the channel for at least a year. It takes time to test and learn and get the positive feedback loops of Amazon and Facebook algorithms working for you.
  • Prioritize one channel within the ecommerce landscape. As mentioned above, each channel is very different and requires different resource requirements.
  • Create e-commerce specific products and case packs. Variety packs are always the #1 seller on e-commerce.
  • Have a Marketing Plan and a marketing budget to support your ecommerce sales. You set aside a trade promotion budget to support your brick and mortar retailers; this is similar.
  • Understand your costs. Ecommerce is notoriously hard for food and beverage manufacturers to make money in – you have to have the right volume/cost ratio.

There’s a lot of potential in selling online: more sales, more profit, maybe even building stronger consumer relationships. But it’s not a utopia where everyone succeeds; the online world is very complex and many food manufacturers struggle to make money selling online. Building a thought-out eCommerce strategy will help you get clear on what you’re doing and why so that you don’t waste any effort on actions that aren’t impactful!

 

Feel free to reach out to me at christie@nourishingfoodmarketing.com to talk all things Strategy and Brand Marketing.

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