Achieving eye level in the online store: How FMCG Companies Can Beat New Competitors in the Digital...

Achieving Eye-Level in the Online Store | 1

© Copyright Clavis Technology 2013, All Rights Reserved.

Achieving Eye-Level in the Online Store

How Leading FMCG Brands Can Beat New Competitors in the Digital Channel

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TABLE OF CONTENTS

Introduction 1

Rapidly changing retail landscape 1

Beat emerging competitors online 2

How the Consumer Decides at the New Online Shelf 3

The online consideration set 3

The First Moment of Truth 4

Online Shelf Placement to Beat the Competition 5

Audit the Online Store to Succeed in the Digital Channel 6

About Clavis Technology 7



Introduction

The market for consumer packaged goods (CPG) is changing rapidly as more and more consumers opt to

perform their weekly grocery shopping online. It makes sense. Who really wants to spend their weekend pushing

a cart around a supermarket when online shopping offers a perfectly

viable alternative?

In this white paper we’ll explore what the switch to online means for

leading consumer brands in the food & beverage, personal care and

household products categories. Big brands have learned how to

dominate the limited shelf-space of major supermarkets, but will that

continue as they are faced with the endless aisle of the Online Store

where new competitors are finding it easier to make an impact?

A recent study by sell-side research outfit Sanford C. Bernstein1 predicts

that online shopping will make up 25 percent of US CPG spending in the

next 5-10 years. There is definitely a “perfect storm” of factors

contributing to this growth, ranging from the rise of the so-called

millennials’ (the generation born between 1982 and the early 2000s) to

the popularity of online ratings and reviews with mothers – who still carry most of the responsibility for grocery

shopping.

Rapidly changing retail landscape

Some CPG brand leaders have been slow to react to the new retail landscape, and that procrastination has

allowed emerging brands to grab virtual shelf space in leading online stores. Until recently the eCommerce

market was such a small proportion of the overall retail sector that many big brands had felt they could ignore the

encroachment of new competitors, but that situation can’t last much longer.

As marketing and media industry paper of record, Ad Age, put it in a September 2013 article2, online CPG is “fast

becoming a significant market that could shift market share to smaller players and disrupt pricing and other key

parts of the industry's business model.” The article continued, “e-commerce seems to be democratizing 'shelf

space' as top brands do not dominate the e-commerce channel as much as they dominate brick-and-mortar

retail”.

1 Fast-Rising e-Commerce Could Jolt Package-Goods Giants. Bernstein Report Finds Niche Brands Gobble ‘Shelf’ Space

Once Owned by Leaders, Jack Neff, Ad Age, September 26, 2013. 2 Fast-Rising e-Commerce Could Jolt Package-Goods Giants. Bernstein Report Finds Niche Brands Gobble ‘Shelf’ Space

Once Owned by Leaders, Jack Neff, Ad Age, September 26, 2013

‘Online shopping

will make up 25 %

of US consumer

packaged goods

spending in the

next 5-10 years.

http://adage.com/article/news/cpg-e-commerce-sales-pose-risks-big-brands/244381/



Ad Age gives several

examples of leading CPG

brands that are being outsold

online by smaller, niche

products. If the people

running these emerging

companies are smart – and

we’ve no doubt they are – it

won’t be long before they

start to use their online

bridgehead to occupy more

and more shelf-space in

traditional retail stores.

Beat emerging competitors online

The threat is real, but the battle isn’t lost yet. Right now is a good

time for brand owners to take stock of their eCommerce strategy.

Recognizing the significance of the online store is a first step in the

right direction. Brands must give the online store the same

attention as they give to the most important brick and mortar stores

and retailers.

To achieve success off-line you already invest in retail store audits

to monitor in-store brand standards, promotional compliance,

product placement and stock availability. To succeed online you

need to do the same, so that you can ensure that your products are always Eye-Level on the online shelf, in order

to beat new competitors, grow your sales, protect your brands and comply with regulations.

‘To succeed online you

need to know that your

products are always Eye-

Level on the online shelf



How the Consumer Decides at the New Online Shelf

Young, tech savvy consumers are starting families and indeed doing what comes naturally to them; purchasing

their groceries where they do just about everything else, online. But what does this mean for how consumers pick

the products they buy?

In theory how the consumer chooses to fill his/her basket in an online store is not much different from a traditional

brick and mortar store. What is different though is how they find your products and what competitors’ products are

available to replace yours.

The so-called “consideration set” – the subset of brands that consumers evaluate when making a purchase

decision – is still central to how the consumer ultimately decides. It exists because consumers have limited

information processing abilities, so their decisions are limited to the comparison of a handful of brands. Put

simply, your brands need to be in the consumer’s consideration set if you want them to be added to their basket.

With a frequently purchased category such as consumer packaged goods, consumers often face information

overload. To circumvent the information overload problem they narrow down product choices to simplify their

decision by considering anything from price to the popularity of an item. If a purchase is unplanned, a consumer

can only buy it if they actively notice it, so in a traditional brick and mortar store, shoppers buy products that enter

their consideration set inside the store. Brands spend a great deal of time and energy on assortment, availability,

shelf-placement and store promotions for that reason.

The online consideration set

In the online store information load and search tools have a very significant influence on how consumers form

their consideration sets, resulting in smaller sets3. So instead of seeing the many choices of the endless aisle, an

online consumer actually chooses from an even smaller set of options than his/her brick and mortar counterpart.

The online consideration set is effectively limited to the products that show up at, or near, the top of a search

results page, or appear close to the top of the category page when a consumer trawls down through the menu

structure.

Online promotions and merchandizing, and suggestions such as “People who bought product ‘A’ also purchased

product ‘B’” can also result in your products getting into the consideration set, while in the online context ratings

and reviews play a very significant role in determining which products actually make it into the consumer’s basket.

3 Consideration sets in online shopping environments: the effects of search tool and information overload, Jose F. Parra and

Salvador Ruiz, October, 2009.



The First Moment of Truth

Let’s take as an example a consumer looking to buy some pasta sauce. She made some excellent homemade

sauce last month, but now wants something yummy to have on hand for quick meals her family can easily make

in the busy weeks ahead.

She goes straight to Amazon.com, where she has begun to do a bit of her grocery shopping along with other

household items she purchases there. She has a favorite brand that she can’t quite remember the name of so

there is the potential, if she does not find what she is looking for, of something else to catch her attention.

You can almost hear the drum roll as she keys the phrase “pasta sauce” into the search bar on the Amazon.com

home page and we approach the critical first moment of truth for the brands.

The site search delivers dozens of options, but what our consumer initially sees is the top three items on the

search page. These are two different variants of a well known brand, Ragu, and something completely

unrecognizable to this consumer, Scarpetta pasta sauce. Scarpetta is not the brand she was looking for, nor has

she ever heard of it, but she assumes it must be popular, and therefore good, because it is at the top of the

search on Amazon.com for pasta sauces.



When she clicks through to the landing pages for each of the top three sauce options, each has some basic

product information, an image and three or four marketing bullets. They all have many positive consumer reviews;

however the Scarpetta landing page has additional pack images that show “Fast and Easy” cooking instructions,

Nutritional Facts, and Ingredients – information that is missing from the landing pages of the other two options.

If she scrolled further down the search results page she would see many more recognizable brands. Instead our

shopper is in a bit of a hurry so she decides to take a stab at this new product and buys a pack of four which

includes “Tuscan Vodka”, “Arrabiata”, “Puttanesca” (her favorite flavor) and “Marinara”. It was more than she had

initially planned on spending, but she had recenlty had some good homemade sauce recently and the product’s

packaging images hint at homemade, reminding her of that experience.

Online Shelf Placement to Beat the Competition

In our example – based on real Search and Content Integrity results in Amazon.com – something went wrong

here for some major brands. This Scarpetta sauce, although it might be excellent, is not the most popular – many

major brands didn’t even make it into our consumer’s consideration set, while the two products that did failed to

impress at the first moment of truth because their landing pages

were missing some key pieces of content.

We all know that store appearance drives shopper attitude in

traditional stores. The online store is no different. Unless your

product is at “eye-view” on the search results page it will be

difficult to get the shopper’s attention and consideration.

Shoppers are brand loyal in categories that are important to

them, but in most cases they still consider more than one option

while shopping in those categories.

Knowing where your brand is positioned and what competitor brands are being considered by online consumers

is an important step in developing a strategy to compete in the changing retail landscape.

‘Online represents a real

opportunity for forward

thinking brand owners

to increase market share



Audit the Online Store to Succeed in the Digital Channel

The brands that succeed online will be those that manage to adapt the techniques and discipline that have

enabled to them dominate the bricks and mortar world. Sales, marketing and category management leaders in top

brands pay close attention to physical store audit results, mystery shopping data, and other analytics to help them

plan distribution strategies, execute in store promotions and collaborate with retailers. To succeed in the changing

retail marketplace brands need to adapt similar strategies for the online retail environment.

It’s only with clear intelligence and insights, about how your products and brands are performing in online stores,

that you can take the right action to improve your product’s digital presence and performance. To beat the

emerging online competitors you need to need to be able to answer questions such as:

Do we have the

right mix of

products in the

online channel?

Are our products in the right

aisles (menu categories)?

Do online

stores use

accurate,

consumer-

friendly

descriptions?

Do our product pages have all the

additional information needed to

reassure consumers?

• Do our product pages have all the


reassure consumers?

• Do our product pages have all the


reassure consumers?

How are our online

promotions actually

executed?

What do consumers say

about our products online?

Are our product

images present

and up-to-date?

How does our digital

product portfolio compare

to competitors?



Clavis Technology worked with a team from the

Massachusetts Institute of Technology to develop a

value framework for calculating the potential sales up-

lift that brands can expect by optimizing their digital

channel presence and performance. The framework is

based on published industry research and statistics

from organizations such as Nielsen and GS1, and

Clavis Technology’s experience working with leading

consumer goods brands. The studies show that by

optimizing their online store presence, CPG

manufacturers can deliver sales growth that is between

15 and 30 percent over and above the industry

average.

With the dramatic rise in online grocery shopping there

is a real opportunity for forward thinking brand owners to increase market share, despite the challenge of new

emerging competitors.

About Clavis Technology

Clavis eCommerce Insight is the leading cloud-based Online Store Audit & Analytics platform for senior

Marketing, Sales and eCommerce management in large Fast Moving Consumer Goods (FMCG/CPG)

manufacturers around the world. The solution brings the concepts of mystery shopping and physical store audits

to the emerging digital channel, providing FMCG Manufacturers with the competitive insights they need to grow

their online and off-line sales, protect their brands and comply with regulations in key markets.

For more information go to www.clavistechnology.com

http://www.clavistechnology.com/

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