IBIE - 2019 Special Edition & Show Preview - 98

CHANNEL

SURFING
Despite holding a small percentage of the
market, online sales are rising quickly, and
companies need to capitalize on the growth.

by Nico Roesler, Baking & Snack
Click-and-collect retail
models are seeing the
largest e-commerce
sales growth for food.
©andranik123 - stock.adobe.com

Market research experts agree that baking and snack
companies shouldn't think of e-commerce as an unknown realm that follows its own marketing, loyalty and
sales rules. Instead, they should treat it as just another
channel in their overall marketing strategy. Many of the
same rules apply, and with some creative thinking, companies can ride the momentum of growth.
Sam Gagliardi, senior vice-president of e-commerce,
consumer and shopper marketing for IRI, emphasized
that most decisions people make in today's world begin
online. IRI data shows that 77% of all purchasing decisions for consumer packaged goods (CPG) started online. However, in food at least, most actual purchases
still happen in physical stores.
"In this world, it's less about what you own and
more about where you build your brand presence," Mr.
Gagliardi said.
Creating a strategy that simultaneously supports
brick-and-mortar retail and e-commerce is a winning
strategy in today's digital world.

Pure players
Within e-commerce, there are two channels food companies should be aware of. The pure-play channel includes Amazon and other sites where consumers can
buy goods directly through a third-party seller. The omnichannel is different in that the seller is an online and
in-store retailer like Walmart or Target. Each channel is
growing in different ways, and Mr. Gagliardi said bakers
and snack makers need to be aware of each.
"You have to do both," Mr. Gagliardi said. "You really
don't have the luxury to choose. You have to do both and
understand the benefits and the risks going forward."
So, how can brands stay in front of consumers?
"The online space is driven by search algorithms and

98 PreShow Guide IBIE 2019

creating lists," Mr. Gagliardi said. "When you win, you're
improving a search algorithm. When you get on a list,
you're driving your sales."
In the world of algorithms, companies need to search
out and target online shoppers, then serve them specific
media that builds awareness and loyalty. "It's all about
traffic, something Amazon knows, and that's why it got
into food retail," Mr. Gagliardi said.
In 2017, Amazon purchased Whole Foods, Austin,
TX, to create a physical presence in food retail. In early
2017, NPD Group reported that just 6% of US consumers shopped online for groceries. By June 2018, that number grew to 16%, or more than 52 million people. Those
consumers were using either delivery or click-and-collect
models. The growth of click-and-collect and speedy delivery options launched by Amazon and other major grocery chains expanded the appeal of online shopping to the
broader population, according to Darren Seifer, food and
beverage industry analyst, NPD Group.
"This past year has been a game of one upmanship among the major grocery chains," Mr. Seifer
said. According to Nielsen data, key retail players like
Walmart, Kroger and Target have grown their online
customer base by at least 90% more than Amazon over
the past two years. But, because of Amazon's appeal as a
pure-play option is its wide reach, it has 10 times more
buyer reach than any of the other merchants.
The advantages and disadvantages of pure play vs.
omnichannel are still being explored. To succeed in ecommerce, brands should have strategies for both.

Omnichannel options
Nielsen estimates that since 2017, the share of click-andcollect sales grew from 4% to 11% for all CPG e-commerce sales. The grocery and gourmet food sectors have

IBIE - 2019 Special Edition & Show Preview

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