Digital CPG Blog

How are e-commerce and bricks-and-mortar retail influencing each other?

Opening Keynote speaker Keith Anderson, Senior Analyst at the RetailNet Group responds:

For the first phase of e-commerce (essentially the last 15 years), most business models were based on the assumption that e-commerce was a substitute for physical retail.

For some shoppers, categories, and trips, it is—and will increasingly be over the next decade. But driving the next phase of e-commerce innovation is the idea that online-offline integration can be even more transformational. We’re about to undergo a major transition from the majority of shopping experiences being “pure-analog” to the majority being digitally-influenced.

One of my clients, a multichannel retailer among the largest in the country, told me this week that around half of the traffic to their site is from shoppers looking for information about the store—operating hours, local events & promotions, or doing product research.

Mobile search, proximity-driven offers, and local inventory transparency will increasingly influence outlet choice. List-building and list management apps will have major impacts on basket size and mix. Ratings and reviews are already often a factor in brand or SKU choice.

It’s also increasingly common to see retailers offer an “endless aisle” via in-store kiosks or tablets. So retailers aren’t just supporting their stores with their sites, they’re supporting their sites with their stores.

Some in the CPG industry think that e-commerce is only relevant to high-involvement categories like electronics and media like books, music, and video.

But we have hard data that shows that shoppers will increasingly use technology to make key decisions—or let the technology make the decisions for them.

Learn more from Anderson at the conference:

The Smarter Shopper: Marketing to the Digital Consumer
Tue – Wed, September 20-21, 2011
Stamford, CT
Register now >
Don’t forget – Use the code “digitalcpg” at registration for a 10% discount just for DigitalCPG.com readers!

Dive into these two great presentations on your lunch hour or your mid-afternoon slump:

Every announcement lately seems to talk about how a commerce company is partnering or buying a media company. Is there a difference between commerce and media? Business Insider muses:

A lot of people will certainly treat this commingling of media and commerce with suspicion. But media is a vehicle to sell things–it’s a vehicle for advertising, but advertising exists because it sells things. If a magazine story entices someone to buy something, then that media publication should be compensated for generating that purchasing intent. And no, that wouldn’t necessarily mean that all newspapers would start pushing product down people’s throats, because if they started doing that their readers would eventually desert them.

From a manufacturer perspective, the commingling of commerce and media is a win-win. But will consumers put up with it? Do you have to separate commerce and media anymore? I wonder…
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Next up in charts and infographics, we’ve got a great one on social commerce growth and f-commerce:

Think people aren’t buying CPG online? Think again! We’ve got lots of great infographics this week, starting with this one that says people buy lots of drugs and health aids online. Who knew?

The survey also highlights the importance of information on returns polices. 46% said they always check returns policies before making a purchase online, 43% sometimes check this, while just 11% never bother.Some great graphs from Econsultancy as you integrate your  marketing efforts with your site design:

If you are shopping from a retailer you don’t know well, how would you decide whether to trust the website?

Product Page Essentials

The best product pages need the five things in the chart below, while the experience can also be enhanced with use of video, 360 product views, effective cross-selling, and so on.

What information do you need to see on product pages to help you decide whether to make a purchase?

Basket Abandonment

After adding items to your basket, what would make you abandon your purchase?

Checkout Abandonment

Once you are in the checkout process, what would deter you from completing the purchase?

What do those young’uns want?

Well, as a Gen Yer myself, I can say this recent study is right on:

In general, you can remember that Gen Yers like to shop as an experience, not just a chore and all the things they tend to like fall under that idea. For instance, we love deli counters and prefer brands with a well-developed social and mobile media presence. Is your CPG brand set up to serve and reach the millenial generation?

Melissa Sowry, Content and Social Media Manager of Burt’s Bees has grown the brand’s Facebook fan base from 98,000 to more than 370,000 by creating compelling content that consumers want to interact with and discuss, reports eMarketer. That content, ranging from quizzes and video to sampling offers and behind-the-scenes access into the world of Burt’s Bees, is helping extend brand loyalty and generate powerful online viral engagement.

Here are some of her insights:

What drives word of mouth?

Beauty is a category where people take recommendations from their friends and talk about what’s new. They also look to experts for suggestions. For example, if we get a placement in Marie Claire or Lucky where they’re raving about the new tinted lip balm, we might share the link to the page.

We also find fans of the brand are recommending products to one another in this space. That’s the normal activity that takes place around beauty products. It’s mostly women talking to other women and finding out what works, but it’s taking place online in social media venues. For example, a mother might ask other moms about products that stop diaper rash: “What works for you?” These are important conversations and I think online social media is a place where people trust one another to get that information.

What’s your Facebook strategy?

Facebook is a channel for us to provide compelling content. When I came on board, we started doing simple things—posting content and behind-the-scenes images on a daily basis and discussing new products coming to market.

We use social media and Facebook in particular as relationship-building tools. We also create opportunities for consumer education around skin care, for example, and sampling offers. We ran successful sampling programs on Facebook for our relaunched body lotions and new tinted lip balm.

We talk about our products on Facebook but we also spend time talking about the culture at Burt’s Bees through our involvement with Habitat for Humanity, sustainability efforts, product ingredients and so forth.

How does your strategy stack up against Burt’s Bees?

This is the kind of graph we all like to see:

For CPG manufacturers, going online enables a deeper, more personalized relationship with the shopper, reports Nielsen.

Five things to know about online grocery shopping:

1. Consumers love online grocery shopping, but it takes time getting used to. You can simply the process by improving the online experience with navigation, search, online help and porting over shopping lists. Deliver a better time-saving experience and consumers will hang on.
2. Online baskets are different than offline baskets. The average transaction size is much larger for food and beverages ($80 online / $30 offline) and health and beauty purchase ($30 online / $10 offline). And online shopping offers a greater mix of pack sizes and categories.
3. Consumer perceptions and purchase behaviors are affected in important ways. The interactions with the online ‘store’ environment are fundamentally different than an in-store experience. The online experience is fueled by a needs-driven experience as a greater variety of options are made available on screen.
4. Online shopping “levels the playing field”. Big brand ‘physical’ advantages do not translate online. With universal distribution and search functionality an inherent bias toward niche players is created. Ultimately, price transparency, connectivity and open content favor a purely ‘rational’ market.
5. Large and small brands can win online by combining marketing savvy with digital capabilities to add value. With interactive websites, smartphone applications and social media connections, expanding your brands in new and innovative directions is virtually limitless.

Last week, we talked about how consumers are more likely to buy a product if a company answers their question on Twitter. So it follows this week that shoppers want to buy via Facebook and Twitter period. This according to the “2011 Social Commerce Study”, a joint research project by Shop.org, comScore and Social Shopping Labs. Key insights from the report include:

- 42 percent of online consumers have “followed” a retailer proactively through Facebook, Twitter or a retailer’s blog, and the average person follows about six retailers.

- 58 percent said they follow companies to find deals, while nearly half (49 percent) say they want to keep up to date on products. More than one-third also follow retailers for information on contests and events (39 percent).

- 56% of Facebook users say they have clicked through to a retailer’s Web site because of a Facebook post, while over two-thirds of Twitter users (67 percent) say a post has spurred them to click through to a Web site.

- Additionally, the appetite for buying directly through social networks appears strong: one-third of shoppers say they would be likely to make a purchase directly from Facebook (35 percent) or Twitter (32 percent).

- 42 percent of Twitter users access the site on their mobile phone at least once a day, while the same is true for 34 percent of Facebook users. In addition, about one-third (32 percent) of people view YouTube clips daily from their smartphones.