That the online channel is growing – and growing quickly – in the UK, is news to hardly anyone. However, online still accounts for under 4% of grocery sales in the country. For all its growth, the sector is still evolving and there is much manufacturers and retailers can learn to ensure they take a chunk of a channel that is set to see sales almost double by 2016. just-food presents ten things to consider when operating in the online sector.
Use the channel yourselves
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Too often, employees of manufacturers and retailers may not actually shop online themselves. Greg Duce, online category manager at Associated British Foods’ Jordans Ryvita arm, said a survey of the unit showed only 8% of its national account managers shopped online. “If they weren’t shopping the space, how can they be expected to engage in strategy?” he told the IGD Online Grocery Retailing conference last week. It sounds obvious but is critical when trying to understand how and why consumers shop online.
The potential for brands
“Shoppers are up to 15% more brand loyal when they’re shopping online.” Unilever e-commerce director Andy Houghton outlined the apparent appeal of brands to online shoppers last week at the IGD Online Grocery Retailing conference. He insisted brands were still attractive to consumers online despite the tough trading conditions in the UK grocery sector. “In the context of the really deep promotional activity that’s going on at the moment, brands act as a totem of value to the online shopper.” His comments were thought-provoking. The rise of online shopping has made consumers more able to compare the price of brands online. However, Houghton said brands could still offer consumers value. “This is not necessarily about promotions but about products that meet their needs on the first time at a fair price,” he said.
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By GlobalDataThe online channel allows suppliers to be more creative with how they “engage” with consumers, according to Unilever’s Houghton. “A lot of the rules for in-store marketing are written. Online for suppliers there is a lot of room for creativity, partnership and collaboration with retailers to try different things and to work with new technology,” he said. Manufacturers need to remember, however, to look to improve the content of their marketing and the product information they display online. “When I looked at our product information at Unilever, much of it had been extracted from SAP systems and was now being displayed with the online retailer,” Houghton said.
Work with retailers
Online is one of the fastest-growing channels in the UK grocery retail sector and, although it sounds obvious, it is thriving due to the simple fact that more and more consumers are using the technology. Retailers, reacting to this, are investing more in their online services so, for brands to capitalise on the growth of the channel, they need to work with their customers. And that is a message coming from analysts, retailers and manufacturers. “Retailers are developing the online channel because shoppers have embraced it. Engaging with retailers effectively on a collaborative level is a key building block,” Stuart Heffernan, online strategy manager at Kerry Foods, says.
Rememeber the value of promotions
Online shoppers are, on average, wealthier. That is the conventional belief and, in many respects, it does still ring true. However, even more affluent consumers are, with the UK economy in the doldrums, looking for value. Ben Miller, head of shopper insight at IGD, says quality remains a key consideration for online consumers but says promotions have become increasingly important over the last year. This could, in theory, hit manufacturers and retailers looking to drive sales online. Shoppers in the channel can feel they are missing out on promotions in-store. However, it appears manufacturers and retailers have reacted as Miller claims IGD’s research shows consumers believe the value they get from shopping onine is improving.
Low-income shoppers use online too
The maxim that online consumers are more affluent does not wholly ring true. Buying groceries online can allow shoppers to budget and more easily remove a product from a virtual basket – something few like to do when queuing in a traditional store. “People on a budget find the online shop a more disciplined shop,” Graeme Douglas, director of the new business supply chain at Asda, told the IGD Online Grocery Retailing conference last week. The rise of online shopping makes pricing more transparent and consumers are willing to look for bargains online – time and delivery charges notwithstanding.
Smart phones could transform the online channel
Shopping for groceries online is, as IGD’s Miller points out, “very much in its infancy”. He cited research that showed 10% of people use their mobile phone for online shopping. However, Miller is in no doubt about the potential use of smart phones. “When it comes to online grocery shopping, the real game-changer could already be in the palms of our hands,” he said last week. The rise of smart phones was one of the most common themes at last week’s conference. Simon Hall, retail industry manager at Google UK, said mobile phones were “revolutionising” the web. The number of people in the UK that have mobile internet stands at 21m, up 50% on the year, he said. Of course, there are some obstacles: consumers can feel they are missing out on offers when using their phones. However, the investment manufacturers and retailers are making in mobile marketing and apps demonstrates that many in the industry are alive to the potential of smart phones.
Social media can build brand awareness but beware
More manufacturers and retailers are using social networking sites like Facebook and Twitter to strengthen brand awareness online. Industry watchers believe the use of such sites is critical in building an online presence and some argue they can be used to drive sales. However, a Facebook page, a Twitter account or YouTube channel need to be monitored. One, the online consumer demands a two-way dialogue with brand-owners and retailers, says Google’s Hall. “Your brand is no longer what you tell consumers it is. It’s what they tell you it is,” he says. Of course, such sites can improve a brand’s profile, with users recommending a certain product to the friends or followers. Manufacturers and retailers must be ready to deal quickly with negative comments online. “A lot of brands talk to us about escalation plans, If something does go wrong, what sort of processes do they have to go through to address it in a timely fashion. That’s a really mature stance,” Facebook UK sales manager Jon Harvey says. “I’ve still yet to see a case where it gets too far out of control.”
