Challenges and solutions for FMCG in digital retail
As ecommerce gets more sophisticated and purchasing behaviours change to reflect this, we’ve been watching with interest over the last few years to see how digital retail is working for FMCG brands.
While the UK leads the way for eGrocery in comparison to the rest of Europe, with 6.9% of FMCG sales taking place online, we’re still way behind the top performers, South Korea (16.6%), with 75% of shoppers still shunning digital retail options in favour of in-store shopping.
That said, a recent FMCG report by Criteo also states that according to IDG, UK digital grocery shopping is set to grow by 68% by 2021.
So if you’re in FMCG and want to break into the digital retail marketplace, what are the challenges you face – and how do you overcome them? Let’s take a look…
5 key challenges for digital retail success
1 Limited product view – one of the main problems that digital FMCG marketers face is the lack of in-view ‘shelf space’ when users are buying via desktops – or even worse, mobile devices. With buyers only seeing a handful of products on each screen, the answer to getting ‘airtime’ is to utilise the sponsored product approach. This method can also help to capture business off consumers using archived baskets to populate the majority of their current shop.
2 Shipping the shopping – basically a bit of a nightmare due to the complexity and spoilage factors to consider, along with the narrow delivery timescales and the promises that tend to go hand in hand with this. One way that large retailers are navigating around these issues is to offer a ‘click and collect’ option – it’s more efficient and cost-effective.
3 Positioning – shoppers will walk through a physical store pretty much following the flow of the aisles: online, you don’t have this browse-and-buy benefit, as shoppers choose their shopping process themselves. You also don’t have the boost of perfect product placement, such as at the end of aisles and other prominent displays. Savvy digital retailers need to create clever product categorisation to overcome the former, and pay for paid placements to help find a solution to the latter.
4 Auto-orders – there are staple items that reappear time and time again in even the most discerning consumers’ baskets – and the whole concept of automatically reordering specified products adds further weight to the convenience of shopping online. If you’re not offering this function, along with savings for loyalty, then you’re missing a trick.
5 Think inside the box – if you work in FMCG, you can’t help but have noticed the latest trend for meal kit deliveries. Don’t just limit your relationship building activities to online retailers in their purest form – try to connect with some of the big players and offer some kind of free trail or other incentive to capture the attention of consumers via these related services, turning them from competitors to comrades.
As digital retail continues to capture a growing consumer market, FMCG brands need to keep on top of trends and adapt their approach to ensure they remain competitive and in the eye of their audience.