Adapting to the online rules of the game
Over the last few weeks we have talked a lot about Discounters. Over the next couple of weeks we are turning our attention to another big growth channel – Online. IGD estimates that UK online grocery sales will double in value from £6.4bn to £15bn over the next 5 years. This is a growth rate of 124%.
Any brand seeking to win in the marketplace over the next few years will have to win online. Winning means adapting to a very different selling environment. Online category management is very different from in store category management.
For instance, in store it is about whether you merchandise by brand or by format or by need. It is about the strength of your brand block, your share of shelf and your position on shelf. It is about which products make it into the assortment and which don’t.
However, this changes significantly online. Space isn’t limited. Assortment isn’t limited. Brand blocks don’t exist. It is not about whether you are on the top, middle or bottom shelf, it is about whether you are on Page 1, 4 or 7. Many shoppers don’t even make it to your ‘shelf’. At least in store, you might get seen.
So, how do you adapt to these changing rules of the game. What are the key intervention points in the online shopping journey…?
First page in a category is king. The order in which products appear on a page has a big influence on what the shopper is likely to see, and therefore, buy. We know of one brand beginning with ‘A’ whose market share online is 3x its share in store. Appearing early, and most importantly, appearing before your key competitors, is a major competitive advantage. Should your next piece of NPD begin with an A or B…?
Search is key. Who wants to go through 7 pages trying to find a product when you can search and get to it immediately? Knowing what the key search terms are in your category and linking your products to them is crucial. There is a reason why Google have made so much money from sponsored searches…
Be seen without the need to scroll. On one grocery site last week, a yoghurt brand had the promotional banner at the top of the offers page, a juice brand had the one at the bottom. You don’t see the juice brand unless you scroll down the page. Much lower visibility and, likely, much lower sales uplifts.
Getting on the favourite’s list. Online shoppers are more loyal to brands and retailers than shoppers in store. Why? Because the most convenient thing to do is buy what you bought last time from the place you bought it last time. This is why online retailers invest a lot of money in getting shoppers to do their first online shop with them. It acts as a lock in to the retailer. Likewise, the favourite’s list acts as a lock in to brands. If you’re on it, you are much more likely to be bought next time around. If you’re not, it’s doubly hard to get into future baskets.
Some of these things may sound obvious, but it is often the simple things that are crucial to being seen or bought. A small advantage now, could be a big advantage in the future. And a small disadvantage…
Have a great weekend and speak to you next week.