How to help your business 'win the digital shelf'...as told by chewing gum & Mads Mikkelsen.

For millions of shoppers worldwide, picking up chewing gum at the till is instinctive. 

It's what you grab when filling up the petrol tank, buying lunch or waiting to scan your weekly shop. It's the ultimate 'system 1' , low consideration convenience purchase.

But what happens to a $40 billion global category when a shopper has to click 'add to basket' instead of physically dropping it to their basket?

To paraphrase Randy Newman, strange things start happening...

E-commerce was only 7.8% of chewing gum sales in 2020, a small, but significant part of the gum market. 

But what's really interesting is how that 7.8% shopped the category.

While behemoths like Wrigley or Cadbury dominate in-store sales, the brands that thrive online are different.

Smaller brands represent less than 2% of gum sales in physical stores, but around 33% of e-commerce gum sales. Many of these are premium, higher margin products with quality ingredients and larger pack sizes.

The retailer landscape is totally different too.

Target, Kroger, Carrefour, Circle K and Tesco don't sell lots of gum online. In fact 50% of all online purchases come from Amazon. Direct sales are also growing. 

So why is this interesting and applicable to your business?

Well gum is a microcosm of a much wider trend in grocery that's occurring throughout the store. Because in many grocer categories, online shopping distorts buyer behaviour in interesting ways, often fundamentally changing buying patterns.

So if you're a CPG brand and you take the same approach to online sales as you do to physical retail, it's probably not going to work.

Digital availability & merchandising

Large CPG/FMCG/alcohol brands spend hundreds of millions each year on shopper marketing, visual merchandising and ensuring they're easy to find in store. 

But the tactics, tricks and even key principles are different online.

Digital availability is an in vogue term coined by James Hankins that outlines the subtle nuances.

If mental availability is about the probability of a consumer noticing, recognising and thinking of your brand in a purchase situation.

And physical availability is about the breadth and depth of your distribution. How easy it is to find and buy your brand.

Then digital availability is about maximising the impact, breadth and depth of your distribution in time and space online.

This term describes the important nuances of how brands need to act differently in the digital retail space - pack size, product imagery, approach to media and creative, retailer relationships are all similar but different in the online world.

And those slight differences compound across CPG to make up literally billion dollar opportunities for those that get it right.

For example, we're seeing Heinz, Unilever and Pepsico trialling new ideas, because they recognise the importance of maximising this digital availability if they wish to 'win the digital shelf'.

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Without getting into high falutin' claims about what you should do, it's useful to think about the strategic shifts needed if you're a smart, visionary CMO. How can you set your brand up for success in grocery e-commerce? How can you get ahead of the curve?

I think there are three big questions to mull over.

1. How do we bring more of our brand experience into e-commerce?

For years, Carlsberg have worked to build a brilliant palate of distinctive assets, running huge integrated campaigns like 'The Danish Way' . The campaigns are beautifully shot to a Nordic backdrop and use actor Mads Mikkelsen as a brand character, along with the brand's key assets - its Danish heritage, the 'probably' line and of course the green bottle.

Carlsberg clearly knows its 'brand codes' (logo, colours, country, tagline etc) and the value of using these to create ads that are both interesting/attention grabbing, but also strongly branded.

So now click onto a Carlsberg product display page on Tesco, Amazon or Ocado.

Where's Mads?

Where's all that beautiful brand imagery and all those lovely video shots?

Where's the unique Carlsberg wit and Danish references?

Nowhere to be seen.

I'm not picking on Carlsberg, but it's a good way to make the point.

We hear so much about 'omni-channel'. But the reality is most big, premium brands with huge budgets spend their time on above the line execution of an idea, yet forget to reflect this in their owned or third party e-commerce sites - the places that increasingly people buy from.

Part of this is lack of retailer engagement, but now the likes of Walmart, Tesco, Amazon, Instacart and Drizly are all happy to work with brands, just like they do in store.

The problem is brands have an old lens on e-commerce. They view it as the end point of the customer journey, the bottom of the funnel, rather than thinking about it as a key part of the whole journey.

This often results in uninspiring images of the product placed against a soulless white background and some robotic, non consumer friendly copy. A good brand manager wouldn't allow this type of experience in a physical store, so why allow it online?

The digital shelf is increasingly where people both discover AND purchase brands (you've all seen the stat about the number of product searches that start on Amazon), but up to now ‘branding’ has been missing from the experience. 

If we start seeing e-commerce as solely the domain of technologists and media optimisers instead of digital creatives and merchandisers it would be a mistake. 

E-commerce marketplaces are not just about commerce and buying, they're also fertile creative opportunities. There are some incredible opportunities to showcase products in creative ways.

We should start thinking about shopping experiences as well as buying experiences online - video integration, better quality imagery, product reviews and customer centric copy can create beautiful, differentiated experiences instead of dull commoditised ones.

2. Who owns digital merchandising in our business? 

A second key questions is where responsibility for this area sits in the organisation.

Almost every large brand in CPG has a massive shopper or trade marketing team focused on improving a brand’s visibility at physical point of purchase.

But winning the digital shelf requires a slightly different skillset. Plus there's a whole lot of extra work to manage multiple e-commerce ecosystems - DTC, marketplaces, retailers and social shopping.

So where does the power lie?

Anecdotally what I've seen is companies building digital extensions of their category/shopper teams. These individuals have remit to work with e-commerce platforms to improve visibility. They analyse reviews and listings online. They work with media and creative agencies or in-housed versions of same. They improve product shots and page copy. They optimise search and figure out how to push the boundaries of product experience pages. They work with retailers to form partnerships.

Clearly every business will be different, and power maps will dictate the ultimate answer to this question. But if you're a CMO it's worth taking some time to think about the structure of your team and what type of skills and aptitudes you need.

3. How should we budget and invest in this area? 

The third question is another hot topic - where does this budget come from and where should we spend?

In many cases brand/ATL, performance/direct and shopper/POS budgets have traditionally sat separately. So where does responsibility for the e-commerce or digital availability pot of funding sit?

You could make the case that it touches on all three. You could also make the claim that responsibility for this area lies in the pricing, product or category management team.

Therein lies the complexity.

We've also seen some well argued pieces say that formats like Google and Amazon search are not marketing expenditure and are closer to operational expenditure.

The brilliant Grace Kite argues that these costs are basically online 'rent' since "their purpose is to help people who are already on their way to a business to arrive safely. They replace the sign above the shop front, the lights that stay on inside, the shelf-space, and even the entry in the yellow pages."

Wherever you decide to apportion the responsibility and however you report the expense, the bottom line is that investment in this area needs to be integrated rather than disparate. Shoppers move seamlessly from channel to channel and brands need to reflect that.

The worst case scenario is big branded communication saying one thing along with some down and dirty no frequency cap performance marketing along with a product experience page that's hard to find and looks totally different to the rest of the creative.

So again, it's worth thinking about how, where and by whom your investment is being spent (and of course, how you're measuring success...)

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(An important) evolution...not revolution

So what did we learn?

This isn't a 'sky is falling, everything is being disrupted' style proclamation I'm making. It's not a revolution, but a very interesting evolution. 

Colin Lewis has spoke a lot over the last few years about how many CPG marketers either had or have their heads in the sand about e-commerce. That's changing.

Whether you believe grocery e-commerce will retrench back to its pre-pandemic level or continue to accelerate, clearly it's strategically smart to think about how you set your business up for success in digital merchandising.

Because the weapons a brand would use in a store, wobblers, aisle ends, decals, proximity media are totally different and more varied in a digital world.

I'm usually skeptical of most new 'trends' we see in marketing like the next social network or 'revolutionary' new technology. And we're at the very early stages of e-commerce still.

But I believe it is a proper structural shift that we're seeing and the whole area of digital merchandising/shopper marketing/availability has enormous untapped potential for brands.

So project forward and think long and hard about how you can help your brand 'win the digital shelf'.

Because, to bastardise a quote, massive change in retail happens slowly at first, and then all at once.

As you can tell, I'm hugely interested in this area! If you want to have a discussion about it or you've something to add drop me a line - shaneoleary1@gmail.com.

Shane O'Leary

@shaneoleary1

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