Success is doing it right
We know the food and beverage industry has changed so much in the last 12-18 months. One of those changes has been the increase in e-commerce. We can debate the actual penetration, but I am sure we will agree it is growing and it is here to stay.
Many food and beverage businesses are doing it.
Many food and beverage businesses are contemplating it.
Success is doing it right.
Just the same as selling in bricks and mortar success is not just about making great products to sell, it is about selling the great products you make. To help you do this we have designed a new SKUFood C.A.R.T. process specifically for e-commerce. We have been learning a lot about this channel and invested the time to develop our proven process for this channel.
Yes, you want to sell more products profitably and you can achieve this through e-commerce. You can maximize the opportunity when you put the resources and effort into selling your products in a different channel. Over the next 16 weeks we will explore each segment of our C.A.R.T. process for e-commerce.
Benefits of e-commerce
#1
The first benefit of e-commerce is that it should be an opportunity to grow your sales. If you are only eroding existing sales it will require more costs and your profits will decrease. There are different strategies to consider:
Sell more to existing consumers-this happens when your e-commerce offering is convenient for them. They might continue to buy from bricks and mortar but add to purchases because e-commerce is convenient or you are able to convince them to buy while they are on social media.
Find new consumers-people shopping online might have different needs than the people who buy your products in store. Perhaps getting to a store is a challenge and they are buying most of their food and beverage online. You also have the opportunity to reach consumers who are shopping where your products are not available. Perhaps you are on the shelf in Sobeys, but not in other retailers. You are missing a big number of consumers who are not in Sobeys often.
#2
A second benefit of e-commerce is the ability to sell into new markets without physical distribution in stores. We know it can be a real challenge and expense to find distribution and build your brand in new markets.
If you can solve the order fulfilment and shipping challenge you can increase your sales in new markets. If your product is a regional item and you want to grow this can be a real possibility with e-commerce.
#3
A third benefit of e-commerce is that it should be an opportunity to increase your profits. This is not a guarantee and we should not jump to the conclusion that you will keep all of that margin retailers make on your product. There are costs to e-commerce, order fulfilment and shipping. You need to consider the value consumers see in your product, what are they willing to pay for it to be delivered to their home?
If they are used to buying it for $4.99 in a store and you sell to the retailer for $3.50 you should be able to make more, right?? In this example you have $1.49 per unit to set up your e-commerce, entice the consumer to buy, pack the order and ship the product to them. It is true they might pay a premium for the convenience of home delivery, but it might not be as big as you think it is. That business called Amazon has created the misconception of FREE shipping. Consumers forget the Prime fees they pay, but you will be compared to this model. Profit is possible but you need the right model.
#4
The fourth and probably biggest benefit of e-commerce is the opportunity to connect directly with consumers. You will now know who is buying your products, how much they buy and how they react to promotions. This is incredibly valuable information when you take the time to analyze it and generate more sales. You can learn so much and use the information to grow your sales online and instore.
E-commerce provides a lot of data, sometimes too much. When you are developing your e-commerce channel consider the resources required to generate sales online and learn from how consumers react to what you are doing.
E-commerce is more than a website with products or an Amazon listing
E-commerce is a channel where you need to have a strategy and the ability to execute. Yes, there are millions of people shopping online every day but chances are they might be on some other website or never even see your product on Amazon.
Our C.A.R.T. ecommerce process will help you figure out how to maximize the opportunity. In the upcoming weeks we will explore the components of a successful e-commerce strategy.
3 options to e-commerce
In this online session with Perennia, we explored selling direct to consumers, selling in an online marketplace (like Amazon) and maximizing online sales on your retailer’s websites. There is some great information about each opportunity.
If you have any questions or help figuring out how to get your product online or in the virtual shopping cart you can always call me at (902) 489-2900 or send me an email peter@skufood.com.
We are adding more industry updates and interesting ideas to your SKUFood newsletter. Hopefully you have heard me say this before and that it resonated with you in your business.
“Success in this industry is not just about making a great product to sell; it is about selling the great products you make”
Peter Chapman
If you see things happening let us know so we can share them with our community. We also want to hear if you find this helpful and benefits your food and beverage business!
Sobeys growing produce in the store
When I was in our local Sobeys store, I found a refrigerated case had been replaced with a new Infarm. The concept of growing right in the store is not new but it does certainly give the consumer the impression of fresh and you can’t get any more local than that.
If I go back to my days as a retailer, I am curious about the return on the space but I do appreciate there is more to consider than just the linear sales per foot and the return they generate in dollars. This is different and perhaps some consumers will be influenced to shop at this store more for these items. The amount of basil growing was not much but I have to give them some time to get the project running and hopefully try the product. If you are supplying basil to Sobeys you might be selling less…
Amazon opens first Amazon fresh store with ‘Just Walk Out Shopping’
Amazon has been experimenting with their ‘Just Walk Out Shopping’ concept in Amazon Go stores. The Amazon Go model are small physical stores located in urban centres where consumers walk in, log in, select the items they want and walk out. There is no cashier to wait for and the consumer’s account is charged for what they put in their basket.
This is the first Amazon Fresh store to offer the convenience of no line ups. It would be interesting to understand the technology required to manage this many items and include a full fresh offering.
Hopefully we will be able to travel soon and visit Washington state to see this store.
Protecting poutine
As we get better at selling the great products we make, it is interesting to consider how much control or oversight there should be for products. Poutine is certainly a popular product and a tasty treat when you have the right ingredients. Like many other products, if an inferior offering is sold as ‘poutine’ it can hurt the overall opportunity.
Poutine with fresh cheese curds, the right gravy and nice chunky fires might be my perception of the ultimate recipe. Someone else might believe any cheddar cheese, melted over frozen French fries and a packet of gravy is the right thing. It is a challenge to sort out who is right.
We do see products pursuing the Geographical Indicator (GI) designation as well. An example would be Parmigiano Reggiano from Italy. They have defined certain standards producers from that region of Italy must follow to be able to use the product name Parmigiano Reggiano.
This can be a complicated issue but one that is worth pursuing to protect integrity when it can be defined.
