Buying food and beverages online is no longer a novelty. As the last few years have shown, consumer shopping habits are forever changed due to digital transformation. Per Forrester, food and beverages will be the fastest-growing online sales category, with its digital share doubling from 2020 to 2024. How can challenger brands win in a highly competitive category that’s ripe with opportunity? Look before you leap into all things ecommerce with this rundown of the opportunities (and risks) ahead.
Ecommerce Opportunities for Snacks and Beverage Brands
There are myriad advantages for snack and beverage brands entering ecommerce. Here we share eight leading reasons to consider reaching consumers digitally.
Open to All. Ecommerce offers the most open and free market for brands of all sizes and maturity to play and prosper. Physical retail has its place but it’s a tough nut to crack for the uninitiated and inexperienced. This over-70-year-old model relies heavily on relationships and personal taste. Does the store buyer like your brand (and your brand ambassador)? Do you have the legal and operational resources to negotiate and adhere to complex contractual terms with buyers, distributors and transport? With fewer barriers to make your product available to consumers, ecommerce presents an unbeatable opportunity for challenger brands to compete. Simply list on the marketplace of your choice and you’re ready to sell.
Endless Shelf Space. Take a stroll down the aisle of your favorite store and you’ll see a finite selection of products on display. In fact, only 15%–20% of snack and beverage products are available in stores versus online per Whitebox data. Unlike physical retail, ecommerce has unlimited space for new products that consumers can discover and try alongside known names. That democratization of the market gives challenger brands a fighting chance against bigger brands with bigger budgets and well-established retail relationships.
Only 15-20% of snack and beverage products are available in stores versus online.
Control of Your Own Destiny. Physical retail creates a number of dependencies that brands must accept in order to make it to the shelf. Did the store give you a discoverable position on a high or middle shelf? Is your agreed-on endcap placement prominent and well-stocked? Are your products in good condition and neatly placed? By contrast, ecommerce eliminates a host of middlemen, disintermediating your brand from the end consumer and an optimal experience. Online, brands can control nearly every aspect of their product’s display, information, inventory and consumer experience. This proximity to the consumer can also inform every aspect of your business, such as product enhancements, new business relationships and even to whom and how you market your products.
Customer Community. Ecommerce is the ultimate brand relationship builder. Consumers can engage with your brand online in ways that simply don’t exist in physical retail. As you create and nurture these direct relationships with consumers, you’ll gain firsthand knowledge of the customer experience from soup to nuts. It’s important to remain open and humble with customer feedback as it can make or break a brand early on. Use this customer intel to inform product improvements or trial packs, segment your most loyal customers from one and dones, and engage and incentivize customers to act as brand ambassadors through reviews, ratings and more. The community that develops around your brand can act as a huge accelerator for sales.
Test and Learn Environment. Focus groups are enormously beneficial to brands just starting out — albeit expensive. With ecommerce, you can test in real time the appeal of products in various configurations or multi-packs on the fly — without the expense of picking and packing before you sell a single item. Variety packs are great introductory purchases to sample a brand and can result in larger basket sizes. This kind of market feedback can further inform what you sell in-store versus what you reserve for online. It may sound counterintuitivebut be prepared to lose money getting consumers to try your products. A consumer may have a hard time committing to a 12-pack of a new sports drink but is willing to try a four-pack. Remember the end goal is a repeat, happy customer. Help them reach that destination with the least amount of friction possible.
Variety packs are great introductory purchases to sample a brand and can result in larger basket sizes.
Customer Service. More so than ever, customer service matters to consumers. A negative experience can do irreparable harm to a brand. In physical retail, brands have zero control over that experience or the customer’s satisfaction. Ecommerce is another story entirely. Consumers feel more in control of their wallets online as the option to return that product exists unlike in physical retail. Consumers remember how a brand made them feel sometimes even above the actual product quality. If that return is easy and fully refunded, they may be more likely to give your brand a second chance in the future.
Inventory Management. If your brand is subject to expiration dates, inventory management is a critical skill to master. Did you know many retail stores charge brands for expired products? Successfully navigating the freshness of your inventory impacts both the customer experience and your bottom line. Selling a short-dated product simply isn’t an option in physical retail as the time it would take to ship and stock in-store could miss that narrow window. However, ecommerce enables brands to run sales on products based on afirst-expiration, first-out (FEFO)approach, so you ship out what expires first.
Ecommerce is a goldmine of data for brands at every stage of growth, offering insights ranging from who’s buying to where, how much to how often and when.
Data, Data, Data. Ecommerce’s greatest advantage for brands lies in the data and insights available. Who’s buying? How often? Where are they located? What products move fastest and at what times of year? Accessing and understanding this data can have a profound impact on what you manufacture, what you offer and where, at what size and what shipping speed, which in turn raises or lowers your returns. For example, on the East Coast, many consumers expect same-day or next-day delivery. However, a West Coast resident may care less about fast shipping and more about sustainability and environmental impact. With this insight, you may want to test small batches of your product in stores on the East Coast and sell the best sellers online for those on the West Coast. Knowing who your real customers are and their expectations can make all the difference to building and sustaining your brand’s growth.
Ecommerce Risks for Snack and Beverage Brands
As with any new venture, brands must weigh the risks of doing business. While bursting with opportunity, ecommerce does have some pitfalls to navigate. Here are the top three to keep in mind as you begin your ecommerce journey.
Delayed Gratification. Have a craving for a bag of chips? You can have that need gratified with a quick trip to the store. Ecommerce will never win in the instant gratification department. Convincing a consumer to buy a six or 12-pack of snacks for delayed gratification when they can spend $1 on a single item now is a tough sell. That’s why reducing the friction to try your product — and being okay with losing money on that trial — is essential to an ecommerce strategy.
Inaccurate or Misleading Product Listing. An explosion of choice online means consumers also have the ability to research products deeper than they would in physical retail. Reviews and ratings do matter as they can impact your brand perception. Mistakes on your product listing or misleading information will not slip past consumers for long. Also keep in mind that more and more people begin their product search on Amazon but if your listing is inaccurate, you may not show up in those results and lose out on discovery. A successful product listing on Amazon is part art and part science. Tapping into a seasoned Amazon advertising agency with data, insights and best practices at the ready can set your brand up to sell and grow.
Lost Margin. As we’ve advised before, “beware of margins becoming the enemy of sales.” Shipping costs are the great equalizer for any brand in ecommerce, even more so for snack and beverage sales. Let’s face facts, shipping is expensive. But as we explained in 8. Data, Data, Data, consumer expectations vary wildly. Above all else, they want the choice to have something delivered next day versus eight days from now. Offering that flexibility is hard for brands of all sizes. There’s a delicate balance between promising “ships same day” and when product arrives at your customer’s door. (Guess which one your customer cares more about?) An experienced third-party logistics (3PL) provider with a deep bench of carrier relationships can eliminate the complexity for brands while satisfying customer demand. There are efficiencies to be had in shipping, and the right partner can illuminate the sweet spot for your brand.
“Smart brands that want to build customer lifetime value and loyalty should view in-store and online as cooperative, not competitive spaces.” Modern Retail
Driving Brand Growth Online — And In-Store
In many ways, ecommerce levels the playing field for challenger brands to compete with deeper-pocketed legacy businesses. The digital learning curve is steep without experience and data-driven guidance. Let’s face it, growing a brand is a gamble no matter what marketplace you choose. Ultimately you want to be everywhere your customer is and that’s a mix of physical retail and ecommerce. Regardless of where you start, it’s important to understand what’s at stake, both positive and negative. Doing well in either market is hard — operating in both ecommerce and retail at the same time is even harder. But with data-led partners in place, brands can navigate the changing rules of modern commerce and master an omnichannel strategy that drives sales and customer happiness. Whitebox can help. With our ecommerce marketplace and fulfillment technology and expertise, clients can launch online and off without overtaxing their teams or profits. Reach out to hear more about our holistic approach and to schedule a free consultation.