Although it’s only been about a year and a half since the start of the pandemic, the accelerated rate of change makes it feel like ages ago. The pandemic forced changes across the board — everyday life, daily routines, the way we shop, the way we work — but it largely shifted the way that brands conduct business.
One of the sectors that saw a rapid amount of growth and change is food and beverage. The pandemic forced food and beverage brands to get creative and figure out how to better serve their customers. We outline some best practices that companies should consider adopting in order to stay competitive in a digital-first world.
DTC ECOMMERCE
People value convenience above all else and giving them the option to pick up their order curbside or delivered right to their door makes all of the difference. When 2020 began, over half of the companies in the food and beverage industry had an ecommerce presence, but were not taking full advantage of it. The businesses that found a creative way to deal with the chaos continue to reap the benefits.
Take PepsiCo for example. They launched pantryshop.com (Quaker, Gatorade, Sun Chips and Tropicana, etc) and snacks.com (Frito-Lay products, Lay’s, Tostitos, Cheetos, Ruffles, etc.) which enables consumers to curate their own snack box and have it sent right to their door. There is even a discounted option to make it a monthly subscription. The use case for buying a 6 pack of Pepsi online is small. For companies that own multiple brands (i.e. PepsiCo), pooling products into a single storefront provides a broader use case for DTC commerce. In 2019, only about 10 percent of PepsiCo’s revenue came from DTC offerings, in 2020, it was reported that their DTC sales nearly doubled 5 months after Pantry Shop’s launch.
DTC is not only working for the giants like PepsiCo, but also for smaller-scale brands like Magic Spoon. Magic Spoon is a DTC cereal brand aimed to provide high protein, low carb versions of classic childhood cereals. Similar to Pantry Shop and Snacks, Magic spoon operates on the “build your own box” model, while also offering a subscribe monthly and save option.
For many food and beverage brands, DTC won’t be a leading channel, but it’s still crucial as part of the omnichannel experience. DTC ecommerce is a good way for legacy brands like PepsiCo to stay relevant and evolve with the times, while providing smaller-scale brands, like Magic Spoon, an option to flourish without a brick-and-mortar store. As consumers become more comfortable with shopping online, their expectations for convenience and availability will continue to heighten forcing food and beverage to evolve with them.
LIGHTWEIGHT B2B COMMERCE
While jumping into DTC ecommerce, something else to consider is implementing a way to provide self-service commerce for retail partners. The value of self-service is oftentimes overlooked, but enabling self-service for your B2B customers can ultimately provide a more seamless user experience, and save time on both ends of the transaction.
We have seen this approach work first hand for companies in the food and beverage space. We partnered with Intelligentsia, a premium specialty coffee roaster, who was seeking out a way to grow their direct-to-consumer sales and optimize their B2B purchasing process. We worked to empower their wholesale customers to make purchasing decisions with a simple user experience and easy checkout process which resulted in 90 percent of their B2B business being transacted online.
Another lightweight, but very effective B2B commerce tactic is taking advantage of the power of point-of-sale items like in-store banner displays, life-size display stands, or hang-tags. This will not only allow a brand to showcase and draw attention to special items but also encourages impulse buying. In fact, point-of-purchase displays have been shown to increase retail sales by 20 percent.
SHIPPING SCHEDULING
One of the challenges with a DTC ecommerce channel for food and beverage companies is the concern of food safety and quality. With the world beginning to open back up, many people are not as readily available as they were a year ago. It will become more imperative to empower consumers with the option to select their delivery date particularly in cases of shipping perishable products that have a limited lifespan in transit.
ANY CHANNEL PURCHASING
If your brand offers a loyalty or rewards program, make sure that your customers can receive rewards across the board. Someone who purchases your product online and accumulates rewards should also be able to purchase your product elsewhere and be able to continue to grow their points regardless of where they shop for your product.
Take Gap Inc. for example. Whether you shop at Gap, Old Navy, Athleta, or Banana Republic, you are able to redeem and earn rewards across all of these brands regardless of whether you shop in-store or online. We exist in a very multichannel, connected world where having a seamless experience both online and offline is now an expectation.
PERSONALIZATION
Creating a unique, personalized experience goes a long way for consumers. A well-known example of this is M&M’s “Design Your own M&M’s”. Shoppers are able to go online and create their own customized M&M’s. They get to select up to three colors, choose clipart or upload their own image, text, and decide what type of packaging it will come in. Something like this gets consumers excited and makes them want to order custom M&M’s for a special occasion as a unique addition that others may not typically see.
When brands are able to connect to their consumers on a personal level it creates a meaningful, memorable experience. Whether this is through an experience like a pop-up diner or exclusive tasting event, or being able to get your name on a glass bottle of Heinz Ketchup, unique and personalized experiences will remain key for brands to differentiate themselves.
ONLINE EXCLUSIVES
What better way to entice consumers than an online exclusive? Playing off some of the same themes that personalization hits, online exclusives get consumers excited to be a part of a small group of people that get special access to something. This has been an increasingly popular tactic with fast-food chains like Taco Bell, which offer special menu items that can only be ordered online or through the app, or Chipotle’s new quesadilla that can only be ordered online or through the app. Not only does this encourage using an online ordering system or app, but also provides that level of exclusivity and brand connection that consumers seek out.
Another great example of online exclusives is limited edition products. Oreo is constantly releasing limited edition Oreo’s which can be purchased both in-store and online. Cheez-It follows a similar model to Oreo, they offer limited edition packs of their newest flavors online, as well as a wide range of merchandise for each new flavor launch that can only be purchased online. Allowing customers access to limited editions on multiple channels helps appeal to a larger audience while still maintaining the exclusivity which makes the products so enticing.
Limited edition products also open up the floor to contests. Chobani ran an “I Dream of Creamer” contest earlier this year to not only promote the fact they sell coffee creamer but to also allow their customers the opportunity to get creative and interact with their brand. The winner will get to see their dream coffee creamer flavor come to life and start being sold in stores in 2022, as well as a cash prize. This is a simple way to create buzz around a product in the marketplace, get actual consumer insights, and overall, increase brand awareness through multiple channels.
SUBSCRIPTIONS
2020 was a big year for the subscription model and truly revived something many people thought would fizzle out. Subscription services are nothing new or groundbreaking, but they continue to hold a lot of untapped potential for food and beverage brands. From prepared meals, and snack companies to grocery stores and restaurants, many brands are taking advantage of the subscription model.
- Panera launched its own coffee subscription program right before the rise of the pandemic. For $8.99 a month consumers can get unlimited coffee and tea, any size or flavor, at any of their locations. To make the subscription a bit more exclusive, they also offer specific perks and rewards just for subscribers.
- Imperfect Foods offer a different way to shop for affordable, sustainable food. They take food that was either a surplus, cosmetically imperfect, discontinued, end pieces, or short-coded and offer a subscription service to have it delivered. Consumers are able to build their own grocery plans, curate their items, and figure out which day of the week works best to have everything delivered fresh.
- Liquid Death is a water company aiming to get people to drink more water while also eliminating plastic pollution by selling all of their water in aluminum cans. They offer a subscription service called “Auto Death” which gives the option of having cases of water delivered weekly or monthly. Plus, subscribing gets you a code for a free t-shirt.
DTC has a retention rate of around 28 percent, and about 60 percent of the revenue is generated from return customers. Providing easy ways for customers to pause shipments and manage their subscriptions can help reduce churn rates. DTC brands thrive because of their loyal customer bases and adding a subscription model that will ultimately save the consumer money and results in long-term loyalty seems like a win-win.
FINAL THOUGHTS
There will continue to be a significant opportunity for the food and beverage industry to attract new online food shoppers, 2020 saw more than 20 million new online CPG buyers. With the world becoming more comfortable with shopping online, this will create higher expectations for businesses to meet consumers’ evolving needs. Following some of these best practices and leaning into the idea of an omnichannel experience will certainly pay off in the long run.
