There are countless ways in which the internet and e-commerce have transformed the way brands do business. Yet despite the relative commonness of online shopping today, many brands still have questions about how to best adapt their innovation strategies for the digital age. It should go without saying, but launching a product in a physical environment is not the same as doing so online. Yet as intuitive as the statement is, many brands are exploring their options as they seek the best route for succeeding online.
So what’s at stake here? In looking at the European market, 93% of consumers claim to have made an online purchase, and globally, online sales for fast-moving consumer goods (FMCG) are growing 5x faster than offline sales*. So compared with a decade ago, questions about the relevance of e-commerce have dissipated, and consumers are now exploring online shopping for their FMCG needs.
So with that data as a backdrop, let’s dive into what we’ve learned to date regarding some best practices for increasing the chances of success in the online space.
Naturally, manufacturers big and small are motivated to innovate with digital in mind. We’ve heard many stories, however, where brands have targeted innovations specifically for an online marketplace. While innovating for specific channel partners can be appropriate in some cases, brands should generally not use a specific channel as a guiding star. Why? Because people don’t simply buy on- or offline. It’s not that black and white. For example, over one-third of consumers in the U.K. are Amazon Prime members, yet many still prefer to shop in brick-and-mortar locations, and they use their in-store learnings to inform their online purchasing. In fact, more than half of U.K. consumers are omnichannel shoppers.
Additionally, we’ve found that channel actually doesn’t have as much impact on consumer perceptions/response as you might think. Consumers are comfortable living and shopping in an omnichannel world. It’s not that there is never a place for channel-specific stimuli or shelf sets. There are instances where a channel-specific launch might be called for, but otherwise it’s not necessary to tailor the message or materials for a typical product to a specific channel.
On- and offline shopping provide very different experiences for the consumer, and accordingly, in their levels of awareness of products. In a store, shoppers see more items and typically shop for more categories in one trip than they do online. They actively seek out new items to become aware of. With this in mind, online innovations need to be more compelling and have distinctive assets that catch attention during a smaller window of opportunity.
Understanding what drives behavior is important to consider when trying to appeal to online FMCG shoppers. Some shoppers are less risk averse and don’t need as much reassurance before making a purchase, and others are more skeptical. Hesitant shoppers need to overcome negative online perceptions in order to make a purchase. Regardless of shopper classification, the experience must be convenient, cost-effective and safe when it comes to online FMCG shopping. Companies that address these critical components will be best-positioned for online success.
Lastly, don’t assume that the more SKUs the better. It doesn’t work that way in an online environment. Quite the opposite. In fact, 70% of online shoppers globally never go past page one of their search. That’s where having the right evaluative tools to ensure elements like packaging have the potential to best position a product for online success are critical. In fact, packaging is one of the most important factors to consider when deciding whether an innovation will have sufficient traffic and awareness. At BASES, we have seen brands and innovations fail online simply because they don’t realize this, and consequently don’t verify and adapt their pack specifically for an e-commerce environment.
It’s also extremely important to resist the urge to launch before you’re ready. You never get a second chance to make a first impression, especially when product disloyalty is at an all-time high. Therefore, taking a “launch and learn” or “optimize in flight” approach once a product is available online introduces unnecessary risk, particularly when you consider the ramifications of bad reviews. Having a good product the first time around is critical. In looking at several products that were tested with Nielsen BASES and then launched on Amazon.com, we see a strong correlation between a product’s ranking in the BASES database and the product rating online, both of which signal higher chance of continued success.
Without using the strategy of launch and learn, you may wonder how it’s possible to take an accurate, measured approach. When there are specific questions related to activation in e-commerce, it makes sense to conduct research and explore. By using reliable forecasting models that are applicable to an omnichannel environment, as well as evaluating, and optimizing innovations to simulate closer to the true path-to-purchase, it’s possible to gain greater confidence in optimizing an e-commerce strategy.
To learn more about exploring the unique growth channel of e-commerce, join our Innovation and e-commerce webinar on March, 6, 2020.
*Nielsen projections based on 30 markets.