Don’t miss the e-comm boat
It’s not too late to embark on an online strategy, but decisions need to be made now
E-commerce is reshaping the global retail market. Since the turn of the 21st century, online shopping has boomed as internet access and smartphones have quickly become an intrinsic part of life in Canada. While global behemoths are well known, the rise of e-commerce is providing exciting opportunities for companies of all shapes and sizes, from major bricks-and-mortar players through to cottage industries. E-commerce has opened up a whole new shopping world, providing consumers with access to greater assortment and value opportunities while helping to satisfy their increasing demand for convenience.
Today, fast moving consumer goods (FMCG) e-commerce in Canada accounts for about 2.1% of sales; however, by 2020 that number is expected to reach 5.3%. Globally, e-commerce shows no signs of slowing, and by 2020 it is likely to be worth in excess of $4 trillion worldwide!
Yet despite the global buzz, e-commerce currently contributes less than 7% of the global FMCG market. One key reason for the slower uptake of online FMCG has been the logistical challenges associated with ensuring fresh and perishable products arrive to the consumer in top condition, especially in expansive countries like Canada. However, with increasing consumer demand for convenience coupled with better technology, online FMCG growth is accelerating approximately four times faster than offline sales across the globe.
Although a highly unlikely scenario, if the current growth rates for online and offline FMCG remains constant, online sales will exceed those from bricks-and-mortar stores by 2037. There is a greater likelihood of convergence between offline and online commerce with concepts such as click-and-collect and alternative delivery solutions being introduced by businesses. What is becoming increasingly clear is that for most FMCG brands, future success will be determined by how successful they are online.
Most major FMCG players already have e-commerce as a key pillar of their growth strategy and are actively scaling investments to increase their online offerings and geographic coverage.In doing so, they are rethinking and reshaping brand strategies; however, many are still uncertain what form their strategies should take and how to best execute them to reach consumers. In this evolving space, e-commerce success requires more than simply trying to take offline capabilities online. Companies are setting ambitious financial targets and testing and innovating in the online space; profits can initially be hard to come by, but for most, the eye is on the long-term prize.
For retailers and manufacturers in Canada that have yet to embark on their e-commerce journey, future success means making decisions now. The good news for brands lacking a strong e-commerce presence is that it’s not too late. In Canada, there is still opportunity to ramp up online shopper penetration, as well as the frequency and amount that current online shoppers spend. For nearly all FMCG companies, the question is no longer one of “bricks versus clicks.” Rather, the formula for winning involves developing an omnichannel strategy.
Regardless of whether FMCG companies are multinational or local, all should be looking to develop omnichannel strategies to sustain and maximize growth in the future. Simply replicating an offline strategy will not suffice; a tailored online approach is essential, including product pictures, clear descriptions and ideal shelf positioning, whether physical or digital—think eye-level in bricks-and-mortar, but think “first page” of online search results. It involves creating different product portfolios for online platforms as well, which may include a wider range of product sizes and flavours.
Retailers should also look to enhance the scope of their online offerings by expanding in-country coverage for delivery; providing quicker, more convenient delivery options; and offering products that are difficult to find offline.
This article appeared in Canadian Grocer’s November 2018 issue.