It's not an e-commerce world, but maybe soon
This time a year ago it was hard to imagine many CPGs, let alone supermarkets, spending more than, oh, five seconds, thinking about how to sell online.
But now, with Amazon selling groceries in Canada and Walmart seriously planning its digital strategy, the future may finally be here.
READ: Amazon adding groceries in Canada
So it seemed at a recent Food & Consumer Products of Canada conference with the ominous title “E-commerce…What CPG Manufacturers Need to Know.”
Actually, the whole event was pleasant and thought provoking. If you missed it, too bad. The speakers were great and the information solid.
I was particularly impressed with Simon Rodrigue, vice-president and general manager of Walmart.ca. He spoke about Walmart’s growing online strategy and how CPGs might grow with it.
Last year, Walmart made one of its biggest investments ever in online, he told the audience. Walmart.ca launched in the fall, allowing consumers to order everything from groceries to clothes and have them delivered or the option to pick up at thousands of Canada Post locations country-wide.
The redesigned site can be accessed from mobile, tablet or desktop computers and includes such functions as a one-page checkout process and a guest checkout option, which allows for online shopping without having to create an account.
“A lot of our mobile sales are coming inside our competitors’ stores, we believe,” Rodrigue said.
READ: Walmart redesigns its website
Later, he added that, “we are aggressively going to go after food online,” and noted that sales from Walmart’s gluten-free site have experienced “gangbuster sales. We’re shipping all across Canada.”
Indeed, there’s little doubt Walmart wants to sell food by the truckload online. It recently hired the most experienced e-commerce grocer in Canada, Stephen Tallevi.
Back in the 1990s, Tallevi co-found Grocery Gateway, the online fresh food delivery service in Toronto. He was most recently general manager for the Grocery Gateway, now part of Longo’s.
But not all of Walmart’s online activity is built around selling over the web. Walmart.ca, Rodrigue said, is helping the retailer “engage with customers” and therefore sell more in stores as well.
What does “customer engagement” look like online? Well, lots of great content helps.
At Walmart.ca, for instance, customers can choose items based on more than just the usual factors: brand, price, availability online or in-store. They can read more detailed information about the products and check out customer reviews as well.
As an extension of that, Walmart next month plans to launch something called Trial the Aisle, a by-invite-only sampling program. Customers who participate will be sent product samples that they’ll be asked to review.
READ: Is Amazon a viable threat to the Canadian grocery industry?
As retailers like Walmart put more of their products online (and thereby online takes the place of flyers for product browsing), consumer packaged goods companies will be faced with both challenges and opportunities.
On the plus side, Rodrigue pointed out that products on the website that do well can quickly get listed in Walmart stores as well.
The challenge, he said, is to produce compelling content for these products online that will grab attention. That includes featuring multiple, high-resolution photos of products, ingredient lists and great descriptions of what’s inside.
“Think about the features you want to promote. It’s not just title and price,” he said.
Video could also help. “When people watch video on our site they’re four to five times more likely to buy,” Trevor Newell, president of Shop.ca noted during a panel discussion at FCPC’s event.
Logistics will also matter more. Most products these days are designed to bounce around on trucks within the relative safety of pallets.
But will packaging stand up when delivered to someone’s home as a single SKU? It’s an issue CPGs will need to have an answer for, Chris Vickers Tucker, president of Clorox Canada pointed out during the same panel session.
One reason many companies aren’t thinking about such issues yet is that the amount of groceries sold online in Canada remains piddly. An FCPC survey of its members found that the vast majority get less than 1% of their business from e-commerce.
Mary Sullivan, an analyst at research consultancy RetailNet Group, pegs online as a mere 0.3% of the overall grocery market in Canada. But that number is expected to grow 18% CAGR to 2017.
“Right now the size of the prize is low. But in the future, the digital influence will be very important to in-store shopping,” said Sullivan, whose firm works with companies to develop their online strategies.
Her math on e-commerce looks like this: Combining in-store with e-commerce, she explained, is a “1 +1 = 3” formula.
“Being online can really compound the best of your business.”