FMCG and the online opportunity
As they gain momentum online, opportunities abound for fast-moving consumer goods. Success will come down to understanding what makes consumers tick
Today, four billion people (53% of the global population) are connected to the internet, and nearly all of them (92.6%) connect using their mobile devices. And these consumers are spending more time, with increasing frequency, on an expanded range of diverse digital activities. It is undisputed that internet accessibility, mobile technology and digital innovations are redefining consumers’ every interaction, and will continue to enable and disrupt many aspects of consumers’ lifestyles as well as retail stores well into the future.
Connectivity today brings the convenience of hassle-free shopping—anytime, anywhere. At no point in time could this be more apt than now, considering the merging of multiple factors that are impacting the complexity of consumers’ lives, as well as shaping new-found shopping experiences.
In 2019, online retail trailblazer Amazon will turn 25 years old. It is easy to overlook that e-commerce is still in a nascent stage, despite considerable advances in online retail subscriptions, augmented and virtual reality services, personalized advertising, mobile-connected payments, and experimental drone delivery.
With continued technological innovation, e-commerce growth is expected to outpace that of traditional brick-and- mortar formats for years to come. And, the number of Canadian consumers who are connected and making online purchases will continue to multiply as newly connected consumers enter the online retail environment.
Today’s consumers are looking for e-commerce options for an increasing range of grocery categories, as their more immediate needs for ease and convenience expand. The availability of suppliers, quality products, broader assortment, competitive pricing, alternative fulfilment and delivery, payment options, simpler website/application interfaces and increasing user trust and confidence are all aligning to entice more consumers online, more often. These factors point to significant opportunities for fast-moving consumer goods (FMCG) categories, which need to be replenished weekly or daily, and take up a sizable portion of consumers’ time to shop in physical stores.
BRINGING FRESH ON BOARD
Fresh foods (such as fruit, vegetables, dairy, meat, fish and poultry) are a large proportion of the FMCG basket as consumers’ focus on health and wellness intensifies. Previously, this category had one of the lowest online penetration levels; however, shopping for fresh produce has gained traction globally with a two percentage point increase.
There are a number of specific fresh food purchase enablers that can help encourage more consumers to purchase online. Daily freshness ratings, detailed product descriptors and labels indicating how many days products will last are important quality indicators to help consumers overcome the physical aspects of assessing freshness. In addition, where consumers’ expectations are not met, refunds and same-day replacements will also alleviate the reluctance of purchasing these items.
As e-commerce continues to evolve, there are numerous areas to improve consumers’ overall online experience that will encourage trial and steer conversion to online. With convenience as one of the primary motivators for connected commerce, shoppers are looking for a frictionless experience that saves time, reduces obstacles and provides an enjoyable experience.
Consumers’ considerable willingness to try different options for purchasing, payment or delivery has grown over the years. Retailers can further solve consumers’ apprehensions through interactive services as well as guarantees; for instance, same-day replacement, free delivery for high-value orders, responsiveness and money back for incorrect orders feature highly to encourage online purchases of consumable products.
In the years to come, the online grocery industry will continue to grow due to the advent of disrupters like grocery delivery services, meal kits and direct-to- consumer brands in the FMCG industry. Understanding the impact of omnichannel performance and shoppers is critical for future success.
For retailers and manufacturers, understanding consumers, including where they shop and why, is a vital part in understanding which categories to focus assortment on and how to resonate online with consumers.
This column appeared in Canadian Grocer‘s May issue.