Four Essential Analyses for a Successful FMCG Brand Online Performance

While most consumers have purchased anything from designer footwear to spa vacations online, most were still buying their milk at the corner grocery store. Until Covid-19, that is. While online grocery shopping isn’t a trend ‘born’ to Covid-19, it has certainly grown and strengthened during the pandemic, with almost 56% of consumers listing ‘personal safety in Covid-19’ as the main reason they now buy their groceries online (according to a ciVaue-Wizer survey conducted in October 2020 among US shoppers). So while online shopping and digital channels were an increasing trend for the past few years, they’ve received a significant boost since the world was introduced to Covid-19.

Shopping online for Fast Moving Consumer Goods (FMCGs) offers obvious opportunity to consumers, saving time, energy and heavy lifting. But more importantly, the online channel provides many opportunities to retailers and suppliers, which simply don’t exist in bricks-and-mortar:

  1. The potential of optimizing the purchase experience and product communication.
  2. No physical limitation of shelf space.
  3. The ability to personalize the experience per each shopper.
  4. Getting more insights about the shopper and his/her purchase behavior.
  5. Increasing the potential target shoppers, not limited to the geographical constrains of the physical stores.

Those two factors, the growth in the online channel and the opportunities it generates add up to more investment in this channel, as suppliers realize they have much to profit by allocating separate and additional resources to online shopping marketing. But dedicating resources blindly wouldn’t be smart business, which is why now, more than ever, we see a growing need for data and insight in this area.

In this blog post, we will cover five essential analytics for suppliers to consider when strategizing their online channel marketing.

On(line) and Off(line)

The first step is a simple comparison of your brands, sub-brands and product market share in the online and offline channels. For starters, this analysis can reveal where the brand is under/over performing. The same comparison should be done for the sales trend: If you report an increase online compared with offline, you are over-performing, if you see a decrease in online sales trend compared with offline, you are underperforming.

Over performance can indicate that online shoppers tend to purchase more of your brand and products than total store shoppers. This means that you have an advantage among online shoppers and a great audience pool to target.

online market share performance

 

This can also indicate that you’re getting more exposure online than in the physical store and that the online shelf is more effective for your brand. If that’s the case, you should work to shift more category shoppers to the online channel.

A third possibility in index over performance is that your marketing efforts are more effective online.

Under performance in this index can indicate that online shoppers tend to buy less of your brand. In this case, it’s recommended to understand these shoppers and find ways to peak their interest.

This can also indicate that your brand has more prominence in the physical store than in the online store, due to competitors’ activity or display that doesn’t benefit your brand. In both cases, you’ll need to invest in promoting your brand up the digital shelf.

This online/offline analysis should be routine and ongoing, to ensure that your marketing efforts and investments are performing well, and re-evaluated if so indicated.

 

Brand Purchase Behavior

Analysis of performance based on sales, is a good start, but in many cases, it won’t reveal real differences. That’s why drilling into sales drivers KPIs like Penetration rate, Purchase Frequency and Basket Size can lead to more insights as to any brand’s online marketing strategy.

Ideally, you’d compare your brand KPIs first to the offline KPIs and then to the total category KPIs in the online channel. These comparisons will help define your main marketing goal online: increase the number of shoppers, increase basket size, or increase number of purchases.

The following chart shows three different brands with a similar overall online and offline market share, so if we limited our analysis to online/offline comparison, there would be no clear indication regarding online performance. But when diving into the sales drivers KPIs, we can see a difference in purchase behavior, which indicates the required marketing strategy.

For example, Brand A should focus on increasing its shopper base online by applying methods that will cause shoppers to switch to Brand A from other brands. Brand B should focus on increasing the online purchase frequency, as the online basket size is already bigger than the offline basket. Brand B should generate more opportunities via coupons, reminders, or banners.

Brand C shows significant weakness in its online basket size. The recommendation here is to increase basket size with appropriate promotions (STRETCH) and personal coupons.

Brand Purchase Behavior

The Portfolio Challenge

As we can see, online purchase behavior can vary greatly from in-store shopping. This is due partly to physical reasons like home delivery which cancels out any heavy lifting. Another reason has to do with the brand’s ability to include far more information on the product page, including recommendations and usage ideas. Important nonetheless is recognizing that the online channels offers almost unlimited shelf space, which provides an opportunity to include niche products.

If retailers are willing and able to manage a unique online variety, the possibilities are vast. To learn about these possibilities, the suggested analysis is ranking products in the online channel by sales or by penetration rate. Comparing the ranking of products offline will expose those products that are high on the lists with similar features like bigger packaging, products requiring additional explanation (which is difficult to display on a physical shelf)’ or products that seem to ‘disappear’ on a physical shelf, while ‘shining’ on a digital shelf.

Identifying those products that are online ‘stars’ can assist brands in improving variety both online and offline.

Promotion Analysis

Analyzing marketing activities and special promotions is basic in the interaction of brands and grocery retailers. A significant part of the analysis should be dedicated to the channel. It is quite possible that a special promotion would effective in one channel, but far less successful in another. Analyzing promotions is done by looking into the sales trend and market share, but also by comparing to the baseline and understanding the additional sales generated by the promotion. This analysis should be done by channel, and by comparing the results of the various channels available.

In general, determining the depth of discount in any promotion should be managed by an ongoing analysis of the data and results. In many cases, you start out with a certain hypothesis, which is then adjusted according to new data, as it comes in.

Win-Win

We’ve looked at these analytics from a supplier’s point of view, trying to determine what actions to attach to certain insights derived from various indexes, and monetize on digital channels. It’s important to note that suppliers aren’t the only winners here. By properly analyzing data, suppliers can invest their budgets more effectively online and in most cases increase their investment where they see results. This is a win for retailers as well. The same analyses can be done by retailers on the category level, in order to determine what to preserve and what to improve.

The right analyses can go beyond the routine, and provide insight into various marketing activities online, serving as a critical mechanism for suppliers wishing to improve their brand’s performance in the ever-growing online channel. The same analyses can also provide a strong base for recruiting retailers’ cooperation with these efforts.

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