In part three of our ongoing series about building a successful e-commerce grocery business, we explore the evolution of digital media and merchandising strategies that can help drive incremental revenue — and increase basket sizes.
Our last article focused on order fulfillment, which is key for creating cost savings and high-quality experiences for customers. While the pandemic appears to be loosening its grip, industry experts agree that consumers’ new shopping habits will outlast the virus, presenting a new standard for grocery chains as they work to maintain relevance among customers who’ve reduced the number of in-store visits in favor of online grocery shopping options.
Understanding the role of digital media and merchandising in your grocery e-commerce business is one way to stay ahead of the game. Here’s what you need to know.
Unlocking The Power Of Digital Media
Before the coronavirus crisis, shoppers made nearly 2.7 trips to the grocery store each week. But continued health concerns and store mandates have caused Americans to change how they shop. Whether shoppers are making fewer trips to the grocery store, speeding up their visits or placing orders online, the shift has forced CPGs to get creative in their consumer outreach efforts.
• The opportunity for retailers and brands: As CPG brands fight to stay in front of customers, retailers have an enormous opportunity to build a digital media business. By leveraging their e-commerce site and mobile apps as digital assets, retailers are readily primed to host sponsored content from CPG partners to drive sales and boost their bottom line.
According to eMarketer, the CPG industry is expected to grow its digital ad spend by more than 5%, with retailers increasingly getting a slice of the pie. Some of the e-commerce advertising strategies CPGs are looking for from retailers include search boosts, homepage banners, video display and other ads — both on-page or in off-site placements, like email.
For CPG brands, digital media is an opportunity to connect with customers at the point of purchase. For retailers, it drives incremental revenue, as brands will commonly fund these promotions from budgets that were previously unavailable to retailers.
• Size of the prize: Retailers can expect 1%-4% of their e-commerce sales to flow through digital media nearly right out of the gate, with 5% (or more) of e-commerce revenue achievable with the right capabilities and sales process in place.
• Improve your e-commerce path to profitability: Digital media creates a path toward making your e-commerce grocery business a profitable venture. With the right plan in place, digital media can offset e-commerce software license fees, with the potential to turn an e-commerce business into a major profit center.
Enhance E-Commerce Performance With Digital Merchandising
Digital merchandising includes all the promotional strategies grocery retailers use to move products online. In store, grocers work with CPGs to create displays and end caps to help customers discover new brands or boost sales. But with customers turning to e-commerce, retailers must tune their focus to mimicking visual merchandising techniques online.
• Get the digital shelf right: In today’s retail landscape, retailers must place greater emphasis on building an attractive “digital shelf” to facilitate a high-quality e-commerce experience. High-resolution product images should be sourced from reliable vendors with broad coverage, such as Syndigo and IX-ONE, and attributes should be integrated from providers such as SPINS. This ensures that product listings include images and filters that produce accurate and high-quality results.
Further, product data needs to be standardized by item-level attributes to ensure that customers can filter search terms and category pages and receive a personalized view of the assortment.
• Upping the impact: The appearance and quality of a retailer’s digital shelf can have a major impact on basket size and customer retention. While the average e-commerce grocery order is roughly $100, this can increase significantly with digital merchandising optimized. Retailers who don’t provide a seamless online shopping experience will lose customers to those that do.
• Getting search right: Above all, customers should be able to easily search for items and view results that are not only relevant to their search queries but also to their individual preferences. For example, if a customer who has historically purchased organic products searches for an item, they should be able to see other organic products prioritized while building their basket.
Added details, such as prefill and autocomplete, and rapid page load times can all make a major difference in the context of an e-commerce grocery experience, especially where customers rely heavily on search to build a basket of 30-50 SKUs.
• Round out the basket: When customers see product recommendations, they should be relevant to their shopping preferences. If a customer adds a gluten-free item to their cart, product recommendations should also be gluten-free, for example.
When an item is unavailable, recommended product substitutes should be made visible for the customer, decreasing the friction associated with a potential out-of-stock scenario. These should also be well suited to the customers’ preferences.
There’s an opportunity to replicate impulse purchases at the checkout lane in the physical store by implementing a “Did you forget this?” feature during the e-commerce checkout process. With machine learning and proper attribute data, recommendations can be provided to the customer based on their purchase frequency or items that are complementary to what’s in their basket and are currently on sale.
For grocery retailers, digital media and merchandising are all about building customer loyalty through a seamless and relevant experience. It’s all about presenting the peanut butter with the jelly.
Up next in our series, we’ll cover the fulfillment of e-commerce curbside pickup and delivery orders.
This article first appeared in Forbes.