Amazon knows the importance of retail’s new holy trinity: bricks, clicks and marketplaces – but how can fast moving consumer goods (FMCG) brands ensure they remain relevant and profitable in a post-Covid world where digital dominates?
The world’s largest internet company by revenue is increasingly how we shop online: once just a bookseller, it is now a logistics and technology behemoth with its sights firmly set on all parts of the retail sector, including groceries.
Indeed, it’s even eyeing up the British high street, with a number of its cashless Amazon Go convenience stores mooted across the UK. Make no mistake, these stores are no cash cows, but a strategic play for ever-more digital dominance and a showcase for the FMCG brands it wants to attract online. Soon, if you’re not there, then you might not be anywhere.
Few FMCG brands own their own bricks & mortar stores, or would want to – and if they do they tend to be experiential such as Nespresso shops/coffee bars, M&Ms superstores and Haagen Daz’ cafes. Most are in thrall to the middleman – the supermarket, limited by room on the shelves and the whims of the buying teams and without direct access to, or relationship with, the customer and the data that reveals.
Many will be looking at building brand equity and relationships (even sales) on their own digital properties in order to garner valuable first-party data, build direct relationships with customers and showcase a brand and its values. Direct to consumer (DTC) is a growing trend, with the likes of L’Oreal, Procter & Gamble and Unilever all looking to beef up their e-commerce offerings. Yet for all but a handful of FMCGs, scaling DTC sales will be almost impossible to profitably achieve.
For while e-commerce is booming, accelerated by the coronavirus pandemic, by far the biggest driver of growth is marketplaces (including the supermarket’s own online offerings). The Office of National Statistics recently announced that online shopping in May 2020 accounted for 33% of UK retail sales, from just (a still considerable) 19% four months earlier.
It is why the vast ‘warehouses’ of marketplaces are becoming increasingly tempting. In the US, spend on marketplaces accounts for almost 60% of online sales; the UK and Europe are catching up fast. It’s predicted that 72% of brands will be on Amazon in the next five years, and Amazon alone attracts almost 3,000 new sellers everyday globally.
However, it is not a case of ‘list and they will come’. Sellers must employ sophisticated strategies just as they would do in search or social marketing.
This is an emerging and complex area where you might have to pay to play, and you certainly need an understanding of the ecosystem at large.
From sponsored product advertising to site and browser SEO and brand stores, everything should be geared towards ensuring your concession is on brand and can leverage your owned assets elsewhere.
Marketplaces such as Amazon, Ocado or even a supermarket’s own internet offering, give brands the performance piece and, with the right strategy and attention, can even enhance a brand’s image.
The Coca-Cola Company is one FMCG firm which is using scaling up strategies to ensure its brands are “within a click’s reach of desire” in the wake of Covid-19. As well as building its click & collect and DTC solutions, it is also enhancing its presence on the virtual aisle.
The company is boosting investment in digital imagery, increasing in-app visibility with online grocers and optimising content for search engines. Coca-Cola China partnered with a large e-commerce platform to increase revenue by 65% during the recent 618 Festival, the country’s largest mid-year shopping event.
A full-service approach should encompass consultation, strategy, advertising support and content creation in order to build superior direct-to-consumer relationships and improve customers’ paths to purchase – in fact 54% of all product searches now happen on Amazon, according to a Jumpshot report.
Marketers must look at a hybrid strategy that encompasses a physical presence, transactional and branded websites and, crucially, marketplaces, which offer retailers their biggest opportunities at scale.
Each has a part to play and should be considered together, rather than in isolation, in order to better leverage the advantages of each. After all, as Amazon knows, a strategy of bricks, clicks and marketplaces, all in harmony, will ensure a marketer can address shoppers wherever they are.
