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How food innovators can leverage e-commerce to drive NPD

Post a commentBy Katy Askew , 10-Aug-2017
Last updated on 10-Aug-2017 at 12:57 GMT2017-08-10T12:57:02Z

©iStock/Tashatuvango
©iStock/Tashatuvango

Food manufacturers are often unsure of how to integrate e-commerce objectives into their models but, when done right, it can be a boon for innovation, sales and marketing, Nick Kirby, Bridgethorne’s e-commerce director, tells FoodNavigator.

A level of uncertainty dogs many grocery manufacturers and suppliers over e-commerce strategies. There is general agreement that it is a growth avenue that needs to be tapped. But, it emerged in a recent industry roundtable conducted by shopper management specialist Bridgethorne, food sector professionals remain tentative about how to plan for and integrate e-commerce into their businesses.

Common mistakes

Bridgethorne’s Kirby says even as online sales are growing many food makers are still making some basic mistakes in their channel approach. Most common of these, he suggested, can be witnessed in the sales and marketing departments.

“Too often [more traditional brand or consumer marketing teams] are treating online as just another place to advertise because they are jumping on the digital trend their agencies have been telling them about and they see it as a cost effective way of using their marketing budgets. However, more often than not, through this approach, they are unable to truly understand the impact on and benefit to their brand and sales. If executed properly, digital activation should create a clear call to action for shoppers, a seamless way of facilitating the adding of products to a shopping basket and, in return, creating a way to measure return on investment.”

The approach adopted by sales teams can also be problematic, Kirby continued. Integrating online opportunities into the joint business plans a supplier has with a retailer can limit horizons. “Too often, sales teams, in particular, are seeing online as a small part of their sales. However, what they are not thinking about is the ROPO effect, whereby more and more shopper’s first interaction with a product or brand is online and the influence this has on in-store purchasing. So, the negative impact of not including online in business and activation plans is far greater than what they see as the current contribution to sales.”

A call to action

With e-commerce competition heating up, Kirby said food makers need to develop water-tight strategies to deliver in the online space because the easy days of quick gains could be coming to an end.

“Whilst many manufacturers are benefitting from sales growth in the online channel, many are doing so because they are inadvertently riding on the crest rather than any particular action they are taking to drive this retail channel. However, this will need to change. Earlier adopters are already putting in place the guidelines, plans, resource and capability to win in this channel and those who don’t soon embrace this will lose out for the long-term,” he warned.

According to the e-tail expert, an awareness of online objectives should be developed across departments, from sales and marketing to research and development. “It is vital that manufacturers, whether branded or own label, have a compelling e-commerce strategy in place that has a clear owner in the business to drive internal engagement and e-commerce capability,” he suggested.

Omnichannel informing innovation

E-commerce considerations should be factored into innovation and product development, Kirby continued. "There are numerous ways e-commerce can be leveraged to strengthen R&D pipelines,” he stressed.

For instance, e-commerce can be a useful source of consumer feedback and insight. “Frequently checking the ratings and reviews that shoppers leave on retailer websites for the products produced by a manufacturer and those produced by competitors in the category. This source of real consumer and shopper feedback frequently offers guidance as to whether existing products in a manufacturer’s portfolio, as well as new product launches, are truly meeting the needs and expectations of shoppers and consumers. Support this with analysis of conversations taking place in locations such as recipe forums to identify the challenges faced by home cooks, how food fits into their lifestyles and what food trends are on their radar, there is a rich source of information at any manufacturer’s disposal.”

Research and development departments should keep a weather eye to the needs of the channel, from appropriate packaging to dealing with questions over how to deliver fresh items such as meat or produce in an e-commerce friendly way. However, Kirby cautioned, e-commerce innovation cannot be viewed as an island.

“There is no doubt that e-commerce should be an important consideration in innovation, however, it cannot be done in isolation. There is no such thing as just an online shopper or just a supermarket store shopper, so suppliers will need to think harder about how their products work across channels, whilst at the same time being able to offer tailored execution to specific retailers to suit their particular target customer groups.

“For suppliers, this could mean that such things as pack designs will need to work on the digital shelf as well as they do in a supermarket in order to drive efficiency and effectiveness and being more targeted with their product distribution based upon shopper missions in a given channel.”

Launching bespoke e-commerce products or formats could potentially add complexity to both manufacturer and retailer supply chains, reducing efficiency and increasing costs.

This pitfall can be avoided through an agile approach to innovation and an awareness of the needs of the omnichannel shopper. “Key to executing this successfully will be developing pipelines based on improved insight around the omnichannel shopper, working more collaboratively with key retailer partners earlier in the innovation process to get early buy-in to the final execution and coming up with creative online shopper marketing solutions to drive shopper engagement and sales online,” Kirby suggested.

A nimble mindset will also become increasingly necessary for R&D professionals due to the changes in shopper behaviour underpinned by their online activity, Kirby believes. “A key consequence of shoppers and consumers sharing more information and views about products and trends is that the lifecycles of some products could become shorter. This will mean that food innovation pipelines will need to become faster and more agile to respond to quicker to an immediate shopper and consumer need.”

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