Food industry in 2018 – e-commerce trends to watch

Food industry in 2018: Trends in e-commerce

Taking advantage of the development of the e-commerce channel will be a priority for an increasing number of food company strategists in 2018. Andrew Pearl, director of EMEA market strategy and analysis at Profitero, an e-commerce analysis company, presents four trends to watch on the channel in 2018.

2017 was another significant year in the development of digital commerce and online grocery.

We witnessed Amazon’s $13.7 billion acquisition of Whole Foods Market as the e-commerce giant accelerated its grocery ambitions.

The growth of meal kit providers such as HelloFresh and Gousto continues. The number of searches via mobile devices and voice assistants Google Home and Amazon Alexa has increased. British grocery giants Tesco and Sainsbury’s have expanded their hourly grocery delivery services.

Earlier this year, Profitero surveyed 134 brands from over ten industries (including CPG brands) to understand how brand manufacturers are shaping and planning e-commerce in 2018.

Survey respondents identified year-over-year e-commerce growth as their most important KPI, with 47% of respondents from CPG brands explicitly setting their e-commerce growth goal for this year to be greater than 25%.

Given that respondents to Profitero’s global benchmarking study ranked year-over-year e-commerce growth as their most important KPI, it is clear that digital technologies will continue to dominate the agenda in 2018.

As digital solutions dominate the growth strategies of global consumer goods brands in 2018, here are four key trends to watch next year.

Mobile first

For example, in the UK, mobile transactions now account for over 50% of all e-commerce transactions in the UK.

As the internet is the fastest-growing grocery sales channel and consumers demand an increasingly seamless shopping experience, grocery and CPG brands will need to optimize their product images, titles and descriptions to provide a much easier shopping experience on mobile devices.

We know that the vast majority of online grocery shoppers don’t go to the product detail page to check and read all the product information – instead, they simply add products to their cart via the thumbnail. Therefore, hero images prepared for mobile devices aim to make the online shopping experience even better.

A study by Unilever found that Magnum sales increased by 24% when hero images were used, highlighting why optimizing your content for mobile devices can have a big impact on your bottom line.

Voice search

Given that over 20% of mobile searches were conducted via voice in 2016, focusing on optimizing products for voice search is no longer a long-term priority.

The story continues

Both Morrisons and Ocado launched Alexa apps earlier this year, allowing customers to add groceries to their shopping lists by voice, and a recent survey by IGD shows that three in 10 (28%) shoppers are interested in using a voice-activated device in online stores . home to add food or groceries to your online cart.

The launch of Amazon’s Choice – Amazon’s product designation that identifies “best fit” products in response to a shopper’s query or voice request – in the US has resulted in Alexa voice-activated devices that recommend top-selling brands in the food and grocery sectors.

With other retailers likely to adopt similar capabilities in the near future, achieving this designation will likely become an increasingly competitive necessity.

Amazon hasn’t disclosed how products get on Amazon’s Choice list, but they are usually highly-rated, well-priced products that qualify for Prime shipping.

Increasing competition from digitally native brands

Reflecting Amazon’s launch of its own-label Wickedly Prime range in the US, many established food brands are beginning to closely examine these innovations thanks to the shorter (and faster) path to market when marketing through an online channel.

In the U.S., we recently saw Walmart-owned Jet.com launch a private label business called Uniquely J, offering dozens of grocery and home goods products aimed at millennials.

We also launched Brandless, a direct-to-consumer website where you can buy everyday items like coffee, peanut butter, toothpaste and hand soap. All products are organic, unbranded and sold for a single price point of $3.

Could Amazon be looking to bring Wickedly Prime to other international markets? Could concepts like Brandless appear elsewhere?

Continued focus on online accessibility

Adopting half-hour delivery as the norm will require significant optimization of delivery channels.

Creating specific online restocking strategies and monitoring performance daily is already providing significant benefits to many food brands.

E-commerce data analytics platforms provide access to daily out-of-stock data, enabling brands to immediately respond to any issues that ultimately lead to lost sales for both the brand and the retailer.

A clear focus on products causing lost sales can not only result in significant improvements in availability (both in-store and online), but also reduce the level of lost sales, typically accounting for 3 to 5% of monthly turnover.

The ability to respond quickly and innovate appropriately will provide brands with the increased annual growth required of them.

“Food Industry 2018 – E-Commerce Trends to Watch” was originally created and published by Just Food, a brand of GlobalData.

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