Part 2 of 2: Guidelines for Retailers
For brands and e-retailers, it’s more important than ever to find innovative ways to partner together, especially now that the rise of eCommerce is offering so many new opportunities for growth. My recent conversations with two industry experts, Tim Dorgan of CROSSMARK and Chris Drumey of United Biscuits, served as an excellent primer on making this online partnership work.
In this post, I’ve provided a condensed version of Tim Dorgan’s and Chris Drumey’s recommendations for strengthening the brand-retailer partnership—and added my own thoughts—as presented at a recent webinar. This blog is the second of two parts and features guidelines #7-12, which are intended for retailers. Click here for guidelines #1-6 for brands as posted in my previous post.
7. Treat CPG companies as partners, not vendors
What’s in a name? Plenty, especially when you’re making the distinction between calling a brand a “vendor” or a “partner.” In our experience, an e-retailer will be much more successful in working with brand teams if they treat them as partners, or to put it slightly differently, as clients. Because in many ways, this really is a client service business.
The fact is, we’re still very early in the game for eCommerce. This is a learning experience for all of us—brands and retailers alike—and it’s in a spirit of cooperation that both parties can help each other achieve success.
To that end, the e-retailer needs to be flexible and willing to customize the brand relationships. A retailer does not want to tell a CPG team that they’re required to spend a certain amount with the retailer, or spend it on specific initiatives dictated by the retailer.
Nor does the retailer want to simply offer pre-set programs in return, in which the brand is required to fit into a rigid template. Instead, customize your programs for the CPGs you’re working with. One benefit is that when they get test funding, they’ll be more eager to spend it with you.
Unfortunately, for organizational and cultural reasons, many retailers are unable to adopt this model. It’s too bad, because it makes it more difficult for them to reach their goals.
8. Share your data freely with your brand partners
One of the biggest advantages of online retailing versus brick and mortar is the amount of data available on shopper behavior and preferences. When you’re tracking visits, page views, clicks, conversions, searches, basket items, and many other variables—you can get a very precise understanding of how the shopper is shopping and where they’re spending their money.
But rather than holding the data close, it makes sense for e-retailers to share it with their CPG partners. The CPGs welcome the new data. They’re generally running so many categories, brands and SKUs that they can’t come close to tracking everything and doing the proper analysis.
By sharing really rich data with the brand team, you’re helping them gain key insights into how to truly optimize their offerings. They’re able to ensure they’ve got the right keywords and product descriptions to assist with search, display their product shots in the most impactful way, and more effectively validate their media selection.
The bottom line is they’ll appreciate your willingness to make your website work for them. You’re showing you want a collaborative relationship in which you and the brand can both gain valuable knowledge together.
9. Be on the lookout for qualitative insights amidst the vast quantity of data
As we were saying, it’s wonderful to have and share all that data. But a word of caution: You can look at reams of data and still not have the presence of mind to pick out the truly significant point—the nugget if you will—that serves as your pivotal insight in growing your eCommerce business. We call this being data rich and insight poor, and it generally happens when brand and retail teams leave their qualitative hat at the door.
Here are a couple of examples. When I (Tim) was working for an ad agency on the Philadelphia Cream Cheese business, there was all kinds of data on why the brand wasn’t doing as well as we wanted.
People pored through the data, but it took a copywriter to glean a single key insight—namely, that a serving of Philadelphia Cream Cheese had about half the calories of butter or margarine. This was crucial, because cream cheese was considered an indulgent purchase, and by pointing out that it was preferable in terms of calories per serving, we gave consumers permission to buy.
Or take the case of Peapod Interactive, the online grocery operation. They invited their CPG partners to participate in the back-end of the operation, which consisted of picking and packing grocery items to fulfill orders, and then go on a ride-along with the delivery drivers who brought the orders to the consumer.
This gave the CPG team a great deal of hands-on know-how of what went into the operation, and combined with the ethnographic research and other data they had at their disposal, helped them tease out some critical insights that led to a win-win for brand and retailer alike.
10. Help your new CPG partners experience the “Aha” sales moment
It’s not unusual for a new CPG partner to look at eCommerce as a “new” channel. But the reality is, they’re probably already doing a fair amount of business in this channel, to a broader degree than they’ve ever realized.
It’s important for the e-retailer to do everything to bring this to the brand team’s attention, since this is a crucial moment when the brand folks decide on the level of resources they want to commit, and how they wish to interact with the e-retailer.
Also, as an e-retailer, you’ll want to provide data to the CPG team that shows them that online sales and brick-and-mortar sales aren’t simply drawing from the same customer spend. Rather, the data shows that online is incremental to brick-and-mortar, above and beyond what customers buy in-store.
We have data that shows when people are doing multi-channel shopping—researching online and buying in a physical store, for example—they’re 2.5X more likely to buy than if they were simply shopping in-store.
Or consider that in the UK, which has a more mature, e-grocery market than the U.S, the online grocery business accounts for “only” 5% of grocery sales. But look deeper and you see it accounts for 25% of growth, what we call “punching above its weight.”
11. Test and learn with your eCommerce partners over the long term
We’re at a point in the evolution of eCommerce where it’s still all about learning and crafting your best market strategy. Today’s brand teams need to be willing to commit to ongoing testing now and in the future, and to partner with the e-retailers on these initiatives over the long haul.
The problem for you as an e-retailer is that the brand folks may be looking at it as doing a test here and doing a test there, and insisting that the testing pay out during the next one or two business cycle. This is short sighted, and doesn’t serve them well, or you.
What you can do is convey the importance of a long-term testing strategy to the CPG team. Bring it back to the fact that even though a test may not pay immediate financial dividends, it could be instrumental in developing a profitable sales strategy for the brand for many years to come. For example, doing a test with your heaviest users can serve as a good guidepost for interacting with your entire customer base.
This is a key point of differentiation between the advanced players in the eCommerce market and those who’ve still got a ways to go.
12. Look to broad-scale execution in the future
You never want to put a stop date on testing. It should always be ongoing. But we will reach a point of maturation in the eCommerce channel where the greatest emphasis will shift from test-and-learn to broad-scale execution. We’re not there yet. But, working with your brand partners, be ready down the road for full-throttle deployment.
For a more detailed look at brand and retailer guidelines, download our recent White Paper: 12 Breakthrough Ways Brands and Retailers Can Partner More Effectively Online. Or click here to view the full recording of the webinar.
