Americans love snack foods. In fact, a majority of the snacks purchased globally are bought by Americans. Today, busier lifestyles are forcing people to eat differently, as they replace full meals with smaller snacks. These busier lifestyles are also changing how consumers shop for food, as Americans rarely have time to roam the aisles of physical retailers.
This perfect storm of conditions has created a substantial opportunity for snack food brands. Not only are Americans buying more of these types of foods, but they’re also diversifying the channels through which they purchase them. Today, an increasing number of consumers are now buying snacks online, whether through pureplay e-commerce, click and collect, or subscription services.
To take advantage of this opportunity, snack food companies such as General Mills, The Hershey Company, Mondelez and PepsiCo need robust digital shelf strategies that focus on standing out among the competition and winning online. Here’s everything your brand needs to know to succeed.
An Overview of the E-commerce Snack Food Market
The U.S. snacking market is estimated to reach $64 billion in annual revenue in 2018 and grow at a 4% compound annual rate through 2021.
Even though the macro food landscape has yet to fully mature online, the snacking category is among the top purchased, with 42% of consumers having purchased these types of products online. According to Slice Intelligence, online sales of snack foods grew almost 35% from January 2017 to January 2018.
This could be partly attributed to the snacking category’s broad value propositions. According to IRI, treating and snacking serves multiple roles for consumers, from true indulgence and hunger satisfaction to providing energy/fuel. Additionally, many of snacking’s diverse sub-categories have long embraced the power of digital commerce, especially healthy, functional snacks.
Which Snacks Sell Best Online?
Not all snack categories are created equal when it comes to online popularity. Certain categories just don’t have the same growing power online as they do in traditional retail. In the Candy, Cookies and Salty Snacks categories, for example, e-commerce is driving a much smaller proportion of growth compared to Wholesome Snacks, where the digital channel is responsible for 42.5% of absolute dollar growth. Other categories that are seeing significant dollar growth from e-commerce include Crackers (37.8%) and Nuts (26.4%), according to Nielsen.
This data corresponds with a recent analysis by One Click Retail, which found that the five best-selling snack food brands on Amazon and their share of sales for the year ending June 2018 were:
- Planter’s (Kraft Heinz): 7%
- Annie’s (General Mills): 5%
- Pepperidge Farms (Campbell Soup Co): 4%
- Jack Link’s: 4%
- Frito-Lay (PepsiCo): 3%
Prioritize Click & Collect
Compared to other CPG categories, food and beverage has been slow to adopt e-commerce as a sales channel due to the inherent difficulties of shipping individual items. This is no less true for the snacks segment, where heavy items with low margins, like soft drinks, can be expensive to ship. Fragile items like crackers and chips are easily damaged, and perishable products like meat and cheese typically require temperature control or they’ll go bad before they arrive to the customer.
For these reasons, click and collect presents a substantial opportunity for snack food brands, particularly those whose products are not suited for traditional e-commerce. While categories purchased via click and collect tend to vary depending on the type of retailer, a recent Nielsen study found that shoppers across all store types (grocery, mass and club) are using click and collect for snacks.
This means that snack food brands should prioritize retailers that are actively building out their click-and-collect capabilities, such as Walmart and Kroger.
Experiment with Subscription Services
Subscription services and automated ordering are another popular fulfillment option for online snack purchases, with 29.8% of all “autopilot consumers” using this option to order snacks. This is more consumers than are using the services for essential baby care categories such as diapers, wipes or formula.
In addition, Nielsen found that snacks accounted for six of the top 10 online grocery categories fulfilled via subscription services.
This means that snack food brands should be testing their own direct-to-consumer subscription services as well as making sure their products are available through third-party services such as Amazon Subscribe and Save and Amazon Dash buttons.
Stand Out Online
Despite the popularity of snacks among online subscription orders, Nielsen found that stocking up is one of the primary trip types for online snack purchases. In fact, 27% of online snack orders were considered stock-up trips. This, according to Nielsen, “is the realm of snack purchases that fosters impulsive, exploratory and open-minded consumer behavior.”
Nielsen also found that consumers are more open-minded when they’re shopping for snacks online than when shopping in brick-and-mortar stores. In fact, 22% of consumers shop online for snacks with no brand in mind, while only 14% remain brand-agnostic while snack shopping offline. Data from OneSpace supports these findings, with unbranded searches making up 63% of the top 500 search terms in the Chips & Crisps category.
To succeed online, snack food brands must therefore focus on standing out among competitors and increasing their visibility on retailer websites, particularly in search results. Paid ads can be effective, but what’s even more important is appearing at the top of organic results when consumers search for the terms that are most relevant to specific products.
As the data above shows, consumers are searching for more than just branded keywords. To capture the growing segment of undecided online snack shoppers, brands must also rank well for unbranded, attribute-based keywords. Doing so requires a robust, data-driven product content strategy that carefully incorporates a variety of short-and long-tail search terms while also keeping the customer experience top of mind.
Don’t Neglect Packaging
Visibility on retailer websites means nothing if the customer is unhappy with the product when it arrives at their doorstep. According to the 2018 IRI Snacking Survey, almost 40% of consumers don’t consider purchasing snacks online due to concerns about products being crushed or melting in extreme temperatures during transit. For snack food brands that sell through pureplay e-commerce channels, this means it’s crucial to redesign product packaging to survive the final mile of delivery. This could be a valuable marketing proposition to include in online product listings.
Whether through pureplay e-commerce, click and collect, or online subscription services, today’s consumers are increasingly purchasing their snack foods through digital channels. What’s more is that these online consumers are less brand loyal and more open to discovering new snack foods than when they shop in stores. For brands, this means that success requires a robust digital shelf strategy that makes products stand out among the competition on retailer websites. It also requires redesigning product packaging to survive the final mile of delivery.
Joshua Schall, MBA has an 11-year background in the emerging and intersecting CPG/FMCG categories of functional food and beverage and nutritional products.
He currently is the owner of J. Schall Consulting, an Austin, TX-based boutique management consulting company that focuses on digital growth strategies for CPG/FMCG brands that range from pre-launch to portfolio companies with $500M in yearly revenue.
Joshua enjoys an active healthy lifestyle but still finds himself spending way too much time scanning social media and digital grocery aisles for new consumable brands.