How Beverage Brands Can Win Online
Back in my day, you used to have to walk barefoot uphill both ways to purchase your favorite beverage from the local grocery store. While part of that statement is an exaggeration, it wasn’t too long ago that physically making a trip to a brick-and-mortar retailer was the only way to purchase a refreshing packaged beverage.
For many decades, beverage brands used this consistent path to purchase to master a highly effective sales and marketing model. All was well in the beverage industry, until the internet started to disrupt the traditional way of shopping and created an uncertainty around its “tried and true” model. Today, just about every consumer has a retailer located in their pocket. If a consumer is thirsty, it only takes a few taps on a smartphone to have a beverage delivered within hours.
The desire for convenience is rapidly changing how consumers shop for beverages. Online sales are expected to sustain their recent aggressive growth rates, as brick-and-mortar retailers prioritize e-commerce and omnichannel fulfillment options. To meet the evolving needs of the consumer and win online, beverage brands must overcome additional challenges caused by e-commerce and expand their strategic thinking past the bounds of the existing sales and marketing model that worked in previous decades.
Current State of Beverage E-commerce
Selling online requires a beverage brand to overcome an additional layer of challenges. Beverages are heavy, often come in large pack sizes, are easily susceptible to damage, and sometimes require a temperature-controlled supply chain. While those challenges are not necessarily unique to selling beverages, solving them usually requires scale to limit the impacts to unit economics. When you are shipping individual parcels to customers online, you lack the scale to provide a comparable pricing model to brick-and-mortar retail. This has historically held back beverage’s online penetration compared to other CPG categories. In fact, only about 3% of total food and beverage sales come from online, thus giving executives an easy statistic to highlight when considering the allocation of resources to digital initiatives.
As is the case for almost all grocery CPG categories, however, being short-sighted regarding e-commerce trends can be the Achilles’ heel of a beverage brand. Consumer preferences are evolving, and more consumers than ever are now buying beverages and other groceries online. Coresight Research’s U.S. Online Grocery Survey 2019 found that 35 million additional shoppers bought groceries online compared to the previous twelve months. Furthermore, eMarketer predicts that grocery – specifically food and beverage – will rank as the fastest-growing product category online in 2019.
Beverages are driving much of this growth, accounting for about 13% of total online grocery sales in 2018. An April 2019 survey from Bizrate Insights and eMarketer found that 35% of respondents purchased non-alcoholic beverages online in the past month, making it the third most popular category for digital food buyers.
What Should Beverage Brands Do to Win Online?
The growing interest in shopping for beverages online has been complemented by the willingness of retail partners to invest in omnichannel fulfillment options, such as click and collect and on-demand delivery. These options are gaining mainstream popularity from consumers who love their convenience, and they also provide the much-needed scale that improves unit economics to an acceptable spread compared to physical retail pricing.
With mega retailers like Walmart, Target and Costco aggressively adding more of these fulfillment options, it is expected that omnichannel retail formats will account for more than 80% of global online grocery sales in the next five years. Beverage brands should embrace this opportunity for growth, partnering with retailers on strategic omnichannel initiatives that are beneficial for both parties.
Avoid a “One Size Fits All” Mindset
With better availability of alternative fulfillment methods, consumers now have the option to shop small, buy in bulk, or whatever way best fits their current needs. Beverage brands must optimize product variants, pack sizes and configurations to take advantage of these different online shopping behaviors. For example, Walmart provides various fulfillment options that each caters to shopper behavior in a different way:
- Walmart.com pureplay: A shopper might stock up on bulk beverages to fill their pantry or prep for a holiday party.
- Walmart.com grocery pickup and delivery: A shopper might add a 20-ounce beverage to satisfy an immediate craving or a 2-liter bottle for this week’s family meals.
With each retailer having slight variations to its omnichannel capabilities, digital processes and customer behaviors, it’s important to have the mindset that there is no such thing as “one size fits all” when it comes to selling beverages online.
Invest in Product Content
One of the biggest keys to winning online is leveraging product content as a strategic differentiator. Beverage brands must embrace the opportunity to provide shoppers with more detailed information and stand out on the digital shelf. Approaching product content optimization as a process (not a project) is a proven way to drive search visibility and conversions on retailer websites. When it comes to search visibility, brands need to focus on appearing at the top of search results for the most relevant, high-volume keywords. As for optimizing for conversion, it’s important to invest in robust, high-quality product page content, including copy, images and video.
Stay Top of Mind
Today’s world is a noisy place, with American consumers seeing more than 4,000 advertisements every day. Any beverage brand that is seeking consumers’ attention faces the relentless struggle to stay top of mind in a crowded, competitive online marketplace. The internet has the ability to level the playing field in brand visibility, and with online beverage sales just getting started, the battle for digital mindshare becomes as important as market share. To ensure your beverage brand is getting more than its share of the consumer’s attention, consider the following tactics:
- Amplify your customer base by encouraging user-generated content that will reach larger audiences.
- Ensure you stand for something that is beyond your product, thus allowing consumer engagement to be more impactful.
- Partner with influential brands in different industries to create lasting impressions.
Compared to other CPG categories, packaged beverages are some of the most difficult products to sell online. They’re heavy, come in large pack sizes, can be easily damaged, and sometimes require temperature control. Thanks to the increased availability of alternative fulfillment options such as click and collect and on-demand delivery, however, the online channel now represents a more margin-friendly opportunity for beverage brands. To take advantage of this opportunity, brands must embrace omnichannel, avoid a “one size fits all” mindset, invest in their product content, and work to stay top of mind.
OneSpace Can Help
OneSpace’s suite of tools and services helps brands centralize, optimize and publish product content that wins top position on multiple online retailers at scale. Contact us to learn more.