Understand e-commerce for food and beverages
More food and beverages are being sold through e-commerce than ever before. Canadian food and beverage processors have an opportunity online to reach consumers and businesses who are interested in their products. In both Business-to-Business (B2B) and Business-to-Consumer (B2C) channels, buyers are searching and buying more online.
With increased use of social media and the Internet, food and beverage processors can connect with potential buyers and communicate directly with them. Selling online can lead to improved margins and a long-term relationship with customers.
E-commerce is a crowded market with buyers and sellers from across Canada and around the world. There are a number of challenges to develop and implement e-commerce, such as finding human resources with the right skill set, investing in the applications and platforms required to execute the strategy and maintaining a secure online shopping experience. There are also threats to your business that can be external such as cyber-attacks, unfounded poor product reviews and shipping companies that do not execute properly on your behalf. E-commerce also has potential risks associated with it such as alienating some existing customers and maintaining an equitable price position across different channels. All of these factors can impact the development and successful implementation of an e-commerce strategy.
One of the strengths of the e-commerce channel is the direct relationships processors can develop with customers. Selling direct provides the opportunity to reinvest the margins made by retailers in other channels and to generate data that can be used to predict future consumer behaviour. E-commerce does offer opportunities such as selling into markets without bricks and mortar distribution, selling products to your online community and collaborating with other processors on sales and shipping.
Determine the right e-commerce channels
Your target market will determine the right e-commerce channel(s) to pursue. The economic model is different for every sales and distribution channel. If you are selling online in B2B channels you will have different expectations from buyers in the B2C channels. In both B2B and B2C, e-commerce good product descriptions with the right keywords for searches and clear, accurate photos will help sell your products.
If you want to sell your products in the B2B channels you have three strategies to consider:
- Selling consumer packaged goods online to wholesalers, distributors and retailers
- Selling food service products online to wholesalers, distributors and restaurants
- Selling ingredients online to processors
Often, B2B buyers online are well informed and transactions can take longer because there could be several people in the buyer's organization to approve the purchase. Building confidence with buyers in your ability to execute can be an opportunity as these larger transactions might be conducted entirely online.
If you are selling to a retailer there is a possibility your products will be sold Business-to-Business-to-Consumer (B2B2C). This occurs when you sell your products to a retailer and they offer them to consumers on their website.
If you want to sell your products to consumers there several B2C strategies to consider:
- Selling direct to consumers on your own website
- Selling direct to consumers on a marketplace
- Selling to consumers through social media
Selling direct to consumers on your own website allows you to communicate with every customer and interact with them. You can invite them into your online community and try to develop long-term prosperous relationships with them. Depending on your e-commerce sales, there can be considerable resources required to operate this part of your business.
Online marketplaces are destinations for online buyers. If you list your products on these marketplaces for sale, it is possible to take advantage of the considerable traffic some of them generate. It is even possible to sell your products to consumers visiting the marketplace for your competitor's products. Online marketplaces can be like a retail customer for your business. They require attention and resources to manage the relationship and the business you conduct with them.
Social media is emerging as a separate e-commerce channel where products can be purchased within some of the platforms. This can be an opportunity for processors if your target market is on the platform. It is possible to promote and sell your products with paid advertising or to an established online community.
Implement an e-commerce and digital business approach
Marketing food and beverages online does present some differences from selling in other channels. Consumers have the ability to compare prices when shopping online and there are even online tools they can use to perform this function. Shipping costs can be a significant portion of the final price and these can be a reason for consumers to abandon your product in their virtual shopping cart. Margins can be higher than selling into other channels, however it is important to capture all of the fees associated with e-commerce from website hosting to transaction fees from an online marketplace. There are many opportunities to promote your product online and you can measure the effectiveness of your promotions. Your strategy can include influencers subscription boxes and/or bundling product(s) to reduce shipping costs.
If you decide to sell your products online directly to consumers, your website will be the cornerstone of your e-commerce strategy. You can learn a lot about your consumers from their visits to your website with analytics. An e-commerce platform is an important component of your e-commerce strategy. There are a number of options to explore that offer different features such as abandoned cart follow up and supporting different payment gateways. While developing your e-commerce model, security is an important consideration as this can be a concern for online shoppers.
Order selection and fulfillment are integral to your e-commerce offering. Food and beverage products can be challenging to pack and ship with specific requirements such as refrigeration or protecting glass packaging. It is possible to fulfill orders in-house or with a Third-Party Logistics (3PL) company. If you decide to sell on a marketplace, many of these platforms have fulfillment and shipping options. The best solutions for order fulfillment and shipping are effective and efficient.
If you decide to sell your products online, e-commerce integrates with your digital marketing strategy. Sharing content such as recipes is a great opportunity to provide value to your target market and increase consumption. You can share these with your online community through your own email list and/or social media. Social media is a powerful media to reach many consumers and it is beneficial to have a strategy for owned, earned and paid content.
E-commerce is a channel that can be an opportunity for food processors. Similar to other channels, it is still necessary to offer a product that delivers value and meets or exceeds the needs of your target market. Selling products online can deliver incremental sales and margin however there are costs and resources required to develop and maintain a successful e-commerce business.