Selling Oreos Online

Traditional supermarket chains are scrambling to get a foothold in the e-commerce marketplace.

As some retailers build out internal capabilities for online ordering and out-of-store fulfillment, others are striking formal arrangements with third-party services to offer their alternative-seeking shoppers something until they can get their own operations up and running.

Among recent activity:

• H-E-B, San Antonio, made a formal arrangement with Instacart to offer shoppers in the Houston and Austin, Texas, markets home delivery as quickly as one hour after ordering via Internet-enabled devices. San Francisco-based Instacart, which has operations in 17 cities across the U.S., also works to varying degrees with Whole Foods, Costco and Petco.
• Publix, Lakeland, Florida, began working with Shipt, a similar (but newer) home delivery service that also promises one-hour fulfillment. The service is now available at Publix stores in South and Central Florida, as well as Tampa. Unlike Instacart and other rivals, Birmingham, Alabama-based Shipt chooses to source exclusively from one grocer in each market. It currently also picks from Kroger stores in Dallas, Nashville and Birmingham.
• Target recently expanded a test of curbside pickup services from 11 stores in San Francisco to 10 locations in the New York metro area. Another independent start-up, Curbside, also headquartered in San Francisco, operates the service for Target. Meanwhile, Minneapolis-based Target announced at an August vendor meeting that it would begin testing home delivery of groceries “in the very near future.”

For traditional retailers, accommodating such solution providers is a quick-fix way to address the needs of modern shoppers and, hopefully, stem their potential departure to e-commerce competitors that already offer such services. However, the assumption is that, eventually, these retailers will build out internal capabilities.

Of course, that’s no easy task, as evidenced by the efforts of channel leader Kroger: Despite buying the online ordering-enabled Harris Teeter chain in 2013 and direct-delivery e-tailer Vitacost.com in 2014, Kroger expects to have curbside pickup service available at only 14 stores by the end of 2015.

Virtual Cookies

Although it took a little longer than it should have, the need to establish omnichannel operations is now obvious to everyone in the supermarket industry: More than half of all CPG sales growth through 2018 is expected to come through online purchases, according to estimates from IRI.

And whether they are tiptoeing or blitzing their way into the market, retailers have been more than willing to seek help from manufacturer partners. “Just like manufacturers play a big role in-store, they’re going to play a bigger role online,” General Mills’ Matt Pierre suggested when interviewed recently by Shopper Marketing. “I think CPGs need to drive more promotional investment on these sites.”

Manufacturers also understand the need to devote more of their own marketing attention to e-commerce endeavors, either to address new category competition (think of the impact that online-based product marketers like Dollar Shave Club and Harry’s have had on Procter & Gamble’s razor business), help drive awareness for the newly launched services of retail partners, or simply to avoid wasting an opportunity to directly drive sales whenever possible.

On that last point, Mondelez International in May unveiled a new strategy that ultimately will make “Buy Now” buttons a standard part of nearly all digital marketing activity, including brand pages, social media messaging, video advertising and CRM communications. Handled by ChannelSight, Dublin, Ireland, initial efforts will involve 130 different retailers globally.

“As a global company, we’re looking at converting all our media investments into buying opportunities for consumers by driving e-commerce transactions at key retailers’ websites,” Bonin Bough, Mondelez’s chief media and e-commerce officer, said in a media release announcing the plan.

“In addition to the media monetization aspect, it will also enable us to get more insights into consumer behaviors, preferences and motivations. And leveraging this intelligence in e-commerce is indispensable,” said Cindy Chen, the company’s global head of e-commerce.

As one example, most SKU listings on the product pages at Oreo.com now sport a corresponding “Buy Now” button that spawns a pop-up linking to one or more of four e-tailers: Amazon.com, Ahold USA’s Peapod.com, Target.com and Walmart.com.

The handful of listings that don’t have a button instead link to a store locator that geo-targets various chains (among them Walgreens, Albertsons’ Jewel-Osco, CVS/pharmacy, Ahold’s Stop & Shop and Mariano’s) after a ZIP code is provided. Interestingly, at the top of these results pages, browsers are invited to “Select the links above to buy on-line” at Walmart or Amazon.

Mondelez stepped up its digital game in 2014, reallocating a significant portion of its total marketing budget to the space and striking extensive deals with Google/YouTube and Facebook. The company expects e-commerce to account for up to 10% of total revenue by 2020.