“Digital transformation” is a buzzword that consistently dominates CPG marketing discussions, much like “omnichannel” dominated the conversation 5-10 years ago. Despite all the buzz, the industry has made little progress toward the interconnected digital shopper experience that most CMOs envision. The headwinds are real: in addition to the common challenges every company faces in implementing a digital transformation strategy, CPG marketers currently face a uniquely tumultuous economic environment, shrinking margins, diminishing customer loyalty and, often, extraordinary pressure on their budgets. They must do more with less, so prioritizing digital transformation may seem like a pipedream.
But the consequences of slow digital adoption are real. Brands that move too slowly are losing the jump ball for potential customers to their more digitally-forward competitors. And while acquiring new customers has always been near the top of the list for any marketer, the advantage of capturing that new business–the first mover advantage–is more important than ever due to the changes the evolving digital landscape has brought.
A New Era: The Digital Basket
The shift toward click and collect and delivery has upended loyalty as we know it in the grocery space. Consumers who buy a basket of groceries online are typically met with the option to repurchase those very same items in a subsequent purchase. This is the digital equivalent of walking into your local brick-and-mortar grocery store and having an employee greet you by saying, “Welcome back, Mrs. Smith! Here is a basket full of all the items you usually buy. Feel free to head straight to the cash register to check out.” If a product gets into a digital basket initially, simple routine and inertia will keep the brand in that basket. A recent Ibotta survey supports this “once in basket, always in basket” theory–87% of Savers say that once they find a brand they like, they’ll stick to it.
Further, online shopping gives brands an opportunity to stand out from all the other noise competing for consumer attention. It’s an unfair SEO advantage because searching for products differs in-store vs. online. Let’s say you’re shopping for mayo. When you shop in a store, you have to navigate thousands of other products across several aisles before you even get to the mayo section, and then you have to choose from a bevy of options. In an online scenario, you just input “mayo” in the search bar, and you’ll be shown a list of a handful of mayos and very little else. Just by having a digital offering, brands can stand out from the clutter, and if they leverage a couple of basic best practices they can ensure that they’ll end up in the basket.
How to Capitalize
Grocery e-commerce presents unique opportunities for driving trial. In any environment, cash back enables brands to drive trial by lowering the perceived risk of trying something new. A Wirecard study found that 75% of consumers say they are likely to make another purchase after receiving an incentive. Cash back rewards, ideally within a pay-per-sale framework, are efficient and can make products even stickier. In the digital environment, this phenomenon is accentuated by the clean and simple redemption experience and an ability to stand out in the UX more clearly. Additionally, it opens the door to new opportunities, such as a true “switch and save” that offers shoppers cash back when they switch from a competitive product already in their cart.
Additionally, brand advertisers can use retail media networks to drive exposure for their products. Revisiting the mayo example, brands can pay for top placement when a shopper searches for mayo. They can also run ads to drive broader awareness. Best of all, brands can combine the best of both by combining cash back incentives with their retail media to generate awareness and then maximize conversion with a compelling call to action.
Timing is Everything
While grocery shoppers continue to shop in physical stores, the paradigm has shifted, and the demand for online grocery and delivery is here to stay. In fact, most transactions on the Ibotta Performance Network (IPN) occur online.
Brands can and must get into baskets today to capitalize on the new first mover advantage and because the digital landscape for CPG will only get more complex. Now is the time to invest in getting in the online consumer’s basket, as those dollars go further and the baskets are stickier compared to traditional tactics. While digital transformation is hard, grocery e-commerce presents low-hanging fruit that brands can pick now to gain a competitive advantage.
