The eCommerce Imperative in the US
It’s no secret that the pandemic has caused many paradigm shifts in human behaviour, including the digital revolution that saw a seismic acceleration of ecommerce grocery purchases. According to one McKinsey study, the US leapt forward an entire decade in the span of 8 weeks with many shoppers opting for curbside pickup or grocery delivery for the first time. These new behaviours are expected to stay and will require a change in the way brands think about their ecommerce activity from merely ‘checking a box’ to a fully integrated component of their business strategy.
What does this mean for brands?
The number one question received from consumer inquiries in the US is “Where do I find the product?” Until a brand has significant brick & mortar retail penetration, this question can be difficult to answer and result in inefficient marketing spends and missed sales opportunities. Therefore, for new brands entering the US, having ecommerce placement with your product available to ship nationally is crucial to take advantage of early consumer interest in your brand while waiting for traditional brick & mortar call cycles and planogram resets to take place.
A well-integrated ecommerce strategy should not only complement a brand’s brick & mortar strategy but work synergistically. It is first necessary to understand the landscape and the main ecommerce channels: (1) brand-owned direct-to-consumer website (D2C); (2) online marketplaces such as Amazon and Thrive Market; and (3) online retailers such as Walmart.com. Each channel certainly plays a part in overall strategy, but each comes with its own set of challenges – especially early on in a brand’s lifecycle. Online retailers are often gated until a brand has brick & mortar acceptance, as is the case with Ahold Delhaize-owned Peapod. Online marketplaces like Amazon are also more nuanced in the US, with the ability to sell via Amazon Seller Central (fulfilled by Amazon) gated until brands reach a certain size and can build the business case to earn space in Amazon warehouses. Instead, brands must begin with Amazon Vendor Central, which requires fulfilling their own orders either inhouse or via a 3rd party fulfillment provider and generating demand in hopes of one day being able to go direct with Amazon and realizing greater profits.
Given these challenges, it can be beneficial for brands to focus on a direct-to-consumer website to start. D2C can serve to validate brand fit in the US market and leverage more robust 1st party data to A/B test and optimize every part of the brand proposition before distorting greater resources against a brick & mortar rollout. It can also serve as a brand’s innovation playground to test different innovation items with greater speed to market and quick reads on what’s working (or not). And, once the brand generates initial traction, this success story and consumer insights can be used to sell back into brick & mortar retail. Generating demand to build a D2C site into a meaningful sales channel requires willingness to test & learn and adequate marketing investment in tactics such as social media and influencer partnerships, but this strategy of “co-developing” the brand with the consumer can yield significant returns.
The best ecommerce strategy is not one-size-fits-all and can vary depending on product category and brand positioning. If you have any specific ecommerce questions or would like to discuss how your brand might enter the US market, email jenny.thielen@greenseedgroup.com.