Substantial change to people’s shopping habits, such as surging e-commerce and home delivery, has been one of the consequences of COVID-19 and now some FMCG brands are stepping up their efforts to sell directly to consumers.
Bypassing the big supermarket chains and other retailers means companies like PepsiCo and Kraft Heinz may be able to keep more profit for themselves, but at least as important is the ability to experiment with e-commerce and collate valuable customer data that is usually retained by retailers.
As reported by the Financial Times, PepsiCo is using its PantryShop site to sell boxes of snacks and drinks that can be delivered to any zip code in the contiguous USA, while Kraft Heinz has launched a “Heinz to Home” delivery service in the UK.
Probably in recognition that demand for processed food has grown during the coronavirus crisis, the Heinz to Home initiative offers three parcels, consisting of an “essentials” bundle, a collection of sauces and condiments, and a baby food package.
Priced between £10 and £20, the company also charges a £3.50 delivery fee, although that is waived for NHS and other essential workers.
According to the FT report, coronavirus has made direct-to-consumer operations more viable despite the obvious challenge of having to factor in delivery costs.
“Different companies have had direct-to-consumer ambitions, but they haven’t found the right market circumstances,” observed Steve Chantry, Kraft Heinz’s commercial director for northern Europe.
“For sure there is potential, for us and many other companies,” he added. “But I think the value in this is as much in the data, testing and learning as it is in any scale commercial proposition.”
And consumer data is the big prize. FMCG executives told the FT that they have no plans to replace retailers on a substantial scale any time soon. Instead, they are trying to improve their understanding of e-commerce and collect useful customer data, such as who online shoppers are and how they behave on the sites they visit.
Gibu Thomas, for example, the head of global e-commerce at PepsiCo, said he didn’t expect D2C to “remotely match” the scale of traditional retail channels for companies such as his.
But he added that PepsiCo was gaining valuable insights from its new projects. “Obviously we want any business we get into to be sustainable, but the value can come in many different ways,” he said.
Sourced from Financial Times; additional content by WARC staff