As we noted in our blog online grocery has reached a tipping point in the US, as the market seems poised to match digital penetration levels seen in the UK, France, and China. To take advantage of the global growth in the online channel will require a shift in category management approaches.
Online there is no longer an actual planned and stacked shelf to pull consumers towards dominant brands, no physical product to hold, and no packs to touch, feel and read. In the online store, market leadership is no longer dictated and perpetuated by the amount of shelf space a brand consumes or where it is positioned on the shelf, but by how brands adapt to manage the new environment.
Once brand manufacturers drove their business by first persuading retailers to stock items, and then ran promotions and shopper programs, and distributed displays to drive sell-through. Online, that equation is turned on its head. Anyone with a product can get online ‘distribution,’ any brand can set up an item detail page and load content, and any shopper can therefore discover the product and make a purchase. It is only then, once the consumer makes the decision to purchase the product, are turn-orders triggered from the retailer to the manufacturer.
Whereas offline brands are accustomed to “pushing” shipments and sales through retailers, now they are learning that online they must create shopper demand to “pull” sales, and thus replenishment orders and shipments. To make this happen effectively requires new rules and metrics to apply to traditional category management concepts.
To learn the practices needed to achieve best-in-class online category management, listen to our on-demand webinar “End of the Endless Aisle: Applying Category Management Principles to the Online Channel.”
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