October 28, 2020

How to take the experiential leap as an FMCG

FMCG customers have had access to well-designed applications and websites for some time, so how do businesses succeed in the experiential leap from B2B2C to D2C?  Here, Peter Ballard, Co-Founder of Foolproof, a Zensar company, explains how.

Purchase experiences have changed. More people are shopping online for goods while fewer people are able, or want to, go in-store. In response to shifting customer behaviour and disruption to normal distribution channels, FMCG brands should take this time to think about their route to market.

Brands in this sector who can commit to serving customers direct could experience benefits such as higher profit margins, greater speed to market, more control over branding and direct access to customers and their data.

When combined with traditional chain stores experiencing a 119% increase  in first-time purchases through e-commerce, and online sales now accounting for 40% of the growth in FMCG sales – there’s a compelling reason for FMCG brands to act now or lose out. 

The direct to consumer experience gap 

Despite the need to adapt and begin selling direct, today’s direct to consumer (D2C) offerings could be described as ‘immature’. Especially when compared to the bastions of direct to consumer selling like Amazon.

This is because many of the D2C routes brands are exploring are experimental marketing campaigns and not sustained attempts to genuinely meet and serve new and emerging customer needs. This creates a gap between the brands, who have always served customers direct, and the new D2C offerings from FMCG brands. 

This experiential gap exists because the customers who are being targeted by these D2C offerings have had sustained access to well-designed applications and websites for a decade. Websites where 2-day fulfilment of online orders is the norm – as is an intuitive experience and slick user interface. As such, many FMCG brands face a challenge if they want to compete. They have to respond and design out experiences which guarantee a quality end-to-end purchase. 

Going direct for the first time 

Direct to consumer offerings could see you in competition with your retail partner. Take Heinz who recently launched selling direct to customers online. In time, they need to have a better, more customer-centric purchase journey, as well as a stronger customer value proposition than Tesco, for would-be purchasers to keep buying direct. 

It’s not easy, but it is possible, and begins with creating a compelling business case that details to your stakeholders how this will alter relationships with existing partners and how you’re going to scale your offering to rival them in the long run. 

As global conglomerates, FMCGs have logistics in their favour. For example, Unilever maintain a supply chain for hundreds of brands globally. This means they have an abundance of latent knowledge and experience that can be redirected to perfect their fulfilment logistics nationally and internationally; strategically and technologically when thinking about D2C too.

This puts FMCGs on a similar pedestal to the Amazon’s of this world, opposed to national shopping conglomerates who, during lockdown, were shown to struggle to fulfil orders in a timely and efficient manner. 

In short, it’s possible and lucrative to serve customers direct. However, there are risks if you underestimate the importance of great design and best-in-class logistics in your new go-to-market product and distribution strategy. 

Setting yourself up for direct selling success 

Customer feedback and insight-driven design are the key to creating D2C offerings that look great. However, you need the technical and logistical capability to successfully deliver if you are to rival existing B2C conglomerates like grocers and online marketplaces. 

As a new D2C provider, you need insight to get a clear picture of who your direct customers are. Ask yourself, what do they need and want? And how can you as an FMCG brand respond to these needs? Typically, retail partners have more direct access to customer data on purchasing behaviour – you need to work to circumvent this loop.

As a new entrant to serving customers directly, you need to understand your customer segments, consider the purchase journey for each and improve the likelihood of purchase. You should also work iteratively to continuously improve these offerings – focusing on common design, interaction patterns, behavioural insight and analytics will help you here. 

However, insight alone can’t fix your purchasing experience or provide fulfilment. You need to be prepared and equipped to manage and guarantee the whole experience of a customer order lifecycle. This means dovetailing your existing B2B logistics with an all new B2C service design and flow. 

This is because purchases include fulfilment and delivery, customer service and support. Getting this right is equally important as a seamless front-end user experience. Foregoing one undermines the other entirely. Any experience is only as good as its weakest point, this includes those that the customers cannot immediately see. 

Which FMCGs are serving customers well? 

Kraft, Pepsi Co (Pantryshop, Snacks.com) and Dollar Shave Club (since acquired by Unilever) are all examples of brands who have created D2C offerings. But, no single FMCG brand has got this entirely right. The offerings although new, are often novel, and campaign-led without reference to wider business strategy. Many of them also have poorly executed customer-facing elements in their purchase journeys. 

Kraft’s Heinz To Home, launched in response to Covid-19, aggregates the most loved Heinz products into discounted bundles. When compared to products available from retailers, Heinz To Home has a clear value proposition – framed as helping customers in difficult times, when there’s a lack of availability and in-store access. 

Since launch, Heinz have evolved the proposition beyond the initial pandemic response to include seasonal gift packages, leveraging their iconic family-orientated brand.

Products that form the Heinz to Home experience are clearly visible and easy to understand. They’re also priced simply which avoids unnecessary choice and complexity. Customers don’t have to register before purchasing and express checkout options are available. 

Although successful and usable, the Heinz to Home experience does play on the safe side with little indication of the current success or future scale. 

Common pitfalls with new D2C experiences on the market

New direct offerings from FMCG brands feature common pitfalls that detract from the user experience and reduce the likelihood of purchase. 

These include unnecessary mandatory fields, poor findability of key elements in journeys (such as get-started buttons), a lack of bulk ordering options, and an absence of consistent ordering patterns from product to product, page to page. 

Other sticking points include illegible product information, poor imagery across devices and badly designed checkout experiences underpinning purchases. All of these elements, when executed well, help people to make purchase decisions with ease whilst having a positive experience. These issues speak to tagging on customer touch points as an afterthought rather than aiming to provide a great user experience from the start.

Top three areas to focus on when creating new D2C offerings 

Having covered off successes and pitfalls, here’s three simple pointers which will help you succeed with creating D2Cpropositions.

  1. Be more customer centred than your competition

As a new D2C player, you should focus on understanding your customers and delivering better than your competition on your customers’ unmet needs. This will help you create better experiences and mean you stand out from the crowd. 

  • Make your products sticky 

Make it easy for people to enter into a relationship with you. Consider offering subscription models to your products, or other unique offerings that people cannot get in-store or online with other retailers, or significant price reductions to encourage repeat purchasing.

  • Tap into permanent social change

Covid-19 has made consumers think harder about where and what they buy. Can your D2C offering feature more locally-sourced products than your competitor? Alternatively, can how you design your proposition articulate how you back manufacturers and support sustainable businesses to would-be consumers? 

Commit to going direct to consumer

To create exceptional D2C offerings, you need to be set-up to put customer’s needs at the heart of how you design your offering whilst being able to fulfil purchases fast. The bottom line is that great design must be your guiding principle throughout the design and delivery of your new D2C strategy.