Diageo responsible drinking trends in the alcohol industry

Diageo responsible drinking trends in the alcohol industry

“Our ambition is to be the best performing, most trusted and respected consumer products companies in the world – ensuring we play a positive role in society is at the heart of this.” (Diageo Annual Report 2016)

With its 9.4% market share on volume (2015) Diageo is absolutely the leading company in the alcohol market, ranking always as first for the past eight years. Its market share is almost double of Pernod Ricard, the second market leader. Diageo strong market supremacy doesn’t surprise since the company operates in more than 180 countries and owns 20% of the world top spirits. For example some famous and well known Diageo brands are Guinness, Smirnoff, Baileys.

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In the medium term the global beverage alcohol market, that generates today around 300 billion Eur of net sales,  is expected to grow. This trend is driven both by a rise in global incomes and a growing legal purchase age population. On one side the beverage alcohol industry benefits from margins that are higher than for the overall consumer goods market, on the other side this market is one of the most highly regulated in the world with regulation varying widely between countries and jurisdictions.

The notch

However, despite of the great market supremacy reached in the past years Diageo seems now to be victim of its own success. The sluggish growth of the company has turned red with a 2016 negative performance of -3% on its global net sales. The brand portfolio has been recently revisited, some brands sold and now it focuses only on the most important areas of the company: Scotch, Beer, vodka, rum and other liqueurs.

It is clear that now Diageo cannot play the same expansion strategy used in the past years. The fast growth achieved thanks to expansion in white spaces market is now not repeatable anymore having reached almost entirely the market saturation.

For Diageo executives a direct competitors fight is now approaching and in order to continue gaining market shares their strategy is diversification through clear areas and a cultural steer towards responsible drinking.   

There are already example of big multinationals who have been able to diversificate effectively in the FMCG market. One is Unilever that is investing in a sustainable living bringing “a brighter future, a better business”. The Unilever sustainable living plan focus on three main points: improving health and well being, reducing environmental impact and enhancing livelihoods. Another one is Coca Cola who have expanded its portfolio towards sugar reduction entering juice and water categories through different acquisitions. For example, a famous one is Innocent brand.  

A challenge

How diversificate in a market where alcohol is considered by the consumer almost like a commodity?  

According to US National Institute of Health, in 2012 alcohol consumption have caused 3.3 million deaths in the world. Alcohol misuse reaches the fifth place as leading risk factor for premature death and disability. However, moderate alcohol consumption may have beneficial effects on health. For instance decreased risk for heart disease and mortality due to heart disease, decreased risk of ischemic stroke and decreased risk of diabetes.

Problems caused by alcohol are of great interest for governments who are continuously putting in place restrictions in the sector, who differs by country and making de facto the most regulated and difficult market to operate. Moreover, consumers – who are the first who pay the sour bill – are becoming more sensitive on this topic.

Responsible drinking

Diageo strategy focus strongly on responsible drinking. This is comparable to the sustainable living plan of Unilever. In the long run, this approach will educate people to a correct use of alcohol and bring a reduction in diseases and deaths caused by alcohol.

Ivan Menezes Chief Executive of Diageo states that sustainable efficiency will bring to the company £500 million savings in the coming three years.

The company is assessing responsible drinking as a performance. In its annual report three KPI out of eleven are based on this: creating a positive role for alcohol in society, building thriving communities and reducing the environmental impact of its products.

Efforts

Diageo is the first company in the industry investing strong commitment on responsible drinking. Moreover, by putting high level of information in the hands of consumers, demonstrates its true desire in helping consumers making informed decisions and at the same time confirms its position as market leader.

In 2016, 335 programs aiming to reduce harmful drinking were sponsored by Diageo. This year DRINKiQ.com was launched in 12 languages. This is a website with best practices about responsible drinking, list of allergens and sustainability symbols. Moreover, compared to 2015, the company has reached 12% improvement of water efficiency through its supply chain and production process.

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Responsible marketing commitment:

“Diageo was in breach for a Smirnoff television advertisement on the grounds that depicted dependency on the presence of alcohol. We were also found in breach for a post on the Guinness Facebook page because it suggested that drinking may have therapeutic benefits. In both cases, the content was immediately withdrawn.” (Diageo Annual Report 2016)

However, the area where Diageo has made the most breakthrough step compared to its industry is with Johnnie Walker, a whisky scotch priced at a similar amount per serve of main competitors. Johnnie Walker Red Label is the first global brand to provide serving alcohol content and nutritional information on-pack. Indeed, a consumer who buys alcohol will never find on any bottle nutritional information. This is quite an anomaly, considering even something as simple as plain bottled water always has ingredients and the chemical makeup of the product on the label.

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Diageo has chosen this exact brand and portfolio range because by value Scotch whisky is the most important area in which the company has 24% of total net sales, owning a total of five brands.

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Competitors reaction

Following very positive market critics and feedbacks, Pernod Ricard follows now Diageo pioneering step. Indeed, it announced in February 2017 that will provide nutritional information on all of its spirits products. Consumers will be able to access this information by scanning a QR code that will be present on the back labels of all its bottles. This method also if different by the traditional adopted by Diageo, will enable consumers to quickly display all main info on their smartphones.

The trend started by Diageo is going to have big effects for the alcohol industry. First of all, this will enhance transparency between producer and consumer. A buyer entering a shop will trust brands who put on black and white calories and direct effects of consuming a glass of alcohol. Secondly, will strongly promote responsible drinking in the society improving as well relationship between key stakeholders such as government and regulators. Thirdly, this will boost sales for companies who will adopt this strategy, differentiating brands between other competitors and at the same time winning market shares in the market.

Sources: Euromonitor, Diageo, US National Institute of Health

How FMCG brands can win with their own e-commerce

How FMCG brands can win with their own e-commerce

FMCG brands need to enhance their online presence

Although the relevance that physical stores still play for FMCG brands, manufacturers need to enhance their online presence through a successful e-commerce model. On one hand even though online sales are currently representing only 3.7% of the total (offline and online) global FMCG sales (Kantar 2015) if FMCG players will be able to overcome the main barriers are currently blocking the e-grocery success the online grocery sales might have the potential to rise to 28 % if 60 % of global households would buy online at least once a  month (Kantar, 2015).

This growth will be facilitated by the rising of Internet users globally[1], by a better and superior customer service (e.g. thanks to the enhancement of the last-mile delivery autonomous ground vehicles[2]) and by solutions will be able to deliver amazing experiences and fun to consumers (e.g. the experience of virtual stores in South Korea or the availability of smart electrical appliances – e.g. smart fridges or smart washing machines).

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Sum up :

• Online shoppers look for a selling model based on cost, time, availability and fun

• FMCG companies can overcome some of their barriers through the e-commerce

• FMCG companies need to take into account local differences across categories, consumers and retailers [/mks_pullquote]

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In order to reach these goals manufactuers have a wide range of choices available. Most of them are improving their online presence through better websites (most of them also finally optimised for mobile devices) and a better usage of e-mails and social media (e.g. through targeted campaigns and initiatives).

That said, among manufacturers only few players in few markets are currenly selling their products online through their online proprietary website with a DTC (direct-to consumer) model.

The aim of the article is to show the advantages and disadvantages of the direct-to consumer models (i.e. the possibility to create and sell their own brands and products online) and in the end, the management implications concerning the usage of this model.

1. Direct-to-consumer (DTC): advantages and disadvantages

The FMCG industry is mainly affected by the following peculiarities:

  • Non durable and low value products
  • Low-switching costs
  • High purchase frequency
  • High impulse purchase

This four peculiarities imply a high competitive marketplace, where competition is high (both manufactures and retailers are offering their own brands), where it is hard to create brand loyalty (because of the low switching costs and impulse purchase) and where it is always more complicated to increase prices and getting higher margins.

For this reason consumers can have a wide range of choices available to satisfy their needs and, at the same time, even manufacturers can have different options to sell their products.

Historically physical stores represent the main selling channel for manufacturers. Since the physical surfaces belong to retailers, over the years, their power highly increased, while the one of manufacturers massively reduced, by forcing most of them (especially small and medium firms) to produce for retailers. However, the rising of the Internet allowed manufacturers to get a new channel to exploit, despite some barriers must still take into account.

Nowadays the online FMCG marketplace is quite fragmented across different regions and countries, due to cultural, local, legal and technologic differences. That’s why solutions implemented by FMCG manufacturers are different accordingly.

 

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unilever-shop

 

The following table tries to show the main advantages and disadvantages of a direct-to consumer model (Table 1).

Table 1: Advantages and disadvantages of a direct-to consumer model (Source: Techingrocery, 2016)

table

Among advantages FMCG manufacturers can build a direct relationship with consumers. Indeed they can get a better knowledge of their consumers, getting valuable information to better invest in innovation, communication, distribution and measuring the ROI, building brands, testing new products, pricing, etc.

Moreover, with the higher power of retailers (e.g. the launch of private labels), the rising of competition (more local brands) and the last distribution trends (e.g. physical store downsize) the online channel allows FMCG manufacturers to solve some of the main issues they have in-store (i.e. troubles to increase prices, to list products, to leverage a repeat purchase, to reduce the impulse purchase…) with the competition and the market.

 

Regarding the disadvantages, the channel conflicts with all retailers (bricks-and-mortars, click-and mortars and pure players) are one of the main risks. Indeed, since retailers are still the main buying channel for consumers (both offline and online), especially for the wider range of products available, they could react delisting products or getting better trades terms. Being online also implies different supply chain models; indeed, if in the past manufacturers were used to sell a double volume of products to retailers, with the e-commerce the order from consumers will be only a small fraction sold to retailers. Other risks concern the probability that consumers might compare prices (e.g. dynamic prices) more easily, as well as the risk of a price fragmentation. Indeed compared to a physical store, where prices to compare are limited at the physical space available, the online marketplace allows consumers to check an unlimited number of prices and products across different websites. Regarding the price fragmentation, it is quite high the risk that consumers will find different prices in the physical store and in the online website, creating confusion and reducing the trust of consumers towards brands. Indeed, while in-stores prices are quite different and flexible across locations in the same country, online prices are the same among all consumers that live in the same country.

Last but not least the channel cannibalization and the consumer experience. Regarding the channel cannibalization, firms are both offline and online might have internal problems. For example managers (responsible for different channels) might have different goals in terms of volume sales, even to the detritment of others managers. Thus, the responsible of a specific account (a traditional retailer) with a remuneration based on sales results towards that account (a traditional retailer) might impact on the goals of the manager in charge of the direct-to-consumer website.

In the end the consumer experience. Nowadays there are no existing apps or devices that are able to replace the powerful sensory experiences (this is especially true for fresh food) and the human interaction that physical stores can provide. Furthermore, consumers like visiting stores with the family or with friends and have fun by doing shopping. For this reason retailers are increasingly investing  in digital innovations to improve the in-store experience (e.g. through virtual reality or beacons).

 

2. Management Implications

 

  • Take into account cultural and local differences among consumers and retailers: differences across countries and regions are quite varying and require specific actions. For instance in the UK the main channel is the “indirect e-commerce (i.e. selling products through clicks-and-mortar stores and pure-players)”, where retailers show a high power even online. In emergent online markets, as Italy, FMCG manufacturers decided to focus on all existing channels (even launching direct-to-consumer products), because the online channel is not well-developed as in the UK for example. Even retailers peculiarities and differences (e.g. in terms of trade terms costs) should be take into account and might vary depending on countries and regions). Regarding consumers, try to adapt your online service to local peculiarities (e.g. offering specific payment methods)
  • Take into account differences across categories: not all categories show the same online growth. Among varying categories food and beverage products are the smallest category, while consumer healthcare products (e.g. razors, creams, OTCs, etc.) represent the main one. Consumers still show uncertainty to buy fresh food and beverage online), where the sensory experience still plays a key role.
  • Successful e-commerce models focused on cost, time, availability and fun: In terms of cost and time consumers find more convenient buying online, since they can save relevant costs (e.g. transportation costs and time, finding more convenient prices having, at the same time, a wider range available). That’s why it is also essential offering different delivery options. In terms of availability consumers can buy online whenever they want with a wider range of products. They can also customise their purchase solution, choosing for the one they need in a specific moment. In terms of fun consumers require amazing experiences online. For instance Peapod’s virtual stores in the US are able to simulate the store experience making funny and unique the buying experience.
  • Take into account analytics, content and targetization: Analytics is essential to figure out new consumer and shopper insights that might help crucial implications in terms of branding, communication, innovation, etc. Content is also relevant: internal information, ratings and reviews, tutorials, mobile applications, etc. are key to add value to the shopper experience. Last but not least targetization: a right targeting approach allows manufacturers to better reach targets with different socio-demographic and psychographic characteristics . This is needed to reach mass audiences online and getting a right ROI.
  • Build a right organisation: developing its own e-commerce implies a more structured organisation (PwC, 2012), where digital shopper marketing teams should cooperate more closely to the marketing teams and along with traditional shopper marketing teams in order to create a better coordination to take advantage of resources might be used in common to take different actions (traditional shopper marketing teams to drive traffic in-store and post-purchase, while digital teams to increase the shopping cart and drive traffic in the e-commerce website)

[1] Kantar estimated that global Internet users will be 48 % of the total global population in 2017 (Kantar 2015)

[2] Mckinsey (2016) estimated that autonomous vehicles (including drones) will deliver approximately 80% of the total B2C items (across to all existing B2C categories) sold online.

 

SOURCES

Kantar (2015), Accelerating the growth of e-commerce in FMCG

McKinsey (2016), How customer demands are reshaping last-mile delivery

PwC (2012), A strategy for omnichannel success

 

 

 

2017: Top key trends that will obsess the retailing business

2017: Top key trends that will obsess the retailing business

In 2017 retailers willl face as usual numerous consumer behaviours changes and will need more than ever to focus on new disruptive trends to maintain their position. Herunder is a selection of 5 retailing priorities for 2017 :

1 – Pursuit of the omnichannel quest: 

The global retailing landscape is evolving quickly with the rise of omnichannel retailing. Omnichannel retailing is a customer-centric approach to retailing through which retailers provide seamless shopping experiences across all of their physical and digital channels. Shoppers increasingly value convenience when shopping and omnichannel capabilities allow them to seamlessly switch from one channel to another. By the end of 2016, the vast majority of retailers were struggling to be omnichannel. The most common challenges that retailers face include tracking sales, inventory planning. However, retailers will continue their quest to achieve omnichannel proficiency in 2017.

Retailing 12 – Adapting to the evolution of convenience:

 The ways in which retailers are delivering convenience is evolving as demand for convenient retail offerings continue. Drivers of convenience include global urbanization, growth of smaller households, ageing population, and hyperconnectivity.. Retailers from various channels in retailing are adapting to the demands of the modern and digital world to offer convenience, leading to channel blurring as well as advances in various online commerce options. Meanwhile, existing convenience stores around the world are responding by modernising and evolving to become more than a place to buy a quick snack and beverage and aiming to become a key part of the daily activities of shoppers. Retailers will continue to innovate to offer added convenience to shoppers’ daily lives.

Retailing 33 – Target the conversational commerce:

 Chatbots and voice-activated assistants that are designed to work with existing digital devices to perform tasks are on the rise. Although their impact on retailing landscape is still in its nascent stage, they are likely to create new opportunities for retailers in the near future. 2016 was the year of chatbots. Facebook launched chatbots for Messenger and Apple’s iOS 10 gave iMessage an app store in which developers can add chatbots. Google launched its new messaging service, called Allo. Allo uses artificial intelligence, like the chatbots, to respond to a user’s questions. Amazon sold a record-setting number of its Echo devices in 2016, and others such as Google and Lenovo are introducing their own voice-activated assistants.

retailing4 – Continue the efforts on Marketplaces: 

Marketplaces continues to experience growth globally, playing a major role in the future of both small and large businesses online. Online retailers that host third party merchants are the leaders of internet retailing and are continuing to gain share. Third party marketplaces enable all types of retailers and tech companies to take advantage of the growing e-commerce through existing infrastructure that is already trusted by shoppers. Despite challenges that marketplaces face like the fight against counterfeit goods and overall quality control, they are expected to continue becoming a larger portion of all online sales.

Retailing 7

5 – Focus on Mobile commerce: 

In 2016, mobile commerce accounted for US$514 million in sales (approximately 44% of online retailing). The figure is expected to nearly double by 2021 to US$1.1 billion in sales (approximately 56% of online retailing). In addition to retailers making many of their promotions online and on mobile, and making some of these promotions only available through mobile apps, there are larger factors at play driving mobile sales. Smart phones and tablets’ penetration rates continue to rise, smartphones are becoming bigger and easier to use, and retailers and technology companies are investing to improve the mobile shopping experience, such as launching in-app payments. Additionally, with smartphones being the sole way of access to the internet for many households, especially in low income households, mobile commerce is positioned to see continued growth in 2017 and beyond.

Retailing mobile

To discover more about the 2017 consumer goods trends in general follow the link

[Focus] Drone delivery: The next disruption ?

[Focus] Drone delivery: The next disruption ?

Focus on Drone delivery: The next disruption in grocery

Pizzas could arrive from the sky in New Zealand and perhaps soon in Europe. This is not science fiction but reality. Indeed, Domino’s Pizza Enterprises has announced its partnership with Flirtey, leader in drone deliveries, to launch the first pizza deliveries drone service in the world. The two companies celebrated their alliance by organizing a demo in Auckland, New Zealand on 25 August 2016.

This event marks the end of the approval process by Flirtey and the beginning of this experiment from a Domino’s restaurant in New Zealand.

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Pizza delivery drone becomes a reality in New Zealand

New Zealand was chosen for this experiment because of its regulation, which allows companies to use delivery drones. According to Don Meij, Domino’s Group CEO, the company’s growth in recent years has increased significantly the number of deliveries and Domino is constantly seeking to innovate in pizza home delivery. The use of drones as a means of delivery is designed to complement Domino’s current fleet in the field.

They will include control systems and GPS online. The Pizza chain invested heavily to equip their restaurants with various delivery vehicles, such as electric scooters, electric bikes and even pizza delivery robots (DRU), the latest innovation.

For supplier it doesn’t make sense to have a 2-tonne machine delivering a 2-kilogram order. The DRU DRONE is the next step in Domino’s expansion in artificial intelligence field. It will enable them to acquire new knowledge and adopt new technologies in the business..Drone delivery allows to expand their supply zone by removing barriers such as traffic or accessibility and to provide faster and reliable delivery system.

Drone delivery could be soon possible in Europe

The first test flights will take place this year after summer in New Zealand. Domino’s will offer discounts on shipments by drone in the early stage of the test to perform later more substantial deliveries in terms of size, weight and distance, depending on the initial results and the Customer feedback. The group announced the possibility of extending the experiment to its six markets, namely: Australia, Belgium, France, the Netherlands, Japan and Germany.

sprite drone

Drone Delivery: The next disruption?

Except for security matters, we think Drone delivery allows companies to reach more rural customers and to reach urban customers in a much more efficient time. Moreover delivery cost would be cheaper and eco-friendly. This year, we saw many companies investing in drone delivery, among them, retailers such as:

  • Amazon in UK: The government permitted them to conduct drone delivery tests
  • 7-Eleven in U.S: The convenience store chain managed a trial with drone delivery for the first time in the country
  • Google in Australia: Delivery drone has been tested in order to reach consumers in rural area

Did you know?

Domino’s Pizza is ready for the disruption

domino's pizza digital

Domino’s Pizza makes your local pizzeria a loser, half of the company’s U.S. orders are digital. Its stock hit an all-time high in 2016 because Domino’s Pizza has aggressively courted Millennial stomachs by upping its online game and allowing young people to order via texts, voice recognition, connected voice and also tweets. Traditional pizzerias lost 21% Market share during the past decade.

Top 5 FMCG Online Marketing Practices

Top 5 FMCG Online Marketing Practices

FMCG online marketing is crucial

Statista reports that by 2017 over a third of the global population will own a smartphone. This is a huge increase compared to 2011 where only 10% had one. By 2019 half of the population will buy online. People are becoming more and more connected between each other by the use of social networks, sharing platforms and e-commerce websites.

In a world where people can influence each other opinion by a tweet, earning customer loyalty is becoming more difficult and complicated. Retailers and FMCG companies need to become aware of this reality. They must engage online consumers in specific actions, finding the delicate equilibrium of building brands across channels.

The market shows how a clear and decisive online marketing strategy is able to positively influence sales performances, loyalty and increase brand equity. Techingrocery has taken into analysis the online strategy of the Top 5 FMCG brands as ranked by Interbrand. By implementing this best practices into actions every FMCG brand will be able to strengthen their brand equity in the consumers minds.

1. Gillette

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Gillette brand value is estimated by Interbrand 22 billion dollars. This value is driven also by a very strong online presence. Below are summarised the key learnings from their FB page:

  • Rate and reviews of all Gillette products made by consumers
  • Video reviews
  • Possibility to become an official brand fan
  • 24/7 customer support
  • Free code coupons

 

2. Pampers

picture1Pampers Twitter page key learnings:

  • Free discount coupons offers
  • Users sharing rewarded with brand charity
  • Engaging videos

 

3. Kellogs

Kellogs FB page key learnings:

  • Creation of suspense and anticipation on product launches
  • Users engagement with games and quizzes
  • Effective use of the mascot brand

 

 4. L’Oreal

L’Oreal Twitter key learnings:

  • Free advice to consumers on which product use for specific occasions
  • Show of positive interest on users blogs/feedbacks
  • Share of useful knowledge about the brand

 

5. Danone

Danone FB key learnings:

  • Creation of fun consumer surveys
  • Promotion of brand as healthy thorough powerful images
  • Effective communication of stores openings
Digital shoppers want customised products

Digital shoppers want customised products

Customised products are the key to increase digital sales.

1 THE SCENARIO

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SUM UP:

  • Customised products are the key to succeed online
  • 2 levers: Ingredients selection, packaging choice
  • Still a white space to be covered by many [/mks_pullquote]

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The biggest fast Consumer Goods companies focus on design, manufacturing and marketing of new products. Traditional retailers is the main selling channel. However, due to increasing competition, decreasing prices and stronger position of local private labels digital is now being explored. This is the only B2C channel that FMCG companies can enter successfully. Indeed, only few capital expenditures need to be invested when compared to the scenario of establishing a new traditional retailer channel. Moreover, e-commerce cuts the middleman, improves profitability and enables to target a specific consumers’ segment.

However, the percentage sales of this channel is still very low compared to traditional. FMCG companies are struggling to understand how to effectively build, use and attract people to their online platforms. Direct to consumer channel requires a completely different strategy, know-how and skills. Selling online an identical product that a consumer can find in a traditional channel is not enough to win in DTC. From a consumer point of view there are more disadvantages than advantages. A digital consumer cannot see, smell and touch the product is going to buy. This a very important factor to not undervalue.  After price, this is very often the critical criteria that steer the final buying decision.

In-store, the ability to influence positively consumers is a very important selling leverage. The best store areas are reserved during product launches. Promoters offers free samples and discount vouchers. High effective shelfs are developed with the purpose of attracting new consumers.customised products

Market shows that the biggest FMCG companies are leaders handling promotional launches and attracting consumers on their shelves. On the other side, they struggle on e-commerce. This channel is lead by startups. Firstly, they have high specialized skills and motivated employees who are able to better detect and satisfy consumers needs. Secondly, they target market niches. Thirdly, this is a very competitive space due to low entry barriers where only the fastest adapting organizations can operate.

2 DIGITAL IS MISSING A BIG OPPORTUNITY

To win in digital customised products are the key. Techingrocery has analyzed major online retailers and found that the biggest FMCG companies are lacking in this aspect.

A) How customised products go online?

Imagine a daily digital consumer. He is surfing the net looking for a ketchup bottle that can satisfy his particular need. This needs to have the exact ingredients, packaging colours & materials that he wants. However, he cannot find it because no digital retailers selling dressings offers this particular service.

There are two levers of personalisation that Techingrocry has identified as core:

  • Ingredients selection

The leading in this area is Youbars.com. A consumer customise his bar from the beginning to the end. On the left he choose ingredients. On the right he sees on real time the nutrition chart changing depending on what he has selected. While on the bottom he has a price chart updated after every selection.customised products

  • Packaging choice

Mondelez during Christmas 2015 offered consumers the possibility to customise its own Oreo cookies with different packaging options.customised products

B) Online customised products are a strategic choice

By enabling consumers to decide their own product, companies are able to differentiate their offer significantly. When putting a ketchup bottle on shelf the producer needs to make choices. How many calories? Which flavour? Which packaging? These question are asked preliminary in order to maximise the number of consumers reached. Indeed, products on shelf are limited and put variants it is an expensive bill that sometime will not pay off. On the other side, digital enables a retailer to virtually show infinite product SKUs. 

Traditional retailers know very well this big limitation they have. Already numerous personalised stores have opened putting customised products as core focus in their consumer experience. As we already showed in a previous article Magnum is an example. Consumers entering the store can choose ice cream chocolate, toppings & extra features all done on the moment! By opening its own channel retailer Unilever have been able to address correctly to this point. customised products

However brick and mortar channel is expensive. It requires high capital expenditures. It doesn’t reach vastly enough all consumers of one region. For these reasons online customised products is a very hot business opportunity to jump in. By making perceive the final consumers as if he is the own creator of its beloved article companies are able to differentiate successfully from competitors while at the same time legitimate a premium price for it.

C) Successful examples

Online there are already successful examples of big companies who are enabling product personalisation to drive higher their sales. Below we have selected three examples that operates in different markets.

Made by a startup this website is leading the online cereal bar business. Consumer can put in a very fancy box different selection of cereal bars. The model has proved working very well, giving a unique consumer experience and being able to satisfy on demand different needs.customised products

  • Evian

Evian is selling a premium water. Owned by Danone, this company allows digital shoppers to personalise their own bottle label. The service is for the moment available only in France for 75Cl glass bottle.customised products

  • M&M

M&M gives the opportunity to customise its most famous snack. There are three main sections. First colours are selected. Second it is inserted a text or a clipart. Thirdly the desired packaging choice.M&M personalisation

3 WHAT IS NEXT

Currently, companies who are selling customised products through digital channel are still low. There are many white spaces to be covered. Consumers want something that can satisfy its needs exactly as he wants. That is the reason why producers need to start implementing this strategy right now.

There are some examples where effectively customised products can be easily put in place. Firstly sauces. A digital shoppers could create its own premium flavored sauce in few clicks. Secondly frozen foods. Thirdly ice creams. By applying the levers explained in this article, a digital retailer will evolve from selling standardised articles to customised products.

Advantages are several. On one side more digital shoppers are reached and attracted. This will increase considerably online sales as Graze.com examples have already highlighted. On the other side the product is sold with a premium price.