3 Reasons Why the F&B Industry Needs E-commerce

Nanda Mohamed
8 min
February 27, 2020
“We're getting a computer. It's gonna do lots of magical things." These are the words of no other but Roger Sterling from the show Mad Men. Just imagine what he would think of e-commerce! 

In 1991, when the Internet opened to commercial use, e-commerce emerged and started growing faster than a speeding bullet. And here we are now, 29 years later, where retail e-commerce sales worldwide amount to 3.53 trillion US dollars. Online shopping is one of the most popular online activities worldwide but, up until recently, entertainment, electronics, and clothing were the main interests within electronic commerce.

But the food and beverage industry is catching up, and gradually shifting towards the online market. Even long-standing food and beverage giants are considering spending billions developing e-commerce channels. As Indra Nooyi, PepsiCo’s CEO stated, “E-commerce is shaping up to be the next great revolution in the food and beverage industry.”

Here are 3 reasons why F&B companies should consider embracing E-commerce.

E-commerce is growing but it hasn’t been fully explored yet

The Food and Beverage industry is gradually moving towards e-commerce, that’s certain, but its full potential is yet to be exploited.

Indeed as of today, sales on direct-to-consumer sites and third-party e-commerce platforms account for only 36 percent of food and beverage sales. There is a lot of space to grow within the internet commerce. 

Some companies have already taken the first steps towards e-shopping. For example, General Mills reports that electronic commerce is their single fastest-growing channel, with some European markets witnessing 10% of food sales happening online already. Smaller businesses are lining up to get their slice of e-commerce’s profits as well. Beer Cartel, an Australia-based craft beer store has also been enjoying the fruits of their online sales’ labor, with 34% sales boosts since they launched their online store.

E-commerce is all about Data

Growth potential is a good reason to boost up a company’s e-commerce, but it’s not the only one.

In order to succeed in any market, especially in the Food and Beverage industry, companies need data. According to a report by McKinsey, food retailers witnessed an improvement in their profits by almost 60% with the use of Big Data. More and more retailers, restaurants and brands narrow down their data tracking to gain the most detailed insights they can achieve.

And the source of these data insights is the customer. Every time a customer clicks, more and more data is being produced which helps in understanding a shopper’s online behavior very closely. The amount of data produced daily is approximately 2.5 quintillion bytes and the number is increasing gradually with the growth of the Internet of Things (IoT).

Companies that choose to embrace e-commerce can dig out consumer’s browsing interest and purchase history and get a catch of when they buy the most. Moreover, by tracking shopper’s online behavior, e-retailers have the chance to predict upcoming trends and act upon them faster.

Customers prefer shopping online

There are many reasons for F&B companies to embrace e-commerce, but as we learned in our last blog Being Customer-Centric in 2020, the key to success is about what the customer wants.

Online shopping is above all convenient for shoppers. A recent research by FMI and Nielsen shows that “in 2016, around 23% of consumers purchased food and beverages online.” Numbers say that as many as 70%-80% of food shoppers will buy online in the next five to seven years. People like the idea of having their favorite product just a click away.

In the eyes of shoppers, one of the most important reasons behind their preference for shopping online is the option of reading other people’s reviews. New research from Salsify reveals that 30% of customers believe that product reviews from people like them are a good sign and they are more inclined to purchase a certain product based on good reviews.

There is plenty of growth potential for e-commerce. So going back to Roger Sterling’s words in Mad Men, e-commerce is “gonna do a lot of magical things” for companies within the F&B industry.

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