E-commerce is reshaping the chicken industry and the global economy. Motivated by shifting consumer behaviors, traditional retailers are either changing or being left behind. Meanwhile, a new crop of online-only companies are fighting for a place in the market.
As part of the 2018 Chicken Marketing Summit, WATT Global Media gathered a panel of industry professionals to offer insight on the world of e-commerce and what it means to the chicken industry’s customers.
The panel included Dan Glei, executive vice president of merchandising and marketing at supermarket chain Food City; Steve Lauder, a digital consultant working with Buffalo Wild Wings Inc.; Lenny Lebovich, founder and CEO of online, direct-to-consumer beef marketer Pre Brands L.L.C.; Tim Madigan, vice president of e-commerce for Tyson Foods Inc. and Tony Stallone, vice president of merchandising for online grocery ordering and delivery service Peapod L.L.C. The panel was moderated by Bill Bishop, chief architect of Brick Meets Click, and took place on July 23, 2018, in Orlando, Florida.
Who is using e-commerce?
The panelists said a major focus of e-commerce is selling to the millennial generation. The group of young adults is now the dominant consumer segment in terms of purchasing power. These consumers are mobile focused, digital savvy and inquisitive about the origins of their food.
Lebovich and Stallone said the digital experience is able to supply more information about a product than physical packaging or labels. This helps answer questions and provide the transparency and storytelling millennial customers expect. Stallone said 60 percent of his businesses’ customers are looking at product details as part of their purchase.
Chicken occupies a strong position in the world of e-commerce because of its versatility, its healthiness and its price. Stallone said he sees the e-commerce market resonating more with value-added products than commodity chicken. He said these products – breaded, marinated, diced chicken – are always popular and the e-commerce customer pays a premium, too. This is different from traditional retailers, where conventional chicken is more popular. His customers are also positively receiving the novel, transparent packing used for chicken products because it conveys cleanliness and healthiness.
Meal kits, prepacked ingredients and recipes sold together as a meal to be made at home, are particularly appealing to this segment. Several online, direct-to-consumer companies offer subscription services for meal kits and leading grocers are now stocking them as well. Stallone said meal kits resonate with millennials because they supply a solution to those unable or unwilling to cook for themselves while also providing new flavor and culinary experiences.
Delivering an experience
Lebovich and Stallone said their businesses are designed with the customer in mind. Both said the foundation of an e-commerce venture is a total focus on providing the customer with the best possible product and services. Lebovich said his business was built on finding a target market and then delivering what that audience needs while providing a great, repeatable experience on the customer’s terms.
A critical part of fulfilling that mission lies in the collection and use of customer data. They explained e-commerce companies are uniquely positioned to collect data about their customer and make use of it to improve the customer’s experience and to increase the odds that same customer will use the service again. This data is also used to get a better idea of which products are moving, which ones aren’t and why.
The e-commerce platform challenges companies to innovate. The sector is dynamic. The customer is demanding and able to shop among a galaxy of competitors. Stallone said e-commerce punishes inaction and forces companies to keep trying new things and keep innovating.
The impact on traditional retailers
Adoption of e-commerce is forcing traditional retailers – grocers, restaurants and food service – to adapt to survive.
Glei, speaking of the regional grocery chain’s experience, said establishing an e-commerce presence is no longer innovative or a competitive advantage, it’s becoming a baseline expectation for consumers.
For grocers, e-commerce is challenging because the customer is no longer doing the work of shopping and delivering the goods to their own home. The e-commerce customer is more loyal and purchases more, Glei said, but the trade-off lies in lower profitability. Input costs are higher on e-commerce transactions, but Glei said it is part of the game. So far, about 40 of 100 Food City stores are using a click-and-collect service, and 95 of its stores are covered by same-day grocery delivery service Instacart.
Lauder said foodservice providers and restaurants must also employ an online ordering and delivery system. He said if a company isn’t in the delivery business yet, they will be soon. Third-party delivery services exist, but both said they prefer not to use third-party delivery services due to logistical and financial difficulties.
Search engine optimization
A common thread among the upstart and established businesses is the importance of search engines and search engine optimization. The modern consumer is using the internet to find information about everything. Now, the answers provided by search engines, and the companies that maintain them, is extremely influential on their buying decisions.
Lauder said the e-commerce market is forcing foodservice and restaurants to reconsider how they present themselves to search engines. Being relevant to a customer used to mean how the store was presented and where items were placed, priced and promoted. Now, along with those attributes, businesses must be relevant to the search engines to retain their relevance to consumers.
The proliferation of artificial intelligence and virtual assistants signals that companies must now consider if they are relevant to them, too.
“I need to be relevant within seconds to people’s lives. Otherwise, they move on to the next thing,” Lauder said. “So, if I’m not there when someone says, ‘OK Google, what’s for lunch?,’ I don’t exist in their life.”
In the same vein, the e-commerce companies need to get their brand out there by appearing on the same search engines when the customer is browsing for dinner. This means optimizing their websites so the bots that scour and catalog the expanse of the internet recognize the business and rank it higher on search results than other competitors. This can be frustrating because the companies running the search engine constantly change how searches and page rankings work and they aren’t always transparent about what changed and why.
Search history, Lebovich and Stallone said, also helps inform e-commerce companies about what’s trending with customers and provides guidance on what to stock and who’s most interested in buying it.
