Even as the worst impacts of the pandemic slowly begin to fade into memory, it’s becoming clear that Covid-19 will have a lasting impact on the way consumers shop for groceries. In 2022, online grocery sales increased by 2.4% on a year-over-year basis and totaled nearly $9.1 billion. Shoppers have continued to increase their online spending despite higher delivery fees, the recent uptick in inflation, and a rash of out-stock-messages caused by supply shortages. As grocery shoppers’ habits continue to shift in favor of online purchases, CP manufacturers should reevaluate how eCommerce and omnichannel fit into their overall Trade Promotion Management (TPM) landscape. Here are five considerations for CP manufacturers when deciding on omnichannel promotions for TPM.
5 Considerations: Omnichannel Promotions for TPM
Ensure eCommerce Players Are Set Up as Distinct Customer
Data hierarchies are the backbone of any successful and well-organized TPM practice. Omnichannel customers can often present challenges to data hierarchies that were built with traditional brick-and-mortar customers in mind. Major eCommerce facilitators, like Instacart and Shipt, don’t behave like traditional customers but generate a significant amount on trade spend. As such, eCommerce facilitators should be set up as distinct customers in TPM even if the final sales volume is ultimately attributed to another retailer. Wherever possible, manufacturers should consider setting up distinct Planning Accounts or Sold-Tos for the eCommerce volume at traditional retailers.
Accounting for eCommerce Sales Volumes
Ultimately, your organization’s ability to clearly attribute sales volume to online sales at traditional retailers will limit if/how many online specific planning customers can be set up in your TPM system. Determining exactly which sales can be directly attributed to online or eCommerce channels can often be a difficult task for manufacturers. The volume reported by eCommerce facilitators is often double counted, and many buyers at traditional retailers aren’t able to accurately differentiate between eCommerce and brick-and-mortar sales. Syndicated data providers have some offerings specific to online sales, but they’re often not available at the level of granularity needed by TPM solutions. To provide some visibility into online sales, manufacturers should work closely with eCommerce facilitators and their retail partners to obtain whatever data they can. Depending on what data is available, it may be possible for manufacturers to create models that can use whatever information is available to push sales data down to levels that are needed by TPM solutions.
Consider Creating a Omnichannel Customer Channel
Since omnichannel customers operate in multiple channels, grouping customers at higher levels of the hierarchy can become confusing and tricky. Traditionally, many manufacturers choose to include a channel level in their customer hierarchies to facilitate reporting or to better align their hierarchies with their overall sales management structures. As online sales grow, it might be time manufacturers to consider creating an omnichannel customer channel for customers whose online sales are growing at a significantly faster pace than their in-store sales. If creating a distinct omnichannel customer channel seems a bit premature for your organization, consider using customer attributes to identify omnichannel customers or portions of omnichannel customers. The ability to clearly identify omnichannel customers through your customer hierarchy will help facilitate reporting and make other efforts to measure omnichannel performance considerable easier.
Ensure That Your TPM Planning Tool is Capable of Capturing Online or Omnichannel Promotional Activities
As online promotions become more sophisticated, it’s important to ensure that your TPM planning tool can accurately capture digital promotional events. Accurately capturing online events can be as simple as creating new Event Types or Promotional Tactics that match the types of promotional activities that are executed online. For organizations that can clearly differentiate in-store from online sales, online promotions should be clearly differentiated from in-store promotions to allow for more detailed financial liability and spending post-event analysis. Online-specific Event Types and Promotion Tactics are equally as important for organizations that lack the ability to differentiate online sales from in-store sales. Organizations that lack the ability to track online sales should include online Events/Tactics along with in-store tactics on the same promotion event where possible. Even if your organization lacks the detail to fully actualize online spend, planning and forecasting online events will still provide your organizations with a forecast of expected online sales.
Create Omnichannel-Specific Reporting That Provides the Correct Level of Detail & Visibility
The quality of your organization’s reporting will always be directly correlated with the quality of your data. Organizations that able to accurately break out online from in-store sales, differentiate omnichannel customer or customer segments, and indicate online-specific Event Types/Promotion Tactics will be able to create much more detailed and accurate reporting than companies that can’t accurately track similar data. For manufacturers that can capture accurate online sales data, the challenge then becomes ensuring reports are created with the right level of detail. Consider creating online-specific metrics and KPIs to ensure that your reporting can be used to identify trends in online promotions over time. Comparative reporting should be used to compare online promotional activity to in-store promotional activity. In time, comparative analysis will better inform your organizations promotional investment decisions and help determine which omnichannel promotional strategies are likely to produce the most profitable results.
Remember that Omnichannel is Evolving
While the post-Pandemic return to normalcy has slightly slowed the growth of online grocery sales, it’s fairly obvious that genie will not be going back into the bottle anytime soon. Online grocery sales are going to continue to become a larger share of the overall market and manufacturers are going to have to figure out how to navigate the new omnichannel retail landscape. Taking steps to ensure that your organization can track and measure omnichannel promotions for TPM is a pivotal step toward ensuring that you will be able to navigate the changing retail landscape. Even if your organization isn’t ready to fully implement the recommendations mentioned above, taking small steps toward understanding your omnichannel promotions for TPM will pay large dividends in the future.
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Co-authored by Shatakshi Shekhar