ISM Cologne
E-tail-volution: Why confectionery e-commerce strategies shouldn’t be put on hold
This content item was originally published on www.confectionerynews.com, a William Reed online publication.
Speaking at a panel hosted by ConfectioneryNews at ISM Cologne last month a panel of experts, including Mars Chocolate Germany’s e-commerce leader, said early movers in the category would reap benefits later.
The upper hand: Early entry
Mars started early in the European e-commerce channel by launching B2C website ‘Mymms’ in Germany in 2007 – an online store selling personalized M&M’s.
“We were an early mover in e-commerce in confectionery and this is something we profit from in terms of insights and expertise…,” said Fabian Roecke, Mars Chocolate’s e-commerce leader in Germany.
He said early entry has meant Mars can share online expertise gained via Mymms with online retailers stocking its brands, helping it build strong relationships.
This means Mars can more readily have conversations with retailers about image quality and the placement of its products in the navigation.
“It’s gathering speed so you need to act quite quickly in this area,” said Roecke.
Market size: Less than 1% in Germany
E-commerce made up 4.4% of global FMCG sales for the 12 months to June 2016, according to Kantar Worldpanel.
It is a nascent channel but is expected to account for 9% of the market by 2025 with an estimated $150bn in global FMCG sales.
Online sales in the confectionery category account for a smaller percentage of overall sales compared to the FMCG market in some markets.
Mars estimates that confectionery sales in the online category in Germany represent about 0.5% of overall sales.
Andrew Pearl, director of strategy & insights EMEA at market intelligence firm Profitero said: “It’s small at the moment, but I would encourage you to focus on it…because it will grow significantly in the future.
“You just have to look at the penetration of mobile shopping and online shopping – it’s where shoppers are going.
“The good news for confectionery and sweets is that, according to a recent study, about 77% of online baskets do actually contain chocolate and sweets –very much driven by chocolate.”
“However, the vast majority of people, 85%, don’t buy sweets online.”
Big players
Major players are already very active in the channel.
Are e-tailers adverse to 'unhealthy' candy?
In the war on sugar, is there any resistance from online retailers in directing shoppers to products perceived as unhealthy? Mars’ Fabian Roecke: “Honestly no – it’s an expandable category. People still like chocolate and confectionery and they will eat confectionery in future. Of course we see a trend towards health and well-being, but we have no evidence that shoppers are not inclined to buy a chocolate.”
Cadbury and Milka maker Mondelez International has set a $1bn target for online sales by 2020 and has invested in a dedicated e-commerce team.
Mars hopes to be category leader in online confectionery as it is in offline retail, said Roecke.
Smaller brands
Profitero analyst Pearl said B2C sites offering customizable confections and smaller brands on e-tailers with standout images and SEO know-how are faring well in the online channel.
“Often we see some small brands doing very well in the e-commerce world… It’s not always the Mars’ of this world,” he said,
“If you look on Amazon at the brands that are doing very well are ones that you can’t buy in standard supermarkets,” the analyst continued.
Chocri: Case study
German-based firm Chocri is one such brand succeeding with its own website and its offer on Amazon.
Chocri own website allows consumers to create a personalized premium chocolate bar online that can be shipped to customers within seven days.
It is also the bestselling chocolate brand on Amazon.de with ‘Chocri Weltreise’- a gift box of 24 chocolates using ingredients from around the world.
Michael Bruck founded the firm in 2008, aged 22 and the company now employs over 20 people with offices in Berlin and New York. Chocri is part of e-commerce services firm Vendi, which also runs B2C websites for Coca Cola brands.
Bruck said: “If I’m just selling a product online which is available everywhere, it’s not going to make any difference.
“The way how people buy online is changing really quickly. Five years ago it was really website based. Now we can’t work without retailers like Amazon and E-bay. It’s a really quickly changing market – you always have to be one minute earlier than everyone else.”
Look out for future articles from ConfectioneryNews’ e-commerce panel at ISM to be published in the coming weeks:
- Shipping and SEO for confectioners
- Confectionery on Amazon
