Updated: Jan 11
For the food and beverage sector, the festival season is the busiest time of the year. The holidays are rapidly approaching, and most eCommerce platforms are gearing up for festivals like Rakshabandhan, Ganesh Chathurthi, Navratri, and Christmas, all of which follow in quick succession. However, preparations to make the most out of the third and fourth quarter of the year take a significant amount of time to plan before implementing these carefully charted out strategies. The Indian online grocery market is projected to touch US$ 18.2 billion in 2024 from the US $1.9 billion value in 2019, growing at a CAGR of 57%; How does one ensure that they are a part of this statistic? This article will walk you through the most significant challenge faced by the F&B eCommerce sector, along with strategies to overcome it.
1. Focus On Increasing Your Average Order Value
Food and beverage brands face challenges such as shorter shelf life, the need to standardize customer experience with every product, and inventory management. The metric that ensures good business outcomes for these brands is Average Order Value or AOV. To put it simply, a small-sized cart transaction does not give you the same revenue as a larger cart value. And festive sales periods provide you with a unique opportunity to maximize AOV using the different tactics mentioned here. Why is this important? Increasing your AOV has multiple benefits, some obvious and others not so much. It allows you to sell more per targeted user, giving you better returns on your ad investment. Products bundled together into thoughtful baskets increase customer satisfaction and allow you to sell targeted products during the festive period. Moreover, when you bundle and ship products together, you can ship more for the same shipping cost, thus maximizing what you get out of your shipping costs. At the same time, a consumer may not be willing to pay high shipping fees for small orders, but when buying in bulk, they would be more likely to not mind the shipping fees too much.
Ways To Increase Your AOV
1. Bundle products in ways that make sense to your consumers. For example, products for Raksha Bandhan can be bundled based on how many siblings there are. When you showcase these on the website in ways that engage the user (shopping for my brother, shopping for my sister, shopping for the clan, etc.), they find what they’re looking for easily, and you get to sell more per customer based on what they need.
2. Provide discounts on bundles. Discounted bundles fly off the shelves faster because people are inherently driven to purchase things that are cheaper than they would otherwise be.
3. Suggest ways in which customers can create their own product bundles. They can mix and match sweets, savory items, juices, and namkeen in ways that they typically consume at home.
4. Offer flat discounts on bulk purchases. It is known that people typically consume more food in the company of friends and family, so offering a discount on larger cart values is a great way to get them to buy more.
5. Make the packaging enticing. Gift boxes have a shorter life, but they play a role in how conversions take place. Today, it is highly likely that families may not be in the same city, and gift boxes are a great way for them to show that they care. When planning festive packaging, consider going the extra mile to truly represent the spirit of the season as opposed to standard greetings printed on boxes.
2. Consider what your consumers want
Even within the F&B eCommerce sector, no two businesses are the same. For example, brands that manufacture healthy sweets and target the health-conscious market may offer stiff competition to brands that take the more traditional approach. According to Neilsen’s Featured Insights on Delivering Consumer Clarity report 2019, the health foods market is set to grow at 10% annually in revenue. People rank natural foods, fortified foods very higher on their preference radar. Both brands have a market and understanding how this market behaves can help you maximize sales. Likewise, the Key Performance Indicators (KPIs) you set to measure your festive sales success should reflect this difference as well. Your success should be measured in direct relationship with others in your specific niche, and not with the industry as a whole. Health food brands may find that promotions oriented around protecting loved ones may work better than standard offers. Introducing products that resonate with the market right now, such as sugar-free sweets and vegan alternatives can also help drive up sales further. Likewise, displaying nutrient information for every product, sharing advice on consumption, etc. can help consumers make a more informed decision. In making this information available upfront, consumers may be driven to purchase more than they set out to and share it with their families as well.
3. Explore brand-based marketing tactics
Online platforms can bank on the emotions of their audience. Particularly with food, one can promote the authenticity of a brand by evoking childhood memories and nostalgic moments people would want to relive for old times’ sake. Finding relatable ads, videos, posters, and memes can ignite nostalgia in customers, who immediately feel the need to share it with their loved ones. This improves the platform’s visibility and leads to impulsive buying and increased customer loyalty based on the relatability factor. Specific to F&B, there are multiple opportunities to make your product a part of the narrative. The best example of this today is the beverage brand Paper Boat. Using your products to tell a story always drives better returns than a standard advertisement. Brands like Cadbury and Haldiram also come up with beautiful packaging for their Diwali and Raksha bandhan seasons, which is why they sell even more for their gifting value. Likewise, for Ganesh Chaturthi, Chitale Bandhu, a prominent food brand in India, serves up the traditional modak in a variety of flavor options and backs this offering up with customized packaging. Collaborations with social media influencers can help drive sales during the festive period. Consider innovative collaborations- for example, a miniature artist may be able to create limited edition fridge magnets that can become part of your gifting bundle. Or, chefs on social media can use your products to create new dishes and share these recipes, which people can then recreate at home. The more unique an idea is, the harder it will be for your competitors to replicate it, and the greater will be your competitive advantage.
4. Look into your logistics
Festive sales for food and beverage brands present a set of unique challenges. On the one hand, several food products are perishable and have a shelf life of a few months at best. On the other, people ordering during the festive period expect to receive their products in time. Planning your inventory for this period, therefore, should depend heavily on your market forecast. This is where data can help you- observing sales during past sales periods is a good way to determine how much inventory to stock during the upcoming surge in sales. With the right kind of data, you can also begin to understand which cohort of people buys what.
People in various age groups would likely buy different products. Depending on who makes up a majority of your consumers, you can tailor your food and beverage offerings accordingly.
People who buy items as gifts (usually identified by their selection of the ‘buy as a gift’ option at checkout) would be more likely to consider product bundles packaged elegantly.
Once your inventory forecasts are under control, the next aspect to look at is shipping and order fulfillment. We will be covering logistics in a separate article, but broadly, here are a few things to consider:
Always ship festive sales orders with vendors who have historically delivered on time. If you have large volume orders to ship, consider signing a Service Level Agreement with your logistics partners.
Do not leave festive shipping until the very last minute. Most brands also stop accepting festive orders a couple of days before the actual date of the festival. This helps ensure that your orders reach on time.
There’s a reason the festive period is a big deal in India. Even in pandemic times, festive sales continue to spike, and food is a way to show our loved ones that we care. eCommerce retail for F&B reinforces this idea, connects people across geographies, and reinforces the nostalgia of our vast and diverse food culture. Focusing on AOV will help you measure the success of your festive campaign. Bolster the actual sale with creative campaigns that grab attention on social media, pay attention to the small things that matter such as packaging, curate thoughtful bundles that bring in more revenue while also pleasing your customer, and you are well on the way to having a wonderful festive season ahead.