We have been predicting that FMCG is one of the last bastions of adoption of e-commerce. Unfortunately for us, it has taken a lot longer than first predicted (it always does!).
The onset of Covid-19 has been a catalyst like no other to change consumption habits of consumers from in store to in home. Every niche area of grocery that has an element of D2C has seen significant growth over the last few months.
This acceleration of adoption has been driven by mass sampling of FMCG brands in home during the lockdown which has suggested that standing in a line outside a supermarket is no longer much fun.
E-commerce has driven this change and as we have seen from recent research in China the adoption has stuck post the lockdown.
I expect this in turn will happen in Europe and we will see a shift like no other into D2C for FMCG brands.
We are here to help and have extensive experience in this area.
Having spent the last 3 days speaking to many investors about Parsley Box our senior nutrition brand I am struck by the opportunity in this sector.
Investors and founders all see the demographic shift that creates the macro opportunity within the ageing population.
The issue is there are very few investment opportunities in this area. Venture and PE investors are attracted to bright, young things who have created the next consumer opportunity. Very few of these founders think about their grandparents as a target market, leading to a massive lack of startups in this area.
The biggest insight is that the demographic isn’t one uniform group, most consumer products are targeted towards the “old old”
This is characterised by mobility aids, comfortable shoes and grey haired consumers walking along the beach enjoying life.
We are more interested in the young old. They are active, physically and mentally, love to go out and are actively enjoying their life.
We plan to work extensively with this consumer to improve all aspects of their lives from nutrition to housing.
We fail fast, probably not fast enough in fact, but fast compared to most.
FMCG is all about a hypothesis, testing an idea and learning when to give up.
We have had a lot of failures and I am as proud of the failures as the successes. Here is why, you learn from them, and you don’t make the same mistakes again (you make new ones!)
Since we started in e-commerce in 2008 (11 years ago!) we have launched the following brands:
Diet Chef Diet Now Fine Coffee Club Brewhive Prana Protein Bean to Door Parsley Box
That is quite a lot – certainly around one a year since 2015. The jury is still out on a lot of them, but most have failed to meet their potential. Some have failed altogether, but who cares! I only care about the successes. My view is a success is born every 10 years, incubating some of these ideas might improve the odds, but we will have to wait to prove this, check back soon (well in 10 years!)
I meet a lot of D2C brands, especially in the FMCG space. I love chatting to them and trying to understand their marketing channels, technology stack, unique proposition etc.
But I always come back to a core issue that a lot of the D2C brand’s havent thought about – consumption. Most retail brands think about this a lot, to get a brand listed in a retailer is incredibly hard, but what is even harder is getting regular purchase.
Regular purchase is really simply down to consumption, the product you bought in the retailer, needs to be consumed and replaced.
If it isn’t consumed, then you have a problem (you will get kicked out of the retailer) or online you will die! Your CAC:LTV won’t support your growth aspirations and you will literally die as a brand!
So I love to focus on this in any conversation. It is so obvious that most D2C brands don’t think about it, generally, they are so focused on getting the first sale, consumption or repeat purchase is an afterthought.
It shouldn’t be. Delve deeply into the consumers thought process and try to work out where you are going to go once you have a trial from a customer. Why will they consume more, and how often do they use your product.
This is why certain categories of D2C brands are really attractive. The obvious one is shaving (Dollar Shave Club ad break 26m views!) – most men do it every day, so you have regular consumption of razors, causing higher LTV. It wasn’t the quirky ad alone that made the brand successful.
Pet Nutrition is another area of extreme consumption, that’s why we love this sector and Bella and Duke.
So you run a D2C brand – think obsessively about consumption – it will take you far!
Over the last 10 years we have grappled with logistics software and had many failed attempts at implementing ERP systems!
So we thought why not use our own internal system and make this available to third parties who are struggling with similiar problems.
So we are launching Warehouse Buddy, a SaaS product for SME logistics needs. No expensive consultancy, all you require is a simple internet connection and you can start improving efficiency and reducing errors.
We are currently looking for beta testers so let us know if you would be interested in participating.
I am 50 this month, I have been in high technology and emerging technology for 30 years.
I am an early adopter – I buy all the new services I can, explore new ways to shop and pave the way for the mass market to follow.
I have seen this in technology first hand – usually by being around a decade too early!
In Grocery as with all retail – things are changing. Asked years ago consumers would say they were perfectly happy with shopping in supermarkets rather than fiddling around with their computers to buy online.
But online is taking a grip of grocery quicker than many can appreciate.
CB Insight have produced some great information on the changes in the grocery market. Take a look here.