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.
The business has delivered two million meals to over 80,000 customers in just over 18 months and is set for substantive growth following the cash injection.
Founded in 2017 by by Adrienne and Gordon Macaulay borne from frustration in finding a meal solution for Gordon’s mother, Gordon noted;
“Traditional meal delivery services we saw were both very expensive and suffered from slow delivery. Parsley Box have reinvented the service by offering next day delivery and a wide range of meals for customers just like my mother.”
The investment was led by Mobeus (www.mobeus.co.uk), who have a successful track record investing in consumer brands. Amit Hindocha, Investment partner commented:
“Mobeus were impressed with the growth rate that Parsley Box has achieved in a very short time and the real need for a quality elderly nutrition brand for this growing demographic.
“The brand allows Parsley Box customers to remain independent and in their own home while freeing them from the time-consuming preparation of meals”
Move Fresh is a shareholder in the business and helped incubate the brand, providing strategic, technology and logistics infrastructure. Kevin Dorren has been appointed Chairman and Bob Henry from Mobeus will be joining the board of directors.
In my previous post we covered the database strategy. This time I wanted to dig into tactics, mainly looking at email which is currently the core database marketing channel for most e-commerce businesses (my strong suspicion is that won’t be true soon).
Anyway, given the strategic objective of maximising the value of the database, let’s look at some tactical considerations:
1. Are we simply bringing forward sales that would have happened anyway?
2. Are we offering a discount to a customer who would pay full price?
3. Are we mailing at the right frequency?
4. Is the content right?
5. What product personalisation should we be using?
6. How strong an offer do we need?
7. Who could be a Member-Get-Member advocate?
8. Who is at risk of leaving us?
On reflection, it becomes clear that there just isn’t one answer to these questions. They are fundamentally questions about segmentation.
The first question should really be “Who is going to buy anyway and who needs to be prompted?”. The other questions could be re-written in a similar way.
These questions are inherently much more complex than our strategic question which could be answered with one simple formula to measure the value of the database. There’s a lot of crossover between the questions: some people probably do need a strong offer at a high frequency for example.
These sort of complex, multivariable questions are very well suited to machine learning where we can just put a bunch of data into an API and action what comes out.
This is what we are currently working on at our new startup Machine Labs. If you are interested in joining us as a beta customer then please get in touch.