ENGLEWOOD CLIFFS, N.J. — E-commerce makes up 5% of Unilever’s $10 billion in sales in North America, which includes the company’s food, beverage and personal care brands. While personal care is more advanced in the category, company management is refining a strategy to capitalize on the opportunity in food and beverage. During the company’s investor day, held Nov. 14, executives outlined the opportunity and their strategy for growing the business.
Fragmentation across digital business models is challenging consumer packaged goods companies (C.P.G.), whether it is click-and-collect, ship-to-home or last-mile delivery. Each business model has its own attributes, and creating a seamless environment that serves each is the goal of C.P.G. companies.
“Each of these (models) is a strong signal about the way the marketplace is evolving, and it provides an opportunity for our brands to reach consumers,” said Ajay Salpekar, vice-president of digital and e-commerce for Unilever, during the Nov. 14 presentation. “And then if you’re a consumer, you can imagine that with every one of these launches and maturations of these formats, it drives further consumer adoption, which is something that’s very key to our brands. And so that brings us to the consumer angle of this.”
Despite the differences in models, there are some commonalities. First, most search and discovery is digitally oriented, whether it’s using Google, retailer web sites or mobile apps, according to Unilever.
“The second trend is the need for convenience is being expressed through consumer search activity,” Mr. Salpekar said. “So, the number of searches for same-day shipping has doubled in the last two years. And you can imagine what this means to consumers because that drives the decision on which format you adopt and which brands you go for.”
The sweet spot for Unilever is a consumer who shops in both online and brick-and-mortar formats, said Mr. Salpekar.
“Shoppers who are engaged through multiple channels spend more, but also spend more frequently,” he said. “And it isn’t by a factor of 5% or 10% or 15%; it could be a factor of 2x. And that also applies to our brands.
“So, when you put all this together, the role for our brands becomes very clear, which is that the way we win in e-commerce is not just for our brands to be there at every stage of the journey, but actually to use the equity of our brands to drive adoption of these formats.”
Using Unilever’s Knorr, Hellmann’s and Best Foods brands as examples, Mr. Salpekar said the products’ brand equity may be used to “bring meals together” in a click-and-collect format.
Unilever estimates that in five years the markets where it competes in North America will grow by $10 billion and over 60% of the sales will come from e-commerce, including click-and-collect, ship-to-home and last-mile delivery models.
The company’s personal care brands have made the most significant inroads into e-commerce, but digital models are becoming sophisticated enough to open doors for Unilever’s ice cream, mayonnaise and condiments brands. One such initiative is the company’s Ice Cream Now effort, which offers consumers delivery of the company’s ice cream brands.
“What immediate delivery of ice cream allows us to tap into is a whole new purchase occasion that may not be in the home,” Mr. Salpekar said. “It may be at an event; it may be at a party; and that’s an additional usage occasion that we’re interested in.”
In October, Baristas Coffee Co., Inc., Kenmore, Wash., partnered with Unilever’s Ben & Jerry’s ice cream brand to develop a network to deliver Ben & Jerry’s ice cream and Baristas Coffee products to homes and businesses. The program is scheduled to roll out this month in Seattle.