How brands shop online

Cure Hydration’s happiness holiday came at a strange time.

Whole Foods, owned by Walmart, CVS and Amazon, began carrying the start-up’s fruit-flavored hydration powder during the pandemic. However, boxes and cartons of the electrolyte often lingered in the stores while busy workers tried to replenish the shelves with in-demand items like hand sanitizer and paper towels. The main sales driver – offering free samples at sporting events such as triathlons or after class in fitness studios – came to a halt. Customers didn’t discover the brand while shopping online or saw it when they rushed down aisles on forays into the store.

So instead, Cure Hydration founder and CEO Lauren Picasso decided to try a different strategy to get her products into shoppers’ baskets: free samples tucked away in Walmart’s pickups.

“As an emerging brand, we wanted to find a way to showcase customers, knowing that they don’t browse stores as often as they used to,” she said.

She said the samples increased sales, while costing less and scaling up more easily to about 1,000 stores.

Add samples to the list of pandemic-related changes that may linger. As more groceries pick up and deliver on the side of the street, consumer packaged goods companies had to experiment with new ways to get their products to the people. Major retailers are trying to respond to rising demand by charging brands for access to their customers and data they have collected about their preferences, while also surprising customers with freebies.

For years, consumer packaged goods companies have paid retailers for premium in-store real estate that helps them grab the attention of shoppers – like end caps, a display of products at the end of an aisle. That equation has changed as more shoppers pick up their purchases in bags from a store’s parking lot after ordering them online.

Online food sales in the US grew 54% in 2020 and are expected to exceed $ 100 billion for the first time this year, according to eMarketer. The market research firm said those habits will last longer than the pandemic because shoppers see it as an easier way to shop, even after they’ve been vaccinated. Next year, eMarketer expects more than half of the US population to buy groceries online. By 2023, it is estimated that online grocery sales will make up 11.2% of total US grocery sales.

Walmart’s US e-commerce sales grew 79% in the past fiscal year compared to the previous year, fueled by grocery orders, but has yet to turn a profit.

Sampling is an opportunity to make money for Walmart. The retailer started a pick-up and drop-off sampling program in 2014, but it’s getting more attention as more customer traffic shifts to the parking lot. The retailer charges businesses when their product is added to a sidewalk or delivery order.

Walmart is looking for new revenue streams as it juggles the added costs associated with online orders, such as taking grocery orders off the shelves and shipping purchases to customers. At a recent investor meeting, Doug McMillon, CEO of Walmart, said it wants to use its reach as the world’s largest retailer to grow other businesses, including advertising. He said it wants to make money from the data it collects about customers.

Even the big brands take note. General Mills has ramped up the number of samples it paid to place in roadside pickups at retailers including Walmart, Kroger, and Target.

Jay Picconatto, director of brand experience and trade marketing at General Mills, said sampling grocery pickups is “something we wouldn’t even have touched two years ago or 18 months ago.” But when retail traffic plummeted last spring and retailers limited in-store demos, he said the company was aggressively leaning in.

For example, some Walmart shoppers have received sample Old El Paso taco seasoning with recipe maps around Cinco de Mayo. Walmart handed out its Annie’s Fruit Snacks and Bunny Grahams at a Walmart drive-in movie event.

“Then we found out, hey, it works and we really like what’s happening,” he said. With more customers shopping on the doorstep, he said, “It’s a place where we want to keep playing.”

Alvis Washington, Walmart’s vice president of marketing, store design, innovation and experience, said the sampling program can help brands connect with the right customers. Personalizing the samples that a customer receives is an important goal.

It can also be used to deepen customer loyalty with Walmart, Washington said. It turned some of its stores’ parking lots into drive-in movie theaters and trick-or-treat sites. In a store near the Arkansas headquarters, it had a special Mother’s Day event. It lit up the sky over several stores for a holiday drone show.

At each event, those present were surprised with a swag bag with samples. Washington said the company wants to scale that up to more of its Walmart and Sam’s Club stores. He described it as a “triple win” – making Walmart a more attractive shopping destination, a fun activity for customers, and an opportunity for suppliers to “bring their new and innovative products to the attention of customers.”

He said Walmart may charge a start-up fee for the swag bags, as it does with its edge-of-the-street pickup business model, and that companies cover the cost of the products.

Walmart has also tested a welcome box for customers who join Walmart +, the subscription service it launched in the fall. Each bag includes a Walmart + branded tote bag and product samples. He said the retailer is expanding the program and plans to tailor the box more to customer preferences in the future.

Picasso said the new approaches to drive product discovery are simpler and more cost-effective. One day, she said an in-store demonstration handed out about 300 samples – which cost about 50 cents per sample, including the fee for reserving space in a store and staffing it. She said the cost of including a sample in a curbside pickup or swag bag varies by store, but typically ranges from 10 cents to 30 cents each.

“It will be much more economical to get into people’s hands in other ways,” she said.

Picasso said the company is again testing demo stations in a few Whole Foods stores, with a pandemic twist. Each powder pack is individually packaged and people can grab a stick of power and a branded bottled water so they can try the product safely at home.

However, for other food and drink products, she said the ick factor could survive the pandemic as shoppers remain aware of the germs and don’t want to eat chopped granola bar.

Additionally, she said, retailers are becoming increasingly sophisticated, allowing companies to add samples to some street-side pickups and not others based on a customer’s purchase history – a more focused approach than relying on the right strangers. to walk by and pick up a sample. .

General Mills will continue to pay for retail displays, Picconatto said. But he said the pandemic has changed “how we think about the balance between in-store levers and online levers” – especially as e-commerce drives a higher percentage of total sales.

“What we really care about in the end is getting on that shopping list,” he said.